Multi-family... Purchase or Pass?

Question

I live in one of this country's most expensive areas, Midland, TX.

Also known as the Permian Basin, it's responsible for 1/4 of this nation's oil and gas production.

As such, people often find themselves paying $1,200/mo for a studio; now, I know some of you are saying "oh try California on for size." I get it BUT, the population here is only about 125,000 people!

With all that said, I stumbled across a quadplex for just $159k and it's been recently renovated?!? You can't buy a gallon of milk out here for $159k!

Exaggerating but this place is flooded with money and investors, any ideas why this property is still there and why it's been there for as long as it has?

Are these red flags? I'm aggressively pursuing my first deal and this one is ALMOST looking like the one...

Account Closed · Answer

@Bjorn Ahlblad

Brilliant marketing strategy but this one has been sitting for over two years.

I take that as a red flag in a hot market.

Maurice D. · Answer

159k per unit? check the fine print :)

Account Closed · Answer

I would just get it under contract and do my due diligence. Only then will you actually know. Plus, there's no harm in analyzing a deal in depth and walking away. It's a free education!

Logan Turner · Answer

Account Closed I know the exact property you are talking about. The listed selling broker is my property manager for my midland properties.

That place has been listed a long time ago as you mentioned and I believe it sold a long time ago as well.

But reach out to Him And double check. He also sold a few in Odessa that we’re listed for a long time but I believe all sold pretty quickly.

Bjorn Ahlblad · Answer

Account Closed If it is a listing they might be building some interest. Recently there was a 12 unit in my area that was listed at 1.2 it got 9 offers in the first week and sold for 2.1!

Account Closed · Answer

@Taylor Philley

Thank you for your opinion.

You're the third investor (myself included) who's familiar with the area that sees red flags here. I believe many of us, at times, have a tendency to over analyze and find ourselves frozen so I had to get a few other opinions and perspectives before entirely dismissing this property with it's potential.

Taylor Philley · Answer

@Aaron Lenard seems oddly low. I have two SF rentals in Odessa. Is the fourplex small? I also saw two triplexes sit on market for 6+ months one in each Midland and Odessa and I considered them but did not purchase. I was wondering the same thing. Why aren’t these being scooped up? Rentals fly off market so you’d think an investor would scoop it up but I don’t know exactly. They eventually sold. I would say buy it. You know one thing- it will rent out!

Mike Evans · Answer

@Aaron Lenard I’d need more information than you provided obviously but if it were me I’d move on it quickly.

Is it an off market deal?

If no, than how long has it been in the market?

Why is the seller selling and why is it still on the market? (Ask the broker)

What area is it in & what are rents going for?

Have you underwritten the deal yet?

I’m in Midland as well and I struggle with the same situation of everyone asking an arm & a leg for their property when 12-15 years ago you couldn’t give land away.

I’d be happy to meetup and go over it in more detail with you if you’d like? If nothing else, tie it up then get into due diligence and try to make the deal not make sense. If it still does then you know you’ve got a deal.

Hit me up on FB or DM me for my phone number and let’s see if there is a way for us to help each other.

Mike Evans

Account Closed · Answer

@Russell Brazil

Midland is the basis of what is the Permian Basin.

Mason Moreland · Answer

Part of that price point is where the property is located in town as well. Generally C-class properties and much lower property values and rents around there. Go drive around the neighborhood and you’ll see why (if you haven’t already).

Multi-family... Purchase or Pass?

Multi-family... Purchase or Pass?

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