Hello new investor here, my husband and I are interested in purchasing a smallish multi-family property (5-7 units) in the Phoenix area. Our goal is to BRRRR our first property and recover most if not all the capital invested (swinging for the fences, I know). The problem I'm running into is I haven't seen anything on MLS that would come close to what we would need to offer in order to pull out our initial investment. I've seen a couple off market deals that are slightly more favorable. The going price seems to sit around 200-250k/unit (regardless of NOI), which given the limits of the rental market I am struggling to make the numbers work. Has anyone had success BRRRRing in this market? How did you locate deals, are there submarkets that behave more favorably to this strategy? Is it even worth contacting an owner if you're offering 75% of asking?
Real Estate Agent · Phoenix, AZ · Member since 2012 · 640 posts · 457 votes
5y
@Jessica Jordan you'd need to buy something off market directly from the seller. It's not worth yours or your agents time to offer 75% of list price for properties on the MLS...most will be sold at or above list price pretty quickly.
Rental Property Investor · Gilbert, AZ · Member since 2020 · 210 posts · 163 votes
5y
@Jessica Jordan the Phoenix market is very competitive right now with multifamily. I'm looking in the east valley (Mesa), and you can find duplexes for sub-400, and quads for around 600, but the numbers aren't very good at those prices. If you have an agent, then you can have them call the listing agent/owner and say 'i have a client that's interested in offering at XX price, is it worth us submitting a formal offer' and see what they say. If they say yes, then you may at least get a counter back from them. If they say no, then you're likely not going to close the gap to get to 75%. Getting properties at 75% of list price isn't very common in today's market especially on the MLS, you'd have better luck finding those types of deals off market going directly to sellers.
@Jessica Jordan the Phoenix market is very competitive right now with multifamily. I'm looking in the east valley (Mesa), and you can find duplexes for sub-400, and quads for around 600, but the numbers aren't very good at those prices. If you have an agent, then you can have them call the listing agent/owner and say 'i have a client that's interested in offering at XX price, is it worth us submitting a formal offer' and see what they say. If they say yes, then you may at least get a counter back from them. If they say no, then you're likely not going to close the gap to get to 75%. Getting properties at 75% of list price isn't very common in today's market especially on the MLS, you'd have better luck finding those types of deals off market going directly to sellers.
Thanks for the tip, I thought it might be a bit unrealistic, but it’s good to hear a locals take on it. Mesa seems like a more reasonable market. An article came out yesterday saying Facebook is planning it’s new data center there.
Rental Property Investor · Gilbert, AZ · Member since 2020 · 210 posts · 163 votes
5y
@Jessica Jordan just to clarify, when I say Phoenix I mean the whole Phoenix metro area including Mesa. If you are OK with taking on lower income properties in rougher areas, then there are likely some BRRRR value add opportunities in parts of central Phoenix. That model doesn't fit with my investment strategy so I can't give you much advice, I just know property is less expensive there. However, with lower prices often comes more headaches so keep that in mind
Real Estate Agent · Phoenix, AZ · Member since 2012 · 640 posts · 457 votes
5y
@Jessica Jordan you'd need to buy something off market directly from the seller. It's not worth yours or your agents time to offer 75% of list price for properties on the MLS...most will be sold at or above list price pretty quickly.