Deal or no deal Phoenix AZ

9 Replies

Im looking to make my first deal, so im asking for advice.

"ONE large 3 bed/2 bath and THREE 2 bed/2 bath units. Each has separate garage with washer/dryer hookups. New roof in 2010 and 18 inch tile flooring in all four units. Walking distance to elementary and middle schools. Located in Glendale,AZ. This property projected total rents of $31,380 less 5% vacancy of $1,569 per year so $29,811 adjusted gross income. Then after projected expenses of $16,530, the amount a projected investor income is $14,438 per year based on pro forma. This is a 6.3 Cap Rate."

I know from doing some research that the water numbers that are listed below are incorrect and should be on average $240 a month which leads me to believe that some of the other #'s may be incorrect. I have verified the rents by looking on "redfin" and other for rent web pages.

Source of Fincl Data:Provided by Owner; Projected Proforma
Adjusted Gross Inc:$30,625.15
Totl Mnth Rntal Inc:$2,590
Other Income:$1,157
Operating Exp:$13,602
Net Operating Income:$14,438
Owner Association:Yes
% Vacancy Allowance:0.05
Annual Elec Exp:$0
Annual Gas Exp:$0
Annual Ins Exp:$1,600
Annual Land Lse Exp:$0
Annual Landscape Exp:$475
Annual Legal & Acctg:$0
Annual Maint Exp:$4,953
Annual Mgmt Exp:$499
Annual Other Expense:$0
Annual Ownr Asoc Fee:$3,108
Annual PAD Fee:$0
Annual Rplcmnt Rsrvs:$0
Annual Trash Exp:$0
Annual Wtr/Swr Exp:$1,450

@Chris Mcalister

  Did I miss the price somewhere your description?  Looking at the cap rate, perhaps around 280k? 

Rents seem low for such big units...how does this compare to market rents?

How does the school district rank?

I don't know Glendale very well. We have a 4-plea in West Phoenix and it's worked out very well for us. The return is nice, but it does take work to manage a 4-plex. I'd be more interested in the price per door. If the selling price is $280k, as guessed at above, that's $70k per door. That's a little on the high side for me around here, but again I don't know Glendale well.

the asking price is 230k, market for rent is $650 for the 2 bed appts, and around 850 for the 3 bed, the school district rank are average. Im not sure on the HOA's, my realtor said no HOA but in the Fincl Data

Annual Ownr Asoc Fee:$3,108

Originally posted by @Andrew LeBaron :

its not a great deal, your cash on cash return and cap rate are not phenomenal. If this is the same 4 plex that shows up on CL everyday for 4 months then I know where the owner's head is. 

Look for minimum 8 caps near Tempe or mesa. Vacancy rates are super low. 

Regards

this property was under contract, but has come back on the market. the listing agent stated that it needs a roof, so im guessing it didn't pass the inspection. I have been looking near Tempe and Mesa but havnt been able to find any good deals. If you know of any im all ears...lol. im eager to make my 1st deal.