They might be used to these kind of fluctuations in California and New York but this is not common in Texas.

Her asking prices fluctuate between $88,000-210,000.

SF is a strong market for renting, rents are only going to increase IMHO (regardless of how property values fluctuate), and you live in a highly desirable area.

Seller is carrying back the rest at 5.75% (seems a bit high but no origination fees) on a 1 yr arm (he has one year left on his arm with the bank)...at which point the rate would fluctuate based on prime just like his commercial loan.

If not getting financing at higher desired LTV's 75% for buyers will be difficult.The banks or lender underwriting the loan will ask for more down with the occupancy percentages fluctuating outside of acceptable margins over time.If you sold the 40 units would you 1031 into something else??

.*1031 exchange- the ability to continuously upgrade and reinvest your property without paying property tax*cash flow- real estate produces stable dividends that you can directly control*control- I can control real estate I can't stocks, bonds etc*higher returns- class a properties produce us between 15-25% retune on our down payment Cons*price fluctuation*repair costs- dealing with handyman, currently looking for a new handyman as the one I thought I found in charleston is charging $200 an hour*dealing with tenants- they are your customers so it's important to Toe the line

I don't see anything changing the desirability anytime soon, so I'd say you'll see similar levels of affordability (with fluctuations of course) for a very long time.

Every state is different on what labor and material will run you, you are from PA and he is from Maryland ( he may have investments in PA and know the market) but i wouldn't go buying a property based on that price fluctuation. go to a local reia meeting and talk to other investors in your area that may be willing to sit with you and give you an idea, take a contractor out to lunch and pick his brain for a little bit or purchase an estimating program that has a multiplier in in for whatever state you want to do an estimate for.

Or do you mean to say if the selling price fluctuated that much that is sells only for 50%?

Typically if a full appraisal cost $400 a desk review may only cost you $150 but since it's a multifamily and like you said there are no comps, it may be higher to include the fact that appraisal fees fluctuate from area to area.