All Forum Posts by: Harsh R.

If you're located in North Tempe or Scottsdale and it's renovated, I've seen comps trade at well north of $170K a door. If you're in North Phoenix or Glendale, low $100K a door seems about right. 

I'm a fan of well put together real estate research reports and Zillow put this out a couple days ago, if anyone is interested - 

https://www.cnbc.com/2020/05/04/coronavirus-will-shrink-us-home-prices-by-2-3percent-nationally-zillow-forecasts-but-deeper-dive-could-be-in-store.html

@Chris Montgomery it's a good idea but I'm not sure if the risk quotient is significantly different between a workforce housing deal I could do myself vs. a deal an opportunity zone fund might participate in. 

@Stone Jin that's a fair point and it's something I have grappled with as well. There's some additional nuance here as it relates to pricing that is motivating the decision - however it is a point well made. Circling back on volatility, and why Phoenix offers a lower rate of return than say the Ohio markets you're in, do you believe a market like Phoenix will have less volatility and higher liquidity through COVID-19 vis-a-vis Ohio? 

@Dave Foster I agree although the 30% or so is just on the gain - albeit painful. If the real estate markets correct by 30%, assuming a 70% LTV, that wipes out 100% of the equity.

@Stone Jin On your lower ROI, one way I would think about it is that this is a premium (or lack thereof) based on the market's perceived reduced risk of your property based on a more favorable geography than say the Midwest - whether that's warranted or not in this climate is a separate question. Same reason why someone - happily - pays $400K a door in Santa Monica, CA. Appreciate your insights.

@Soh Tanaka appreciate the thoughts. Given that real estate capital markets typically move slower, I don't think the 7/15 deadline will materially affect pricing. 

@Stone Jin thanks for the insight. To answer your question, my going-in cap. rate will be lower than what my current cap. rate is on the downleg property. Of course, I've held the downleg property for a while and increased rents, so not a fair comparison. My going-in cap. rate will however be higher than what the buyer on my downleg property will yield at the purchase price, which I guess sheds insight into why I'm selling - I want to protect my appreciation and the sale price is motivating. I also believe there's some some upside in rents although that's based mostly on data from January-early March 2020. 

Which markets do you focus on in the Midwest? Phoenix had strong demographic and employment fundamentals coming into this pandemic. What made you look elsewhere?

Hi Everyone,

I've been a quiet observer on these threads for the most part, but given these precarious times, thought I would get some community feedback. 

I own a 4-plex in South Scottsdale which is under contract for a sale. Although not the best time to be disposing a property, i) I have conviction in the buyer's ability to perform, and ii) believe the sale price is a defensible exit value given the current climate. My question is how I should be looking at a possible exchange. I've tied up a 4-plex and a 3-plex in the East Valley (PM me if you want a more exact location - this city does not have a ton of inventory currently) for approximately $100K a door. All units for both properties are 2BD/1BA and my underwriting/required returns will pencil if I hit $800/mo conservatively for rents. To be clear, these are workforce housing properties. Not new and shiny but solid builds nonetheless. 

I consider myself a long-term owner and have sufficient reserves to withstand collection issues/turnover. Curious to get the broader community's thoughts on whether it makes sense to 1031 in a time like this (assuming the deal pencils conservatively given what I know about the market now), or if I should just take the capital gains tax hit as a California resident. 

Best,
Harsh

Hi Guys,

I'm in the process of finding some contractors for a remodeling project for a small multifamily (2-4 units) in the Phoenix metro area. Would love to hear if you guys have any recommendations!

Thank you!

Hi Albert,

Welcome to BP! Fellow S'porean here based in LA :) Let me know if you're in town ever here.

Cheers

From an underwriting standpoint, you'd have to factor in higher vacancy factors, lower appreciation, higher annual CapEx. From a risk-return standpoint, I'm not so certain about it.

Full disclosure - I've never visited any of these neighborhoods. If someone said the same thing about Inglewood or Hawthorne or Mar Vista 15 years ago, they'd be banging their head on the wall right now lol.