I've been on BiggerPockets now for a few months and realized I should finally make a post. I'm a lifelong Alaskan, born and raised in Anchorage. Currently I am working full time in Anchorage (and I also commercial fish in Bristol Bay) and am attempting to buy my first property.
After running the numbers on duplexes, triplexes and fourplexes I've come to the conclusion that I'd like to purchase a fourplex. My reason being is that I intend to owner occupy, and rent out the other units. A fourplex is the only multifamily property that I can get into currently that will allow me to nearly live for free (or under $500 per month in expenses - mortgage, utilities, taxes, maintenance, capex, etc.). I intend to use an FHA loan for those who are wondering.
I've been in the hunt now for a few months pretty heavily. I'm working with a great agent in town who specializes in multifamily properties. I'd like to find a property in the SW or SE part of town. Given that I'll be living in this property I do not want to buy in Mountain View, Fairview, Russian Jack, and certain parts of Muldoon. I have not yet found a property that I've been wild about...it seems like not much multifamily inventory is hitting the market these days.
What I'm really looking for is advice on what other investors in town are doing given the current state of our economy (recession), the unstable fiscal climate at the state government and loss of oil jobs which are now spilling into the broader economy. Are people holding back, looking for deals, selling out? Should I hunker down and continue to save, and wait until the market really bottoms out? Is the multifamily market bottoming out or staying strong?
Likewise, I'd love to connect with anyone who knows of fourplexes for sale that aren't on the market, or who knows anyone with a fourplex in the SW or SE part of town that may be reaching a point in their life where they'd like to sell.
I'd love to hear any advice you all have for a guy like myself looking to get into the real estate investing game! Financing strategies, buying strategies, land lording strategies, etc. I'd love to pick people's brains who have experience in our market with multifamily properties. I'm game to get coffee with any who is up for it.
See you all around the site!
I would love to have coffee, stop on down to Cleveland Ohio and I will buy! LOL
I have bought many 4 units. They are great for owner occupants, but I would not let them know you are the owner if you get one. act as if you just live there and you can get the inside scoop of what is really goin on.
The great thing about real estate is that you can look almost anything up on line.
Just look and see all 4 units, then contact the owners directly to work a deal.
Try to find the ones that have a different tax mailing address. they may be sick of being a landlord.
so much more to say about this, but I will give others a chance to wear their keyboard out! LOL
@Hans Rodvik , I just moved from Anchorage after living there for the past 3 years. I'm curious if you've looked at Eagle River at all or, as you mentioned, Muldoon. I only ask because from a long-term viewpoint, there is no way property can be built into the Turnagain Arm unless they start leveling mountain tops. Eagle River is already established as one of the nicer Anchorage areas and I'd expect development to move in that direction. I know there are a couple 100+ unit complexes already up along the glen in North Muldoon. As bad a rap as the area gets, North Muldoon it does have direct access to the glen, is relatively close to a hospital, very close to base (if you are targeting military tenants), and puts in directly in the path of the only direction development can move for the city (aside from in-fill). It's also where the newer theater is along with the nicer shopping there.
As far as off-market 4plexes, I started learning in about real estate in Anchorage. There is a a whole heaping mess of mom and pop 2-4 unit properties scattered all over the city. Just look at craigslist or the automated housing referral network and they are immediately noticeable. I had a lot of good luck verifying that the owners lived in one of the units and just knocking on the door and asking to talk to them about the business. It might be a good segue to ask if they are looking to sell? All-in-all, with the turmoil up there right now, I'm guessing folks are buckling up and preparing for bad times.
Right now its winter so as far as selling goes it is considered the off season so there wont be nearly as much on the market. You will see a lot more hit the market after April, you have limited yourself to the more expensive part of town just by only looking at South Anchorage but I'm sure you already know that. My wife and I have two properties a duplex and a triplex both close to the UMED district as we feel that will help us given all that is going on in Alaska at this moment. I think a lot of people are either hunkering down to weather this out or planning on getting out.
@Hans Rodvik Welcome to BP!
In the multi-family market there is always a shortage of inventory, and the good ones go quick.
I don't think there is any hesitation to buy in the MF market right now, that said I have seen rents go down slightly. Previously, our vacancy rates were insanely low. That said, our market still beats out a lot of other markets when it comes to that market.
Your agent should be savvy to find you the deals, especially the off market ones.
Also, if you're going south anchorage, prepare for the rents to not cashflow like they would in other areas of town. You're going to pay a premium for that area.
@Rob Gillespie Ha! If I'm ever in Cleveland I'll hit you up! Thanks for the input. I've been trying to find an owner who lives out of town (and is older) as I feel like I'll have better negotiating power with someone who just wants to get out/retire and thereby allow me to make mymoney going into the property.
@Brian Volland Yes, I've been looking at Eagle River. It is one of the other areas I've considered, I just forgot to mention it in my original post. After I acquire my first property I'm very open to the Muldoon area - because I won't be living there. With the crime increase in Anchorage I just value living in a better part of town. When I'm not owner occupying Muldoon and the other less appealing parts of town will be where I look to get much better cashflow. What is the "automated housing referral network?"
@Ronald Laurion That's good to know regarding the natural uptick towards April. Yep, I've accepted the fact that I won't be able to get as good as cashflow on my first property if I find one in South Anchorage. Right on! Congrats on having those 2 properties. What are your tenants like in that part of town?
@James Cash Thanks for the welcome, and tips. Outside of rents coming down some, are you seeing values creep down yet? Outside of south Anchorage, what would you say is the next best (in terms of safety, quality of life, and cashflow) bet for a decent part of town to owner occupy in a fourplex? UMED?
Way to go on your first post to Biggerpockets!! Shout out to Bristol Bay fisherman, I hope you had a killer year as a lot of guys did, which district do you fish in?
I think 4plex is a great start to investing in regard to the living for free and FHA is a low down payment way to get into your first property. What is your long term investing goals? And what are you capping your price search at?
It sounds like location is important to you, is that more for your comforts of living there, the tenants, resale? How long do you plan to live the 4plex?
My thoughts on the Alaska Economy may differ a bit from what you hear and would love to get your feed back and others. I agree with the financial climate being unstable if something doesn't change in the next 2-3 years. I think Lisa Murkowski just got sworn and has the capability to get a lot of Federal dollars back into the state and multiple native corps have announced that they plan to start spending money this year as apposed to last year where they were not doing so much of that. 99% of the owner occupied investors I worked with last year and this year are pushing hard to get into a property because there is a constant battle against the rising interest rate that is a write off and other people technically are paying (tenants) but is really affecting your cash flow. Just with you waiting 2-3 months your payment has most likely increased anywhere between $200-300. When you think of jobs thinning in the oil industry I would recommend reaching out to friends/family that you know that work in the industry and ask how many of their co workers are local Alaskans. My experience has been that about 6-7 out of 10 slope workers live in other states. I don't foresee the multifamily market bottoming out because that market is driven off supply and demand the the rent rates.
I would love feedback and continued conversation. I am always open to new thoughts and advice. I hope this brought some value! Cheers! Jeremy
@Hans Rodvik I haven't really seen a huge softening of price yet. Nothing noticeable. It's also hard to say with interest rates creeping back up. This pushes down buyer confidence, which in turn raises rents due to demand of rentals. If that trend continues, rent price / income property price should remain strong.
As far as a safety thing goes, living in a city anything can happen anywhere. Just have good security system (video camera, every door secured entry) and you should be fine. UMED is great due to location and quality of renter (nurse, doctor, student, etc.). Near the airport also tends to have some great renters. West side is close to trail system and has a niche demographic, so that part also tends to be desirable for renters.
There's lots of experienced agents and investors already chiming in here, so I'll be the odd man out. I only own one investment property. And it isn't in AK (although I live here and have for 13 years).
I wouldn't buy anything in Alaska at all. This state is going to go through some serious financial difficulties, the inventory of multi-family (particularly in Wasilla) is high, real estate here is a cyclical market and is near the top (but beginning to soften).
I think we are going to see prices and rents decline.
@Jeremy Tompkins 2016 was my best year in the Bay in terms of total poundage! I primarily fish in Egegik, and sometimes go up to Naknek. When my brother is done with college we are going to get our own operation out there.
Long term investing goals are probably like most BP members! Achieve financial freedom and get out of the rat race - replace my current income through cashflow from real estate investments, and be able to stop working the 8-5. Numbers wise I'd like to hit $100K per year in cashflow, and have over $1 million in net worth (equity built up in the properties I own).
Location is important for sure - it's a combination of all those criteria. Better tenants, higher rents, comfort, and hopefully higher resale down the road. I'd like to live in the 4plex for as short as possible so that I can maximize its potential. My guess is 2 years max - I'm thinking I could save up enough in 2 year to get myself into a condo/ZLL or duplex that I could "house hack." After that my plan would then be to again start saving and focus on getting another 4plex and just grow from there.
Yeah my take on AK's economy is a bit different from yours. I think there are some positive things to come from the federal level with our Congressional delegation/F-35s coming to Fairbanks/Trump's plan for infrastructure spending/tax plan/more favorable towards business; but oil/gas/mining are what drive Alaska. I work for a trade association that represents over 500 Alaskan businesses, with 30,000 employees that do support work work in the oil/gas/mining industries and our members have laid off 3000 people since late 2014 - these are the highest paying jobs in AK. Our members have over an 80% Alaskan hire. AK Department of Labor numbers put out of state oil workers at about 30% of the oil/gas workforce. Regardless reports now put total job loss statewide at nearly 6000 - between private sector and public sector. Hopefully oil prices continue to rise, and our state doesn't change tax policies again that chase off investment. Our state govt. really has to implement a long term fiscal plan to fill the budget gap, that hopefully doesn't involve excessive taxes, so that businesses can plan for the long run.
On the interest issue my agent has been informing me on that, and I'm definitely paying attention to it. I definitely want to get into a property this year, so hopefully rates stay under 4% for FHA/first time home buyers like myself!
Thanks for all the advice and comments!
@Hans Rodvik I owner occupy a duplex in UMED and have another duplex across the street. I like the area a lot minus the bums. I just rented two units last month. Renter pool was nurses, students, financial professionals, and blue collar - kind of all over. I agree with @James Cash , rents are a little lower lately and the market seems strong.
I also have some concerns about the market here. I have a duplex downtown that has rented out well and have been looking into another property. But the economy and prices definitely concern me, would definitely not be able to purchase downtown again. I think Eagle River would be a good place to look, I have been looking a bit more there and I second the Umed area, good tenant pool and central location.
Hello from the slightly colder town of Wasilla, here are my thoughts:
Owwer occupy the 4plex... great idea. A year later, buy another 4plex. If you move into a big condo in Anchorage (never a good rental... I run two of them), you'll have to explain to the bank why you want to move back into a plex... might get tricky. On the other hand, I have a nice 3bd ZLL with brand new windows and carpets for a BP only price of...
Soft market? Great. I'm excited about it. Every single one of you guys that is worried about the market softening up... that's fine. More for me. I see the doubt about the future and the economy, as well as the increasing interest rates, as an indication that there are going to be even better deals available in the near future.
As far as 4-plexes in Anchorage. I've looked at them, but I'm trying (and failing a lot), narrow my farm to out here in the valley, so I'm not as familiar with market rents and such where you are. If you're ever out this way, I'd love to talk shop... I work on 76th, but never like to stay in the big city longer than I have to.
interesting conversation...thought I would chime in on recent rental experience in Anchorage I have a duplex, on gentrifying edge of Fairview towards downtown. Recently rented out one of the empty units (1/1 move in) but took two months and had to drop rent a couple times (whereas these type of units were moving pretty strongly about six months prior) I also have a friend with a decently nice apartment by the airport who has rented it fairly consistently for years, and has been sitting on it vacant for about three months. Best of luck on the search, don't get too anxious and compromise yourself into a bad deal though.
@Hans Rodvik 2 and half years in between. I mostly spent the time learning the ropes of being a landlord, studying about financing, doing improvements to the property, and learning how to analyze a little better post-pulling the trigger. Financing is much easier now that I know a little more about it.
@Hans I'm going to jot some quick replies in here: "I think there are some positive things to come from the federal level with our Congressional delegation/F-35s coming to Fairbanks" Our entire delegation rolled into one wouldn't make one Uncle Ted. Don Young is getting up there, and I shudder to think what will happen when he is gone.
"Trump's plan for infrastructure spending/tax plan/more favorable towards business;"
110% agree except for infrastructure. Infrastructure is a loser for two reasons: 1) maintenance costs in AK are typically addressed by state bonds, and we got down-graded. Probably going to lead to taxes and definitely to debt. 2) the nature of government spending on infrastructure is that government must first extract the funds from the economy through taxation in order to have it in the first place. Government creates NOTHING.
I am looking forward to Trump's tax plan, however and I think that will help the US out but I'm unsure about AK where the majority of people are receiving government checks.
"Oil/gas/mining are what drive Alaska. I work for a trade association that represents over 500 Alaskan businesses, with 30,000 employees that do support work work in the oil/gas/mining industries and our members have laid off 3000 people since late 2014 - these are the highest paying jobs in AK. Our members have over an 80% Alaskan hire. AK Department of Labor numbers put out of state oil workers at about 30% of the oil/gas workforce. Regardless reports now put total job loss statewide at nearly 6000 - between private sector and public sector."
I agree here I just think we missed the boat on LNG, there's no refining, and past high oil prices made cheaper oil elsewhere more attractive as ours is expensive to get. The US rocketed up in domestic oil production while AK oil production declined.
I hope Trump can make changes to make oil (and mining) cheaper and easier here in AK. I'm totally on-board with you that those industries are going to be the most important going forward.
"Hopefully oil prices continue to rise, and our state doesn't change tax policies again that chase off investment. Our state govt. really has to implement a long term fiscal plan to fill the budget gap, that hopefully doesn't involve excessive taxes, so that businesses can plan for the long run."
I think there's plenty of cheap easy oil available in the lower 48 and newer pipelines elsewhere, too. Commodities globally have taken a huge dump in 2016 and I guess I'd say the only place prices can go is up. The largest gains in AK employment were in Providence if I remember correctly. I don't know how that might work into your strategy, but there it is. Overall, 2016 was the first year since the 1980's with a net population loss in AK.
AK is and has been a cyclical RE market. Hopefully we won't repeat 1983 ever again, but being able to identify where we are in that cycle should be apart of every local REI's tool bag. I personally prefer more lineal markets, but I'm not really in the market I'm in for appreciation as much as I am for cash flow.
@Jeremy Tompkins Great Comments and I confirm.
@Hans Rodvik Glad you made your first post! I'm glad you are doing a 4plex! It was the best investment I've ever made and it launched me into a great future.
I manage several properties in Anchorage - Valley and currently everyone is holding onto their unit. But don't let that stop you. There is plently out there, you just have to hunt a bit. You are welcome to join a local group of DIY Landlords. It might help you network locally and try to find opportunities to buy something.
@Kassandra T. Yeah the 4plex route totally makes the most sense. When did you get into REI? What part of Anchorage are your properties in?
Over the weekend I was driving around my neighborhood looking for 4plexes not on the market and was able to find a good number of them which was pretty exciting! I intend to do some direct mail to their owners to see if they are interested in selling. Any advice on ways to craft such letters?
A buddy of mine told me about the Landlords Almanac a while back, so thanks for the reminder! Now I just need to go :)
@Hans Rodvik We manage properties from Anchorage to the Valley / SFH to 30 unit complexes. Oh yes! There are lots and lots of multifamilies here. It would be great to see you tonight!!
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