High End Quadruplex cash flow

 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

1. 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. 

2. 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. 

3. 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. 

4. 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. 

5. No evictions at my buildings!  Wrong, sellers try to tell me they never ever ever have to evict.  I just don’t buy it. 

6. 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 

7. 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

Check out our unique real estate services and advantages

Geoff & Mia Nowlin

480-466-3737

www.5kflatfeelisting.com

nowlin.geoff@gmail.com

Name:

Email:

We respect your email privacy

Serving Maricopa & Pinal County Arizona

Does a Phoenix Quadruplex cash flow?

 

Does a Phoenix Quadruplex cash flow?

The fast answer is NO!  Cash Flow is defined as 

Gross Income

• Vacancy

• Expenses

= Net Operating Income

• Debt Service (your payment)

= +/- Cash Flow

We looked at low end Quads and could not cash flow any of them at all.  Looks like the Californians have totally converted our market to that of CA.  

My client was desirous of moving into 1 unit and renting the other 3.  Great idea.  A Buyer generally must stay in their Primary Residence (if they get a loan) for at least 6 months.  This client wants to buy a new Quad every 6 months until she has 20 Quads or 79 rentals.  Her plan then is to sell the 10 dogs of the portfolio and pay off the 10 good units.  Again, a great idea.  She would need to move twice per year but so what.  Maybe she leaves the furniture and rents those units as furnished.  Her theory is “what am I willing to do to be a millionaire”.  Love her attitude. 

We had lunch with Steve Oliver of Cardinal Financial.  They are a Mortgage Broker, Mortgage Bank and a Portfolio Lender.  He can get her into a Quad on an FHA 3.5% down and he can fix her credit as well.  The problem is, he can only do it once.  Then my client would need to get a traditional 80/20 loan.  

Steve Oliver

Cardinal Financial

Loan Officer

(602) 625-5995

steve.oliver@cardinalfinancial.com

My clients dream will not come to fruition in Phoenix.  Our only choice is to switch Cities.  More to come on that. 

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

Check out our unique real estate services and advantages

Geoff & Mia Nowlin

480-466-3737

www.5kflatfeelisting.com

nowlin.geoff@gmail.com

Name:

Email:

We respect your email privacy

Serving Maricopa & Pinal County Arizona

Why do old houses in Scottsdale fetch huge prices?

 Why do old houses in Scottsdale fetch huge prices?

I always wondered why people pay huge prices for old junk.  Old houses generally have low ceilings, inferior technology, choppy floor plans, etc.  Today, I am sitting an open house at 5831 E Charter Oak Rd. Scottsdale AZ 85254.  It’s a 1974 and it looks it.  2,580 sqft. 4/3/2.  That means 4 bedrooms, 3 bath, 2 car garage.  This is a pool house that needs a re-plaster.  

I believe there are a few factors relating to this ridiculous pricing.  1. The California exodus.  In CA, they often live in small and old houses.  When they come here, they can buy bigger, pocket some money and to them it’s a huge upgrade.  2. Hot Zip Code, every building in 85254 is getting a rehab, pushed over to build a mansion or otherwise upgraded.  And 3. Access to the best restaurants, shopping, downtown, airport, mountains, etc.  This is just a great location.  

It all comes down to location, location, location.  This particular home is under contract at $950,000.  I use a simple rule of thumb.  For every 500k financed, your payment is roughly $3,500 PITI.  Principle, Interest, Taxes and Insurance.  If this home were 100% financed, it would cost roughly $7,000/month.  Ouch.  That means the Buyer would need to earn $14,000/month (assumes 50% taxation) just to pay the house note.  Ouch, Ouch, Ouch.  

The Californians don’t finance 100%, they sell their property in Cali and come here to pay cash.  The interesting thing is that the Californians don’t seem to have any trouble selling their property for top dollar.   

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

Check out our unique real estate services and advantages

Geoff & Mia Nowlin

480-466-3737

www.5kflatfeelisting.com

nowlin.geoff@gmail.com

Name:

Email:

We respect your email privacy

Serving Maricopa & Pinal County Arizona

Are there any basement homes in Scottsdale?

 Expensive Basement House in Scottsdale

5436 E Sheena Drive, Scottsdale AZ 85254 is the hottest zip code in all of Phoenix.  Homes in this zip code are going for an astronomical amount.  This one is 4,300 sqft. 5/3.5/3 with a basement in a gated community.  Basement homes are super desirable in Phoenix.  95% of this Valley is electric. This home is in the 5% as it has gas.  

I am holding this one open and the neighbors tell me the owner’s dog died in the pool, so they removed the pool.  Unfortunately, they also removed a fast sale and some equity.  This home has been on the market for a month.  Very unusual for this zip code.  

Right now, appraisers are giving $11,000 for a pool.  But Buyer’s give more and jump on pool homes during the summer.  How much equity they gave away is uncertain?  At 1.3Mil ask price and 30 days on the market, might be a high price.  

There is a competitor selling at 1.2Mil with a pool, no basement and next to the busy road.  If I were offering on this house, I would offer 1.2Mil and use the pool as the excuse for the lower price.  The minimum pool will cost $50,000 anyway.  

The high sale right now is 1.150Mil or $323/sqft. If that holds for my house, the sale price should be near 1.4Mil.  This house at 1.1Mil is a bargain and should sell.  

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

Check out our unique real estate services and advantages

Geoff & Mia Nowlin

480-466-3737

www.5kflatfeelisting.com

nowlin.geoff@gmail.com

Name:

Email:

We respect your email privacy

Serving Maricopa & Pinal County Arizona