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Hi everyone. I am a new investor and I've been looking at a variety of SFR and multi-family properties as I practice analyzing deals. Wanted to send this one out to see what other people think. Since I'm new it always feels like I am missing some big number or forgetting to include some important piece. I was hoping for some input from some seasoned investors. I included the link to property on realtor.com and zillow.com. Thanks all... looking forward to hearing what others think of the deal and what variables I may have missed.
Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes
8y
@matthew kimball If I were a new investor I wouldn't want 46 units in a C class neighborhood. Are they currently professionally managed by a local company? If so, I'd love to have a solid relationship with them as they will make the deal work for you. What are the unit sizes and what are they currently renting for?
My family has been investing in MV for 30 years, right in that area. Everyone used to avoid Stanford Drive because that's where the shootings occurred, but that was 20 years ago. We used to own a 21 unit right on the other side on N 21st, but sold a few years ago. I have friends that own properties right next door on Stanford, so I think some savvy investor will buy, but having the right property management in place is crucial for this area.
Yeah, they are working class units, but necessary for some of the hard working people of Skagit Valley. We still own all our multifamily on S. 20th and it's great. I think the area is turning, and now might be the time to get in. Skagit is the last influenced area along I-5 and people are noticing, and this past year has seen substantial growth. Our rents have steadily increased and we never have a vacancy in the past couple years.
The numbers look solid, but I would expect a little more expenses and more vacancies. I think it could make money for you, but would be a lot of work. Find out about property management in place.
Irvine, CA · Member since 2016 · 545 posts · 614 votes
8y
@Matthew Kimball You're missing a great deal of numbers in your analysis because you're using a template designed for small deals. When you're trying to evaluate a true Multifamily property, you'll need to use an IRR template to capture a lot of cost that aren't going to show-up in the template you used. It's possible to use this template if you were a seasoned investor and new which cost to lump into certain categories in this simple template, however based on the low expense numbers I know that's not what happened.
I can't help by evaluating this deal because I can't tell what's in your numbers, and you're missing a great deal of information needed to evaluate this deal.
Investor · USA · Member since 2015 · 325 posts · 447 votes
8y
@Matthew Kimball, I looked at this place yesterday. On paper I think it looks really attractive with a good CAP rate. I know that area really well for MF and don't think it is a good area. It is surrounded by a bunch of other apartment complexes.
**I could be jaded because I own an apartment up there and have had some terrible tenants
Investor · Lake Stevens, WA · Member since 2016 · 36 posts · 19 votes
8y
@Ray Johnson Thank you for your comment. Could you recommend a place to use an IRR template?
@Kai Van Leuven Thanks for the info. It certainly is an interesting deal. I used to work downtown Mount Vernon as well as in Burlington and there are certainly some less desirable areas. Overall how have you liked investing in Skagit County vs Snohomish County?
Investor · USA · Member since 2015 · 325 posts · 447 votes
8y
I really like Snohomish County along I-5 but so does every other investor... It is a really competitive time. Skagit County is really pleasant to work with as opposed to Snohomish County for permitting. The jobs are higher paying in Snohomish Co so I feel like there is a larger tenant pool to go off of. I always felt like if I could buy a “one off” apartment complex in Skagit and make it nice than it would be a good fit. There are really trade offs to both. If I were going to develope I would do Skagit. If it is just turning a small house than I would stay in Snohomish County. It also has to do with where I live and travel time.
Investor · Lake Stevens, WA · Member since 2016 · 36 posts · 19 votes
8y
Thanks @Kai Van Leuven. Really appreciate the feedback. I eventually want to get into developing new construction, but I have a bit of work to do before getting to that stage. I come from an Architecture background so I need to learn some of the other areas such as marketing, finance and working the system.
Investor · Lake Stevens, WA · Member since 2016 · 36 posts · 19 votes
8y
For those that have lots of experience analyzing properties, what are some of the biggest positives or negatives that jump out at you when looking at this property? Is there something that you REALLY like? Is there something you see that is a major red flag or instant turn off? Thanks.
Rental Property Investor · Everett, WA · Member since 2013 · 389 posts · 222 votes
8y
@Matthew Kimball the only thing I like about that place is the number of units. I don't like the location at all and as soon as I saw it hit the MLS I ignored it for that fact. Rents are too low to justify repairs and tenant pool is bad. Mix those with trying to fill 46 units and I say no thanks
Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes
8y
@matthew kimball If I were a new investor I wouldn't want 46 units in a C class neighborhood. Are they currently professionally managed by a local company? If so, I'd love to have a solid relationship with them as they will make the deal work for you. What are the unit sizes and what are they currently renting for?
My family has been investing in MV for 30 years, right in that area. Everyone used to avoid Stanford Drive because that's where the shootings occurred, but that was 20 years ago. We used to own a 21 unit right on the other side on N 21st, but sold a few years ago. I have friends that own properties right next door on Stanford, so I think some savvy investor will buy, but having the right property management in place is crucial for this area.
Yeah, they are working class units, but necessary for some of the hard working people of Skagit Valley. We still own all our multifamily on S. 20th and it's great. I think the area is turning, and now might be the time to get in. Skagit is the last influenced area along I-5 and people are noticing, and this past year has seen substantial growth. Our rents have steadily increased and we never have a vacancy in the past couple years.
The numbers look solid, but I would expect a little more expenses and more vacancies. I think it could make money for you, but would be a lot of work. Find out about property management in place.
Investor · Lake Stevens, WA · Member since 2016 · 36 posts · 19 votes
8y
Thanks everyone for all the great feedback. Every day and every opportunity is certainly a learning experience.
@Julie Marquez Where do you go to see the class of a neighborhood? That would be of great help. That area does have lots of housing so there would be tons of other properties competing for tenants as well as lots that would be priced well below the rates for a rehabbed property.
Here's an article about neighborhood classification.
The inventory in the area is low. There is nothing on the market. I have a 3/1.5 in a four plex that is just going to be cleaned up and kept with it's minimal, low grade finishes, and we will probably get $1490 in rent.