Multifamily deal considering current Tenant Protections

5 Replies

Hi all, currently looking at a duplex in the Arcadia lite spill over area. It will cash flow ~$150/month as is but I think the area will be turning in the next 3-5 years. Not a ton of cash flow for the 25% down I'll need but thinking of future potential.

Are other investors straying away from multifamily right now with so many tenant protections - unsure if they will be able to collect rent? Also, it is on a lot with 5 other duplex units - if I plan on BRRR is there added risk that the other units not being rehabbed will prevent the property from appraising as highly?

Any insight is greatly appreciated as I look to dip my toes into multifamily!

Hey @Samantha McEntire , it's probably too late now that it's been almost 2 months since you posted this. ~$150/mo for a duplex is an Ok return but I would look for a way to sweeten it to make it closer to $200/mo or more. I don't imagine you would have any issues with the neighboring lots not being renovated since the Phx market is so hot and everything is selling so high. It's a duplex so it's assessed off of comps but with the market the way it is, I think you could BRRR(refi) and get what you need back out of it. I'm no expert and that's just my opinion. I work for a local contractor and run/manage most of the jobs so if you ever need any remodeling help, feel free to reach out.

Originally posted by @Samantha McEntire :

Hi all, currently looking at a duplex in the Arcadia lite spill over area. It will cash flow ~$150/month as is but I think the area will be turning in the next 3-5 years. Not a ton of cash flow for the 25% down I'll need but thinking of future potential.

Are other investors straying away from multifamily right now with so many tenant protections - unsure if they will be able to collect rent? Also, it is on a lot with 5 other duplex units - if I plan on BRRR is there added risk that the other units not being rehabbed will prevent the property from appraising as highly?

Any insight is greatly appreciated as I look to dip my toes into multifamily!

 As far as being protected from rent payments during this time will depend entirely how friendly your local government is with landlords.

Also with it being a duplex, the value will be based on comparable, if there are similar duplexes on the street then this could potentially hurt or help the value. There is always the choice to explain to an appraiser why the value of yours is worth more.

@David Stock Thanks for the response. I didn't end up moving forward with that deal but am in escrow on a single family home with a small art studio in the back that I will convert to another unit to rent. Cash flow should be $180 before the added unit. Would love to connect as I am looking to get bids on the added unit and some upgrades to the house- I'll shoot you a message!

@Steven Wilson thanks for the input. Ended up moving forward with a single family residence but will check out that article because I am curious on how to maximize my appraisal after adding a unit and understanding which renovations will increase the $ the most. Cheers!