I'm looking at a building in the not so safe area of Phoenix. Normally this wouldn't bug me as I go in, fix the place up and find decent tenants for the area. What has me worried is that since they are all single occupant units I'm going to have a lot of turnover, and wont be able to get families that are looking for stability.
The upside is I'll be able to cash flow around $25k/year with an %8 vacany rate factored in. I've driven by the place and the building itself seems to be in good shape, might need to get painted but, no major strucural damage. Anyone have any experience with 1B/Studios that might enlighten me on something I'm missing?
@Bud Dwyer at first glance it appears that your vacancy rate is much too low and probably should be raised to 15-20%. Studios and one bedrooms naturally have a much higher turnover rate which potentially leads to higher vacancy.
As I am unfamiliar with the area, may I suggest that you contact a local property manager or commercial broker to verify your assumed vacancy rate.