Arizona 15 unit Deal - 1st Out of State

[Zach Richtor]

Hello BP,

I have spent hours combing through old posts learning the world of commercial real estate investing.

It has always been my dream to buy a small to mid size apt complex.

However, I live in Seattle, and I quickly realized I was priced out of the market. I also determined the CAP Rates and Cash on Cash return was minimal- 5% or less on most deals. And I would be extremely leveraged to get into such expensive buildings. Looking at those factors, I felt more comfortable leaving my cash in the stock market- growing it slowly until i found a deal that would cash flow better.

I finally decided to look out of state. I became frustrated with the entire Seattle market. I determined Arizona was the best place to buy. Low property tax rate- friendly landlord laws- and steady job and population growth around the major cities. I contacted all the local multifamily brokers and told them what I was looking for.

I ran the numbers on 15 to 20 different properties. We made offers on 3 different deals over the course of a month. Finally one was accepted: a 16 unit low rise in North Tucson. Conservative calculations put the CAP rate at 8.5% with C on C of 19%. Much more appealing than the Seattle area!

Very excited about this big step- but also very nervous. Being out of state scares me.

I have a few questions I hope the BP community can help with:

• Any recommendations on Tucson Property Management Companies?
• Any contractors you recommend in the Tucson area? - Property will likely need a new roof
• Any other advice you would give to a first time out of state AZ investor?

Thanks for all the help. I enjoy reading the BP forum and plan to document the entire process to help the next investor avoid some of the mistakes I will undoubtedly make!