Posted by Mark (SDCA) on September 20, 2010 at 12:25:07:
I can comment on Phoenix. Rents are under pressure.
Vacancies are UP.
I don’t know why- for sure- but I expect it has to do with a couple of factors 1) people doubling up, moving in with frends/relatives etc and 2) SB 1070 and the illegal alien crunch.
I would probably not be a buyer at any price in Phoenix at this point but if I did I would want to be able to break even at say, 50% occupancy.
I have seen many sellers of smallish apt building who had vacancies of 30-60% and had bought fairly recently. I did not see ANY way I could help them. My guess is that the properties get foreclosed or short saled. The financials made no sense any other way.
I still get stuff from brokers trying to sell 4-plexes and smaller apt buildings at 6, 7 caps. Some of it even worse AND with vacancies. I would not touch that junk AT ALL.
Bottom line, I don’t see the potential because the sellers aren’t pricing realistically (IMO). You might take a look at REOs if you have cash. Make some lowball offers and see what the banks say.
GL,
Mark