Apartment Investor » Investing in multifamily

From High Returns to Moving Neighbors to a Lack of Properties.

Farlon — Sun, 29 Nov 2009 17:36:39 +0000

The Phoenix real estate market seems, to many, to be a bargain basement store where the owners of the store have no sense or are giving things away. It’s not. And, that is what cover in the article, 15% Return Cash on Cash On Phoenix Real Estate. High returns are possible, but not with little or no input from the investors. It is as it always was, the more astute investors get the better deals, which most educators don’t teach you.

The article, The Greater Phoenix Population Is Moving, Most Of It Down The Street, To The Home Next Door. covers how the population of Greater Phoenix is moving but simple within the same neighborhood from one house which is being sold short or going into foreclosure to another often one purchased by an investor.

There has always been some interest from people who want to combine the need for shelter and investment with purchasing a fourplex. In the article, Where Are The Triplexes and Fourplexes More Suitable For Owner Occupants in Phoenix, I gripe a little bit and explain whey the choices for owner occupants are so limited.

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A Review of Several Phoenix Real Estate Investment Related Articles

Farlon — Fri, 02 Oct 2009 23:20:58 +0000

Some investment related articles we did at PhoenixMarketTrends.com

Case Study: A Central Phoenix Condo From Lender Owned To Long Term Investment:

This is a case study of a condo purchased by an out of town investor. It was a lender owned property taken from a plain dirty place to a wonderful inviting home.

How To Search For Income Multifamily Properties, Duplex, Triplex, Fourplex, In Greater Phoenix.

There are several ways to search for multifamily properties, here and at Phoenix Market Trends and we review them here.

Being An Active Investor Is The Way To Passive Income

I like this post because I believe you have to be responsible for you own assets and that includes real estate, though your involvement may be limited, but it needs to be there.

Real Estate Investment Strategies: Opportunities For High Long Term Returns With Multifamily

Multifamily is now in a many year low. You can find properties priced at the same levels at the 1980′s. That’s just extraordinary and there is a clear reason for it. Just the same, there are very good reasons why well purchased multifamily properties will do well in the future, maybe even the near future.

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Tough Times for Multifamily Income Property Owners.

Farlon — Tue, 14 Jul 2009 23:20:59 +0000

It’s that cycle of the market where most multifamily property owners are having to adjust their modus operandi: even well cared for and superbly managed properties are seeing increased vacancy and pressures on rents. This cycle seems to be of great girth, depth and resonance.

It’s a tough one, one that has and will continue to affect may owners. It’s especially difficult for owners who debt prevents them from being competitive with owners who are able to reduce rents to stay competitive and still cash flow.

So what’s going on.

This is a perfect storm, a beauty from the distance but fierce when you’re in it.

1. Depressionary pressures: prices for many goods are down, but so are wages and unemployment. Lower demand has forced many retailers to lower prices, cars, houses and many durable goods are down as well with rental rates right behind.

2. Consolidation: many people are consolidating living quarters reducing the need and increasing supply.

3. Vacancy: is also up because the buoyant housing market where prices have decreased a great deal making the rent vs. buy decision easier for the tenant. The government is providing massive incentives in cash and low interest rates to reduce housing inventory, but at the same time hurting landlords.

4. Competition: is up from other owners and from single family homes and condos. Multifamily owners not only have to compete against each other, but veryattractively priced single family homes.

What can you do.

This is not the time to cut back on maintenance, advertising and property management: quite the opposite. Owners need to be scrupulous with their resources and activities, but not to the detriment of the properties.

To compete in the is market you need to be diligent with having the units be clean, well cared, for, maintenance free and well advertised.

1. Adjust rents, even for existing tenants to keep them in place. It’s much less expensive to keep existing tenants then to to cope with vacancy, repairs and advertising for a new tenant.

2. Paint is an easy and cheap way to freshen up the interior and exterior. Often some strategically painted walls on the interior with interesting shades will make all the difference with out having to paint the entire interior.

3. Increase the competence and quality of your advertising. Make sure potential residents know about your property and get as much information as possible.

4. Be a little bit more flexible with credit. Many prospective tenants in the current market are the same people who lost their home to foreclosure or a short sale. These actions do not necessarily make them bad tenants.

Don’t skip on processing and due diligence. Sometimes it easy to bend your qualifications too much just to get a body in the doors. I’ll tell you from experience that tenants accepted out of desperation don’t work out and often end up costing much more then if you would have waited.

It’s a very difficult market now, one not seem in many decades. On the one hand there is a tremendous occasion to buy low priced distressed properties that will certainly do well. On the other hand current owners and new owners are all in the same difficult rental market. It’s people that take on adversity as a challange in personal life or business that get past it with strength, often in a better position then before.

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Research Crime Statistics Around The Potential Phoenix Real Estate Investment.

Farlon — Sun, 12 Jul 2009 23:01:27 +0000

One of the most frequently asked questions by investors is about any area is about crime. We, as agents, cannot give out our opinions about crime or crime rates, but we can show you how you can easily find out.

Crime statistics, while an imperfect measurement at best, nevertheless provide some indication of the level of criminal activity in an area.

A visit or phone call to other law enforcement agencies may be required and is one of the best ways to get detailed information.

The list of links below will provide you with many answers to your questions about the area, city and state crime statistics. Overall Greater Phoenix has a crime rate below that of other major cities and is below the national average, but the question of weather an area is safe should bethoroughly investigated to your personal measures of safety and comfort.

While crime is important it’s only one consideration amongst a multitude of measures to consider: jobs, demographics, schools, stores, local culture are amongst the few. All these will affect what types of clients you will attract.

Another good way, besides speaking with the neighborhood Police is to be in the neighborhood at different times of the day and night and observe what is happening. Talk to other residents and get their opinions.

Incoming search terms:

crime rate in greater phoenix areas
greater phoenix crime rate stats
investing in phoenix apartments
crime statistics in the greater phoenix az area

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Investing In Small Multifamily Cannot Be Done Well Long Distance Unless…

Farlon — Sat, 09 May 2009 01:24:03 +0000

If you’re thinking or buying a duplex, triplex or fourplex in Greater Phoenix and you are out of state and you want to manage it long distance: stop now and forget about it, because your chances of success are very low.

It’s different with a single family home, but even this you need someone to run your business if you are not here.

A single family home investment is a business but a multifamily is more so. With multifamily you get a better cash flow but in return you do more management. You cannot give up the management to lower cost. This is like trying to let your retail store run itself.

Many of the small multifamily properties out there being sold as REOs are that way because out of state buyers came in to buy the property, milk it and then push it off to the next buyer. That seems to be the modus operandi of many investors, even ones that are local.

That is why you rarely see prime small multifamily properties: they have been neglected with deferred maintenance and a build up of issues from bad management.

There is no reason for this sort of behavior: there is a market for buyers who want well run premium properties and for tenants who will pay a premium to live in a well cared for small multifamily property. Not everyone wants to live in a rat maze.

If I sound a bid irritate, I’m: I am disappointed. These properties, the tenants and neighborhoods deserve better. These can be very lucrative and good properties to own and you can have prime tenants in them that will care and respect your property and your business.

It’s not going to happen if you are not here to run it. it’s not going to happen if you pick a management company for their low price. If you are not willing to run the business then hire really good people who will put in the effort to manage your business for you and pay them well.

The effort that it takes to turn around a mismanaged multifamily property is extraordinary: extraordinary in money, time, aggravation, but in reward, as well, if done right.

I have seen so many properties out there over the years that just make me sick. I like multifamily, especially small multifamily because it can be an amazing path of financial stability and possibly financial freedom especially in this once in a lifetime opportunity market as we have now to buy properties in very good locations.

Rarely does a property come on the market that is a ready to run business. Some of the well run properties will not be sold while the bad stuff seems to float on the open market. This time savvy investor can truly pick up properties, put some effort and money into them and do really well: I mean really well: I’m talking about positive after all expenses cash flows of $1,000.00 on a fourplex for $120,000.

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Where Are Your Tenants? Is This Where Your Property Is?

Farlon — Mon, 27 Apr 2009 23:40:24 +0000

Investing in real estate is a business and as with any business you would carefully do research on where you customers are and how to reach them. It’s no different in real estate.

Certain parts of the valley tend to be better for investment then others. No matter how inexpensive some property may be if there is no rental market it’s not a good investment period. You can hope to leave that property vacant and maybe it will go up in price but that is not a sound investment strategy, though, many people did that.

So where are the renters? They are where most people want to live: near jobs, good transportation, schools, shopping and some entertainment: these are popular places where homes don’t sit vacant, where they don’t deteriorate nor are decimated by un-use (home that just sit around, not used tend to deteriorate).

Where to invest? This is a more difficult question. Rental rates don’t increase proportionately to prices. A 1,500sf home in Avaondale can lease for $1,000 and cost $125,000 but a $350,000 Central Phoenix will only lease for $1,800 on average.

There is more to consider, of course. What are you going for, appreciation, cash flow or a combination. What ever I say now is subject to change based on market conditions.

Homes in Avondale, parts of Goodyear, Litchefield Park, Surprise are well priced, still and the rental markets are fairly good. These are areas where you can purchase income homes and rent then out for near a 1% per month return in gross rents: $100,000 leased for $1,000 per month is 1%. That’s a good goal to have.

You won’t get this in Central Phoenix but it does not mean it’s not a good investment. We’ll selected properties will provide a good return for many other reason then simple rent cash flow: these could be the reuse of land for better purposes, an increasing population or even a changing population.

If you buy a home for $50,000 in rural Phoenix, it can be large, newer and fairly nice. There are places like Buckeye or Queen Creek or Arizona City where inexpensive homes are abound. There is a reason they are this low in price. They could be good purchases if you live there, but tread carefully if you’re investing for rentals in those areas

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Duplexes, Triplexes, Four-plexes: An Increasingly Attractive Investment Market.

Farlon — Tue, 03 Mar 2009 19:19:49 +0000

The tenant pool is increasing for the smaller apartment building properties. These buildings tend to be a bit older with less amenities and command a lower rent. With a lower incomes and some uncertainty vacancy rates for well marketed small multifamily properties are lower then larger complexes with offer lots of amenities but higher rent.

Priced for small multifamily properties are very attractive resulting in good returns, especially when partnered with good financing, these can make very good cash flow positive income properties that can be held for a long time.

Financing is a bit more difficult to obtain, usually 25%. Some buyers decide to purchase a fourplex as an owner occupied property- for that purpose. Loans for owner occupied multifamily properties can be purchased for as little as 3.5% down with an FHA loan and they will still cash flow.

Artur Ciesielski, CCIM 602.628.4349

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Investment Return On An Actual Multifamily Phoenix Property

Farlon — Sun, 22 Feb 2009 02:18:55 +0000

Here is an example of what can be purchased now. This is an actual purchase of a 4 plex in Phoenix. Since the example below is an REO property it’s all vacant – though not all REO’s are vacant, expect it. There are additional costs for a vacant property. We don’t take them into account below but you could add $8,000 to your cash flow lost due 3 months of all vacant units in the first year, though it does not have to be that way.

$160,000 purchase price REO or Short Sale

$5,000 in closing costs.

$8,000 in post closing repairs and preparation for leasing.

_______________

$173,000 purchase cost.

$32,000 loan 20% of $160,000

$45,000 out of pocket cost including initial investment and expenses.

$2,650 potential monthly income.

($265) vacancy

($530) operating expenses: taxes, insurance, water, maintenance.

($240) management: 8%

_______________

$1,615 NOI Net Operating Income or $19,380 annual NOI

($764.00) Debt: $128,000 @6% fully amortized over 30 years. $7,004 PI annual.

_______________

$10,212 Annual Cash Flow.

12.11 Cap Rate

22% Cash on Cash: This is a return on the $45,000 total out of pocket.

First Year Principal Reduction $2,200

That’s pretty good. There are a lot of properties for sale but not too many are good and provide such compelling numbers.

Artur Ciesielski, CCIM 602.628.4349 (also an investor and owner of multifamily properties since 1999)

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Phoenix Income Property Investment Overview

Farlon — Sat, 21 Feb 2009 15:24:50 +0000

If you do not visit Phoenix Market Trends you may not have seen that we have published a few articles that may be of interest to our readers here at Arizona Apartment Investor.

With a lot of lender owned and short sale multifamily properties selling we put together some steps to help lease them since most will be vacant or you’ll make them vacant before repositioning.

1. Filling A Vacant Income Property After The Purchase: How To Get The Income Flowing.

Property prices have dropped a lot for all property types. Although rents have dropped as well they are still at levels which allow both multi-family and single family income properties to cash flow. The article below reviews a good rental area where prices are very good as are the prospects.

2. Phoenix Area Real Estate Investments That Cash Flow

This is an interesting read for the longer term and in real estate, investing is longer term so it would behoove you to know where the populations are moving, how and why.

3. The Shifting Suburban Landscape And The Current Economic Crash

Bank owned properties are very attractive but not always. We reviewed the market to see at what discount they are selling in proportion to list price and normals sales.

4. What To Offer On A Phoenix Bank Owned Home?

Homes are affordable now an many are very inexpensive at around $40.00 and sometimes less per square foot. Often these are big homes with don’t make the best investments as rental income properties.

5. $40.00 Per Square Foot Newer Phoenix Valley Homes: The Affordable Big.

This is just starting. For about half a year now there were restrictions on how many loans an inventor could have and still buy properties. If you had 4 or more you were out of luck, having to resort to expensive financing with made the investment not work, but now that number has grown to 10. So investors can dive into this tremendous market filled with cash flow properties, good financing options and lots of potential for wealth building.

6. Financing Up To 10 Properties Is Available Again.

Artur Ciesielski, (Certified Commercial Investment Member) 602.628.4349

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