Investment Return On An Actual Multifamily Phoenix Property

By sonoran • February 21st, 2009

Here is an example of what can be purchased now.  This is an actual purchase of a 4 plex in Phoenix.  Since the example below is an REO property it’s all vacant – though not all REO’s are vacant, expect it.  There are additional costs for a vacant property.  We don’t  take them into account below but you could add $8,000 to your cash flow lost due 3 months of all vacant units in the first year, though it does not have to be that way.

$160,000 purchase price REO or Short Sale

$5,000 in closing costs.

$8,000 in post closing repairs and preparation for leasing.

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$173,000 purchase cost.

$32,000 loan  20% of $160,000

$45,000 out of pocket cost including initial investment and expenses.

$2,650  potential monthly income.

($265)  vacancy

($530)  operating expenses: taxes, insurance, water, maintenance.

($240)  management: 8%

_______________

$1,615  NOI  Net Operating Income   or $19,380 annual NOI

($764.00) Debt: $128,000 @6% fully amortized over 30 years.  $7,004 PI annual.

_______________

$10,212 Annual Cash Flow.


12.11 Cap Rate

22% Cash on Cash: This is a return on the $45,000 total out of pocket.

First Year Principal Reduction $2,200

That’s pretty good.  There are a lot of properties for sale but not too many are good and provide such compelling numbers. 


Artur Ciesielski, CCIM 602.628.4349  (also an investor and owner of multifamily properties since 1999)

Comments(1) Distressed Properties, Investing in multifamily, Phoenix 4plexes

Comments

By CINDY on May 3rd, 2009 at 21:33

It was interesting. You seem very knowledgeable in your field.

 

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