All Forum Posts by: Josephine Wilson

@Account Closed PM'ed you!

@Daniel Trimble That is awesome - congrats!! Are you concerned at all about keeping it occupied with Covid and a lot of people being out of work or moving back in with family?

@Brian Ellwood Good points. I haven't looked at the macroeconomic data on Tucson. It's _my_ market and my skills (marketing, handyman, active management) are pointing me toward local investment. The plan was to make it work here. But agreed, that would be good info to have.

@Account Closed Thanks for this info. I like the idea of the tenants being students or university staff. I can market to that demographic. But as you note, there just may not be those opportunities on the MLS. My next closest area is midtown. Are there people who want to rent in a Level A in midtown?

I need to look into off-market, as you both note. Will do more research on that.

Newbie question here: I'm looking to buy a Class A triplex or quad within 10 minutes of my house and doing property management and maintenance myself. I live close to a large university. Of the 20 recently-sold small multis I've analyzed, nearly all have little to no cash flow and cap rates averaging 4.6%. (2048/2050 E 6th St, Tucson, AZ 85719 is one example.) Some even have substantial negative cash flow. Everything I'm reading says these cap rates are not favorable. So why are people buying these properties?

I'm thinking the buyers are A) hoping for appreciation and don't mind no cash flow, B) planning to increase NOI or hoping that market rents will rise, C) wealthy parents buying a place for Johnny/Susie to live for four years or D) house hacking. Can folks offer their insights into why buy properties with negative cash flow and low cap rates?

For anyone interested, here are my estimates for my example property: 2048/2050 E 6th St, 85719

Price: $245,500, two 1BR units, 1219 sq ft total

Rent: $1454

Maintenance: $205

P&I: $938

Taxes: $195

Cash flow: -$39

Cash on cash: -0.7%

Cap rate: 4.4%

Pretty much everything built before 1950 has lead in the first layer of paint. No big deal. Just don't go sanding the walls. In some states you have to disclose it to the tenants. Check your state/local laws. You can buy lead paint test vials at Home Depot, but you would need to have access to the lead paint layer. And yes, if it's in one, it's likely in all.