Market Conditions in 94086>Question Details

Frank Wu, Home Buyer in Sunnyvale, CA

Is it a good time to buy a 4-plex in Sunnyvale? Going cap-rate?

Asked by Frank Wu, Sunnyvale, CA Tue Jan 29, 2008

I am thinking of investing in 4-plex in Sunnyvale 94086 over a long term. The recent news is "The Commerce Department reported Monday that sales of new homes dropped by 26.4 percent last year to 774,000. That marked the biggest decline on record, surpassing the old mark of a 23.1 percent plunge in 1980." Also there is talk of further decline in 2008.

I don't know how single family home prices and 4-plex prices co-relate and what appreciation I can expect from 4-plex over next 15 years.

I need to make a decision on
a) Is it a good time to buy
b) If answer to a is yes, what Cap-rate range would be considered a good buy?

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Answers

3
HI Frank, I am coming to the party late, however I have been busy working with both Single Family and Multi Family investors lately. There have been a number of different scenarious for each different client. We have learned the current market cap rate to be 5%-9%. We are looking for 8%+ and 10%+ is the golden egg lately.

Vacancy rates used has been 5%-6% ,generally.

The big question! Which15 year investment opportunity will deliver a better ROI. I can only genralize here due to the unkown factors in your investment dollar pool (Initial Investment, Mortgage Rate & Management Vehicle) compared to purchase price/ condition/location. Imperical data will help some.

A typical SFH investment return will more than double in 15 years. A Multi Family will not see a double return in the same period. It is definetly investor specific if one is a better choice. Multi Family investments are most commonly used as a shelter if held under 15 years....a low risk low return piece of the Real Estate portfolio. The former would be considered an equity leverage position to further develop the portfolio...used as a higher risk higher return piece. It is imperative to have collaberation betweeen a great Tax Accountant and Realtor working on your behalf specifically.

I refer to the attached link as one of my research data points. I bet an information thirsty person like you will find it addicting too.

This is one great time to develop your investments.

Michael
http://www.MichaelRobertsHomes.com
0 votes Thank Flag Link Thu Apr 16, 2009
Can you break even with 20% down? If you cannot break even then forget it.
I will check a 4plex in San Jose campbell area for $634K. That price can break even much easier.
4plex is an investment. You need cash flow to keep it long haul otherwise why you want those management work. I like something under value with great possible grow in value and good cash flow.
Give me a call. I am looking for investment everyday.
0 votes Thank Flag Link Sat May 17, 2008
now is the time frank call me I have one under 900k on ayala
0 votes Thank Flag Link Wed Apr 30, 2008
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