High End Quadruplex cash flow.
Guess what? High End Phoenix Quad’s don’t cash flow. Duh, no one should be surprised by that. This blog is a follow up to yesterdays. Sellers of quad’s are hilarious. They tell me baloney stories like
You can raise rents to 1 million per month. Nope, you can’t. There is a thing called COMPS. The job of the renter dictates what they can pay in rent. Every Seller thinks you can just magically increase the rent $500 per month. It is just not so. Try it for yourself. Then let me know how it worked.
They have 100% Occupancy. What, no way in hell that is true. Every time a tenant moves out, the landlord has to go in an repair/clean. This takes a moment and by obvious logic, it is impossible to have 100% occupancy.
If you put enough down it will cash flow. Ha. Duh. That is true but that would eat up all your cash and ruin your ROI. In my world, a property must cash flow near 100% financed or I am not interested.
Cap Rates don’t count in this market. Wrong. Capitalization Rate (the amount of money the property throws off per year) is always, always, always important. In my world, if it doesn’t throw off at least 7% to profit, I don’t want the building. If you are like me, you got into this business to make money not to lose money.
No evictions at my buildings! Wrong, sellers try to tell me they never ever ever have to evict. I just don’t buy it.
No repairs at my buildings! Really! All your tenants work at Home Depot and can fix everything without calling the Landlord. I don’t buy it. You would be smart to
No Reserves! Reserves are moneys set aside for the huge repairs. Like the roof, driveway, HVAC, etc. Smart investors hold back 5% of the rents in a separate account for these big purchases. Is it not true that the earth is consuming a piece of the roof every day? Sure it is and you had better plan ahead for it.
Summary, don’t fall for Sellers claims. Do you due diligence and crunch your number to the dollar. If you need help doing that, feel free to call. Would be happy to help.
If you need to buy or sell a home, see us at www.5kflatfeelisting.com. We look forward to hearing from you.
Buyers get: Sellers get:
FREE Home Inspection 5k Flat Fee Listing
FREE Termite Inspection FREE Home Inspection
FREE Home Warranty FREE Termite Inspection
Best,
Geoff Nowlin, Phoenix Realtor Brett Young, Cleveland Realtor
480-466-3737 (216) 703-5740
www.5kflatfeelisting.com by56083@gmail.com
nowlin.geoff@gmail.com
