Clearly, based on a number of recent posts, the Phoenix area market is heavily in the seller's favor right now. Before I moved here a little over a month ago I was hoping to be able to find $200/door for a small multifamily. When I got settled, I immediately got added on to an MLS search that alerts me daily of new and changed properties fitting my search criteria which i then analyze. So far it's been disheartening to say the least as most of the properties won't even positively cashflow due to the low rents I've been seeing unless it is bought cash. We've only driven around and seen 12 properties so far in the Glendale area but even those properties are asking $200k+ and they are in areas asking $550-625/mo w/ debris and garbage piled near doors/open lots. Not ideal for house hacking. I've since dropped my ideal cashflow to $100/door since $200/door seems unobtainable.
So, two questions: At this point, showing up to the game as late as I am, is my best bet to find another investor who will throw me a bone and/or cold calling owners? I have time as I don't intend to purchase until June-ish next year, but I'd like to know where I should be looking to, at least, really analyze a property instead of getting stopped immediately at cash-flow.
And two: For those of you financing your purchases, what is a reasonable cash flow to expect at this point in Phoenix and west Phoenix? I'll be using a VA loan which already cuts into profits, but I'd still like to have an idea of what the current "norm" is.
Okay, I was mistaken, third question: From what I've seen of the west Phoenix area so far, most multifamily are nice 30+ unit complexes and not a lot of small MFR. The small MFRs I've seen have generally been in bad (think D or E on a scale of A-E) areas. Is this basically what I should expect or do I just need to drive more and find the pockets of nicer areas? Any tips on how to locate them?
I'm mo expert, I hope this helps. First question: Multi family real estate (MFR) is the most tax favored asset class. There are several vectors of renumeration. 1. Appreciation. 2. Deappreciation. 3. Cash flow. 4. Tax shelter.
Perhaps someone can more elequintly articulate these facets. Until then here's an article:
Second question: Bottom line is, your going to pay for desirable areas. Scottsdale and parts of the east valley areas are the most desirable and most expensive. The fringes of those areas might yield what you looking for. Think Tempe area for college housing, Scottsdale for retirees. AZ is hybrid and smaller market then CA. The kicker is its a right to work (fire) state. If your near Phoenix you can leverage density, but know certain parts are rough.
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