The following will be an analysis of an actual income property located in Phoenix.  In all cases I'll analyze on a simple basis an actual property for sale.  These will be rather simple analysis because my full analysis are often 20-30 pages and are based on investors individual criteria. 

The subject of this analysis is a foruplex located in North central Phoenix near the Pheonix mountains in a mature neighborhood.  It is a good subject for a "good deal / bad deal" analysis, more so because its for sale, and even more so because I'm handling the sale of this property so I'm biased on that point, but I won't be biased on the facts and the deal itself.
Now a bit about the property.

• 4 Units.  All 2 bedroom and 1 bath units.
• 2 story property with no deferred maintenance.  Most items have been taken care of, like the roof, heat-pumps etc.
• The owner is only responsible for maintenance and regular repairs, loans, taxes and insurance.
• The tenants pay for all utilities.  This is a unique property.  In most multifamily properties water, sewer and trash is paid by the owner.  Not in this case.  This does make the analysis a bit easier and it certainly makes this property worth further investigation.  It's not only these cost that will be saved but related ones as well, so this is a big plus in favour of the property, but its of little use if it does not pencil out.
• Great location with little landscaping maintenance needed since its desert landscaping. 

Income based on actual number for 2007 and below are some assumptions (the first table) 

So the gross income for first year of purchase is $32,026 and annual expenses are 17% of annual income or $2,669.  If you had a management company handle that property then your expenses would increase by the 7-10% fee of Net annual income.

Above is a chart with some of the most common measures applied.  These would include NRI, IRR and NPV analysis.  Almost any number you look at its a positive return and one higher then you may find in other properties, especially if you consider the value of other factors like time.

Below is a before tax IRR or Internal Rate of Return (read more about the IRR) This means that over the time period of his analysis, our money invested returned a yield of just over 20%.  That is fairly good and some would consider very good. 

Compare it to your return on a savings account or stocks.  The after tax IRR was just over 17% and I bet you its much higher after tax proportional then a stock would be, simply because you don't have depreciation on stocks or savings accounts and you don't have long term capital gains at a current rate of 15%.   

Is it a good deal or bad deal?  Thought the final decision is based on an investor's individual needs and and criteria, this deal is good and if you consider some of the other factors that make this property unique amongst the others, this is a very good deal.  Take a look at your return after a 10 year hold.  The return is just as attractive fora 6 year hold.

If you'd like to see a full 12 page review of this property and a demographic profile then call me or send me an email and I'll send over the PDF. 

I can also customize it based on your tax brackets with after tax results or results based on different criteria and loan structures.  I can also help compare a real estate investment to money placed in other investment vehicles.