Phoenix Area Multi-family Investors

[Anthony Gayden]

I'm just looking for opinions from other Phoenix Area Multi-family Investors. As of right now, I am still relatively new at this and would love to hear opinions of others.

How does the market look right now? I keep my eyes open and a lot of it looks overpriced. I am even having difficulty finding deals as good as the property I bought in North Phoenix in March.

What type of multi-family do you invest? 2-4 unit? 5-12 unit? 100+ unit? Somewhere in between? Are you noticing a lack of quality inventory? 

How are the vacancy rates so far for the units that you do hold? Have you been able to increase rents recently?

What areas do you believe have the most potential? What areas would you avoid? (I already have a few) 

[Steve Olafson]

Hello @Anthony Gayden 

Lots of questions.  :)

I think that it is obvious that the market is overpriced.  I bought a 28 and 29 unit building earlier this year and have continued to look at properties up to 200 units.  The larger ones are being bought by groups that are much more adventurous than I am.  I can't even find a fixer that fits my needs right now. 

I have sold off 90 units recently and will continue to sell more as long as this craziness persists.

The way I see it is that cap rates are already super low.  Agents are trying to sell on proforma's that I cannot buy into at this time.

I do feel that our economy is still in the early stages of recovery and that there is room to grow.  But, I think that some of the euphoria will die down in a couple of years.  Some deals may show back up at that time.

Don't know if my projections are correct but that is what I am going by.

As far as locations go, it is damn near impossible to try to list it out here.  I won't buy anything west of 17 even though there are decent areas spotted around.  I also won't buy in Tempe based on the unrealistic numbers that are tossed around for that city.  I stay away from Sunnyslope and the square mile in north Phoenix.  As far as the rest goes, it is block by block.

I am about 95% occupied right now.  It is possible to be higher but renovations are being done to some of the vacants.  We are increasing rents on the renovated units.  I don't have a good feel for exactly where the market rents have gone on stabilized units in the last few months but they have gone up significantly in the past year.  I would say greater than 5% in the class A areas that I operate in.