(Graph by: PhoenixMarketTrends)

We're currently revamping Arizona Apartment Investor into a new design, actually it's been in the works for a while: until it's completed shortly some updates will be located here, like the most current look at the triplex and fourplex market in Greater Phoenix.  I chose only triplexes and fourplexes because I happen to like this size, it's easy to buy and sell: it can be done so via a residential loan like FHA, VA or conventional, these are purchased by investors and owner occupant/investors and they are a good gauge of the small multifamily market.

I can't tell for sure, but it looks like the market may have it bottom.  What makes me think that is that through out the high summer buying season prices stayed level and they increased ever so slightly as the sales dropped, well and the very high level of inquiries from investors.  

In November the average price per units was $24,958 while to low this year was $22,269 and prices have stayed in the range of $23,000-$24,000 for 9 months now.   In general that is 25-35% of peak pricing.  In other words prices have dropped by up to 75% for some properties: that price reflects distressed property, though, which means vacant units in need of repair, sometimes lots of repair.

We're still in the phase of distress where many of the properties are on the market because of mis-investment and mis-management.    Many were purchased simply for speculation so once the market turned negative those investors were left with a losing property and simply let it go because the lack of sufficient cash flow to keep the property going.  That situation was exacerbated by lower rents.  I believe were at the end of that flow of properties, but we're in no way at the end of the foreclosures.

There are many owners out there that are in the process of making a decision about the viability of these investments, cash flow or not.  It is as tough decision and some will simply choose to let the property go via short sale or into foreclosure.

So far the bulk of the properties are junk.  They have been ravaged, destroyed: by tenants or owners: they are the victims of this market.  Not only were many already full of deferred maintenance, but the lack of cash flow then not-caring owners meant that years more went by without necessary repairs.   Yes, the prices are cheap at $24,000 per unit, but these places are not ready for rent nor are they attractive.

Of the 51 properties sold in November 2009: 28 were lender owned, 11 were short sales and 12 were normal sales.  

35 of the properties were purchased by cash, mostly because there were no other options due to condition.  13 sold with conventional loans, 1 was an FHA loan and 2 were owner carry-backs.

Do you find this information valuable? We track these for our clients and ourselves.  We're not just agent, but investors as well.

If you are interested in these types of properties please call me at 602.628.4349.  While they do need more care and work they can be a good cash flow property, often providing better non-speculative returns then single family homes and there is a market for these: tenants want good affordable apartments, but in good condition and with good owners.  In other words, if you just want to buy them cheap, milk'em then dump them onto the next investor don't call me.