Multi-families in Tempe/Mesa Area

[Andrea Tomlin]

Hi Everyone!

I'm new to Bigger Pockets, so I'm very excited to join the community! I want to get started in real estate investing by buying a duplex as my first place of residence. However, I've noticed that multifamily market in Tempe is quite expensive, and scarce at that. Originally, I wanted to stay in the Tempe area, but now I'm thinking about researching the Mesa and Chandler areas to find properties that are less expensive. I'm still pretty young and have around 5K saved up so far.  

For those with experience, how did you find your deal on your first multi family? Did you find it through researching online, a real estate agent, or by knowing a fellow investor?

[Ryan Swan]

Welcome @Andrea Tomlin! You're in the right place to both learn and also network with the people you'll need to help you. 

Real estate in Tempe is always in high demand, especially small multi-family. You'll find more MF properties available on the market if you expand your search to neighboring cities like Phoenix, Scottsdale, and Mesa, but the good properties in those cities are in just as much demand as Tempe. 

If you want to buy a 2-4 unit property, then you'll likely be using a low down FHA loan to get started. These are government insured loans that allow buyers to put as little as 3.5% down (plus fees and closing costs). You can run the math backwards to see how much you can roughly afford - $5,000 / 3.5% = ~$143,000. There are some condos around Tempe that would fit in that price range. Keep in mind that typical closings costs will run you about 1% of the purchase price, plus FHA has what's called a "funding fee" which is an additional 2.25% of the loan amount due at close of escrow. Those additional fees/closing costs "shrink" your buying power by reducing the money you have to put towards a down payment.

My honest best advice is to keep educating, AND keep saving! You'll have many more purchase options available as you grow your down payment and cash reserves.