Should I invest in a 4-plex in Arizona?

Question

I'm starting some research on buying a 4-plex community in the Phoenix or Scottsdale area. Has anyone on this forum bought a similar property out here? Is it better to buy a 4-plex, or would just buying out individual units in a condo communities around the valley be a better investment? Like I said, I'm in the beginning stages of this train, I'm just curious as to other investor's experiences in this market. I know that if I go out of state to invest it's cheaper, but I'd like to start local if possible :) Thank you in advance for your input!

Dan Voykin · Answer

Hi Aria,

I own a 4-plex and I self manage. The biggest plus on a a 4-plex in my opinion is that even when one is vacant, you have 3 other tenants paying your mtg. bills etc. With an SFR, when it is vacant, YOU get to pay for everything. I have never come out of pocket in the 3 years I have owned my units. I screen the tenants with a website called landlordstation.com and this is paid for by them (non-refundable) if they are interested in renting.  If you are firm but fair, the tenants respect you. I am in the Sunnyslope area and it is C-D rentals, but there is a huge need in that area and I am rarely vacant. PM me if you'd like to pick my brain, good luck.

Nichole Stohler · Answer

@Aria Jackson,  property management experience is a great foundation!  My husband worked for a large property management firm handling large 400-600 unit complexes.   Operational experience like this will help you maximize profit and if you do you use a property management firm for non-local properties you'll be better equipped to negotiate the contract.    Sounds like the next step for you is analyzing properties to see if the numbers work and if it's a good fit?

Matthew Rogers · Answer

@Aria Jackson Since you have property management experience it sounds like you're planning to manage everything yourself. In that situation if you're goal is to build a large multi-family portfolio you may want to expand your market to the east valley. Mesa, in my opinion would be the place to look if you're okay with managing yourself. You'll find higher cap rates at lower prices than Scottsdale and better tenants than Phoenix! So you can have you cake and eat it too..

Nichole Stohler · Answer

@Aria Jackson,   we started with a 4-plex in Phoenix because our goals were to grow into larger multi-family property.   A 4-plex gave us the opportunity to gain some experience (some good... some bad) and develop our systems for managing the property on a smaller scale.   I'm writing a step by step process over in the "starting out" forum and later this week will be posting an analysis of a case study property on the things to look for, what the numbers say, etc.

https://www.biggerpockets.com/forums/12/topics/455...

You mention looking to buy something locally -- just curious why?

Dalton Kiley · Answer

It depends on your goals with REI - do you want all your rental units in one area (four-plex), or want to spread out within PHX/Scottsdale (individual)?  There are other questions you'd have to ask yourself in terms of your REI goals.  As these guys have pointed out, one of the biggest areas you'd need to know before buying any condominiums are the HOA's and it rules for renting, maintenance, etc.  It sounds like this is your first time investing real estate?

Aria Jackson · Answer

Thanks so much for the information and writing that article Nichole! I was thinking to start locally so that if there are problems I have the ability to see my property. After research, the other area I was thinking is Midwest. Can't wait to read your post!

Aria Jackson · Answer

Correct Dalton,

This will be my first time investing in real estate. I have looked at individual HOA fees, city HOA fees (Biltmore), etc. I'm trying to find a place that won't have much in terms of repairs, but I am still going to budget and plan for that as I know if can get expensive. It seems as if it would be nice to just own a 4-plex and be able to bypass the worry for HOA fees, etc. I'm just not sure of other's experiences in this market.

Aria Jackson · Answer

I was a property manager for 2 years so I have experience in that, just not the investment end of things      :)

Should I invest in a 4-plex in Arizona?

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