February 5, 2012

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

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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 

Filed Under: Investing in multifamily, Multifamily Market

Investment Return On An Actual Multifamily Phoenix Property

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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)

Filed Under: Distressed Properties, Investing in multifamily, Phoenix 4plexes

Phoenix Income Property Investment Overview

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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

Filed Under: From PMT, Investing in multifamily, Investment Financing, Management
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