All Forum Posts by: Patrick O'Sullivan

@Thai Foo

There isn't a map that I'm aware of but there are companies that rate areas based on location. One being Pierce-Eislen. If you're familiar with areas in Phoenix, I'd estimate 16th St and McDowell C class area, 16th St and Indian School B class and 16th St and Camelback A class. For building class, no amenities, 1980's and older would generally be C class property.

@Serge S.

Did that 32 unit happen to be in Florence by chance?

@Eleanor V.

If I were you, I'd take my overall market value of the homes less selling costs and use that figure to purchase a 4-plex you find on the market. You can look at it from many perspectives, including CAP rate, GRM, overall wealth accumulation, etc and see if that is something you'd rather have.

I'm in the middle of doing that for client right now, selling 3 homes in El Mirage and 3 in Laveen and he's looking to exchange the money into a multifamily property.

J. Martin,

I don't do anything in the Tucson area and am not familiar with it. Phoenix keeps me busy as it is. I recommend you find a CCIM that works down there. That really goes for any market an investor is looking in. We are trained to look at property from the investment perspective.

@Johnson H.

Overall vacancy rates have improved year over year. Rents have been ticking upwards as well, even on the $500/unit C class units. I see no deposit more common on the C class properties but some owners give tenants items like a free TV's or a gift card to Walmart to entice them in. The overall market is below 7% now, so in looking strictly at C class, it's going to be higher, likely in the 8-10% range.

@J. Martin

One example for you, I have a listing in escrow at $160,000. It's a 4-plex, rents are $2,000/mo. No deferred maintenance, C building in a C area. That's a 6.67 GRM. Cap rate in the 9% range.

Another example for you, a 4-plex in a great part of Phoenix, C building (recently renovated) in a B area sold for $280,000, rents were $2,700/mo cash, so 8.64 GRM. Cap rate I'd estimate in the 7% range.

These are turnkey options. You can do better if you look for distressed properties where you can add value like you did in your above example.

@Johnson H.

There are still some seller's out there reaching for the moon. I've seen it range as low as 6.5% for a recently well renovated and stabilized building to 7.5% on a building that would be stabilized but not recently renovated. On occasion you can do better, but those get snapped up quickly.

It's the early stages of buyer's market here, so I believe there is going more opportunities out there.

You can get better CAP rates in other markets, but there is also a reason why for that, whether it's population growth (or lack of), economy, general desire to live there, etc.

@J. Martin

I do come across a higher percentage of 5+ MF deals offering or willing to take seller financing. You will pay more for the property going the seller financing route than cashing out the seller through conventional financing or paying cash. That's the way it is in our market today. A dollar today is worth more than a dollar tomorrow. Seller financing deals are typically 25%-40% down (I've closed a lot of these) so unless there is some other reason why a buyer can't get a conventional loan, I recommend exploring a conventional loan because then you have some leverage on the price.

There are no second mortgages in our market, so whether you go the seller financing route or conventional loan (I have a great lender I work with) you won't be able to get a loan on the part the seller won't finance. A frequent saying I've repeated many times to investors... in order to invest in real estate, you have to INVEST.

I do run into those on occassion. @Eleanor V. send me a connection request and I'll get you more information.

I am a bit biased being in Arizona but there are good properties in good areas that may not get the cap rates in other markets, but people like to live here and are coming to Arizona. Even with our recent increase in pricing, there are good homes and multifamily properties that reach the market and even others that never do. Many of the bigger players have left town so demand is down and is now considered a buyer's market for the most part. You just have to know what you want, be prepared to jump and jump quickly.