Let me know if this sounds like a good investment:
$1000000
5800sf building
12 units (10 units=410sf, 2 units=710sf)
410sf rent for $645/mo
710sf rent for $990/mo
4 parking spots
Central Phoenix
Taxes are $3500/year
Tenants pay electric
Water sewer garbage landlord pays
Updated one year ago ($25000 per unit according to seller)
Looks modern with nice upgrades according to the pics
Gated with key card access
How would I know if this is good or not. I used the BP calculator and assuming 30% down that's about 7% cash on cash roi. Basically I'd have about $1500/mo in cash flow after all expenses are paid.
It's hard to figure out the expenses. I think I was conservative but I'm not sure.
Rental Property Investor · FL · Member since 2016 · 9 posts · 4 votes
7y
Sounds like a cool property overall Derrick. I'm no expert in Multi-Family and am always learning in this business everyday. Based on those figures on just down payment at $300K and cashflow/month...that seems to be 6% COC. You may want to consider all the cash you put into the deal, including fees, etc. to get a more accurate return. At the end of the day if it produces a return that you're happy with, right? We are currently focused on SFR flips with our investors and getting great annualized returns. I'm sure you will get some good feedback here.
Investor · Phoenix, AZ · Member since 2018 · 312 posts · 156 votes
7y
@Derrick U. make sure you know where in Phx it is located. There are still markets in Phx where you want to stay out of. A couple questions:
- sounds like it’s being marketed as a turn key unit. Good locations in Phx are selling at $130 - 150k a door for turn key class C properties (Cap rate in these areas run in the 5 - 5.5% range). At $80k a door, you’ll want to look very carefully at the location.
- only 4 parking spots to 12 units? You’ll need to discount your rent significantly for units without parking or on-street parking. Phx public transit isn’t that great - most people want/need a car. Make sure your rent numbers factor this in.
- For well managed properties we model 45 - 55% expenses and then verify through seller's T12.