Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
Well my first deal is done. I am the proud owner of a 4 plex in Phoenix, AZ. Before I go into the details with the numbers, I should tell you about my goals. I want to get into commercial multi-family real estate investing. I knew from the beginning that multi-family is where I wanted to work.
Phoenix, AZ, 4 - 2 bedroom/1 bathroom 800 sq. ft. units. Built in 1984, single level, well maintained and completely remodeled a few years ago.
Purchase Price $179,000
Down payment $45,500
Closing Costs $4965
Gross Annual Income $24,600
Vacancy Loss 10% $2460
Adjusted Gross Income $22,140
Property Mgmt. 8% $1771
Maintenance/Supplies $1064 (calculated using the average of actual numbers from 2011,2012,2013)
Water/Utilities $2458 (calculated using the average of actual numbers from 2011,2012,2013)
Annual Mortgage $9865 (includes insurance and taxes in payment)
Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
12y
Wow @Kimberly T. , very impressive analysis!! I would have never guess that you haven't actually lived in the valley :)
I tend to agree with what you've posted. Generally speaking, if I were to buy a multi family out here it would be in:
-Tempe
-South Scottsdale
-East Mesa
-Some of the historic districts in downtown
Now there are some exceptions to that, and again that is just where my level of comfort lies. The 68th strip you speak of is an interesting area that I'm very familiar with. In fact, I lived right off 68th street and Indian School for many years. In that area, I would avoid west of 68th street, but be all over east of 68th street. It's a dynamic I've never seen but that road is literally a divide between good and bad(until you're north of Osborn, where everything gets better).
The square in northern phoenix you speak of - Not somewhere I would feel comfortable investing either.
Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
12y
@Chris Blount I calculated the cash on cash return dividing my estimated annual income after all expenses by my initial investment (down payment and closing costs). In my case that was $6982/$50,465 = 0.1383533141781433 or approximately 13.8%
@Jacob Ehrgott actually yes there is room to increase rents. As of right now, two of my units are paying $525/month, and the other two are paying $500/month. I would like to bring all rents up to $525 a month. Also I decided to start charging the tenants the sales tax. Finally, new tenants with pets will be paying $20 extra per month per pet, and a pet security deposit of $300. All of those recommendations were made by my property manager, and I thought they sounded like good ideas to increase income.
@Anthony Gayden A fourplex for under $200k in PV? AWESOME! Great work Tony, and the numbers check out too. Was this an MLS find or off market?
Yes, I bought it off the MLS. It fit all my criteria, and it will be a good start for my real estate investing goals. I am currently looking for a 4 plex in Cochise or Pima County that I can owner occupy as my second investment property, but that is at least a few months down the road while I build up the cash for a down payment, closing costs, and emergency reserves for another building.
Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
12y
@Desmond Haylett I'm probably not the best person to go to for advice since I am an absolute beginner and my goals are pretty different than a lot of the people I have met.
I'm not an out of state investor, but I might as well be since my building is 3.5 hour drive from my house. Also before I decided to invest in Phoenix, I had only visited there once. I live in a small town 80+ miles east of Tucson, and have only lived in Arizona for 2 years. I am originally from Kansas City.
Originally I wanted to invest in multi-family in Tucson. However, I quickly found that the deals on 4 plexes were better in Phoenix, and since Phoenix is a much larger city, they were far more numerous.
Chandler, AZ · Member since 2013 · 113 posts · 25 votes
12y
Congrats Tony G. $180K in PV sounds like an awesome deal. I do also see some good deals in Tucson area as well. Next step is learn to handle tenants and stick to the rules.
Investor · Colorado Springs CO · Member since 2014 · 535 posts · 253 votes
12y
Well congrats @Anthony Gayden and good luck with your first investment! So there are fourplexes in PV? Or is this in an area that's in Phoenix or Scottsdale, but near PV? I have never seen small multifamily in PV, but there are some relatively close to PV in Phoenix and Scottsdale. Just be careful about areas in Phoenix metro, there can be some bad pockets surrounded by areas that are otherwise pretty decent. For example, The Square in northern Phoenix (an area bordered by Bell, Greenway, Cave Creek, and N 32nd St) seems to be a pretty rough area with a not-so-good reputation. Another is the Holiday Park area of southern Scottsdale (bordered approximately by Osborn, Thomas, N 64th St, and N 68th St). Again, a pocket of not-so-good stuff.
Perhaps @Justin S. and @Scott E. and some of these other responders know more about these areas and others in the Phoenix metro since they live there (my knowledge of them is based on online research and driving the areas myself, I've never lived in AZ). Guys, am I correct in my assessment of those areas? Any others?
Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
12y
Wow @Kimberly T. , very impressive analysis!! I would have never guess that you haven't actually lived in the valley :)
I tend to agree with what you've posted. Generally speaking, if I were to buy a multi family out here it would be in:
-Tempe
-South Scottsdale
-East Mesa
-Some of the historic districts in downtown
Now there are some exceptions to that, and again that is just where my level of comfort lies. The 68th strip you speak of is an interesting area that I'm very familiar with. In fact, I lived right off 68th street and Indian School for many years. In that area, I would avoid west of 68th street, but be all over east of 68th street. It's a dynamic I've never seen but that road is literally a divide between good and bad(until you're north of Osborn, where everything gets better).
The square in northern phoenix you speak of - Not somewhere I would feel comfortable investing either.
Homeowner · Phoenix, AZ · Member since 2011 · 14 posts · 6 votes
12y
@Scott E. That list seems pretty reasonable. I've been looking around downtown Chandler. You've left that off your list, is that due to you not knowing the area, or is something around there causing you to not be interested?
Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
12y
@Geoff V. I would consider Chandler, but it's off my list simply just due to me not knowing the area very well. I actually grew up in South Chandler(over a decade ago) and at the time downtown Chandler was an area to avoid. It very well may have changed though, and if so then it's a part of town worthwhile following.
Rental Property Investor · South FL · Member since 2014 · 92 posts · 16 votes
12y
Hello and congratz
I'm a newbie so basic ?
How did you calculate estimated annual income ?
Are you including labor costs for maintenance and supplies ? Thanks
Rental Property Investor · South FL · Member since 2014 · 92 posts · 16 votes
12y
Hello and congratz Anthony G.
I'm a newbie so basic ?
How did you calculate estimated annual income ?
Are you including labor costs for maintenance and supplies ? Thanks