Any advice on how to start out investing in Phoenix, AZ area?

[Miciah Furbay]

Hi,

I want to get started in real estate investing and so far I am mostly interested in long term rental properties and Multi-family properties. However, I am running into a lot of questions about how I will started in my local area of Phoenix. It seems prices are relatively high in the area and that leads me to wonder if I should keep looking for a good deal locally or if it would be a better idea to invest out of state.

However, I understand investing out of state comes with its own drawbacks so I am not sure if that would be a great idea as a first property. Just for context, I am single and make about $75K a year with around $100K saved up in the bank. What would you do in my position?

Thanks,

[Ty Coutts]

Hey Miciah,

Given your situation, it might be worth starting with local investments in Phoenix even though prices are higher. Being close to your properties means you can easily manage them and stay informed about the market. Look into emerging neighborhoods or smaller multi-family units that might be more affordable. If local deals remain out of reach, exploring out-of-state opportunities could be a good backup. Just make sure to research thoroughly and consider working with a property management company if you invest far from home. Balancing local and out-of-state options might be the best way to build your portfolio. Feel free to reach out to me directly if you have any questions or need help with financing for your investments!

[Mason Weiss]

Have you considered house hacking? 

[Josh Young]

@Miciah Furbay

Buy a primary residence in a good area using a 5% down payment convention loan, don't max out your DTI, in 12 months buy another primary residence with another 5% down payment conventional loan and start renting out the first one. You will probably be a little negative on cash flow unless you rent by the room or buy the interest rate down or both, but honestly a little negative on cash flow isn't a big deal if you still have most of your cash in the bank since you only put 5% down. Repeat this strategy every couple years.

If you really don't want to buy a primary residence and instead you want to buy an investment property then I would recommend a new build in Casa Grande for under $300k, this will require a 25% down payment and buying the rate down a little to break even on cash flow, but will be a very easy first rental property as it will be brand new and will not require any cap ex for many years and by the time it does require cap ex you will have raised the rent and gained enough equity to do a cash out refinance.

[Tommy Ray]

I live in Texas. I invest in TN, TX, OKla, FL, SC... Oklahoma has the most potential. Prosperity Bank serves both TX / OK. They will lend on stock / ETFs / Mutual Funds. Invest in a stock or fund with a huge upside on appreciation (think AI / Robotics). Collateralize it for the down payment of a discounted buy in OK / TX. Rock solid rental while the money is in the stocks doing double duty as the principle investment as well as your down payment equivalent. Buy the rock solid rental and get your appreciation, cash flow, depreciation, principal pay down, equity capture on a discounted by and forced appreciation gain for a well targeted rehab.

[Tommy Ray]

I live in Texas. I invest in TN, TX, OKla, FL, SC... Oklahoma has the most potential. Prosperity Bank serves both TX / OK. They will lend on stock / ETFs / Mutual Funds. Invest in a stock or fund with a huge upside on appreciation (think AI / Robotics). Collateralize it for the down payment of a discounted buy in OK / TX. Rock solid rental while the money is in the stocks doing double duty as the principle investment as well as your down payment equivalent. Buy the rock solid rental and get your appreciation, cash flow, depreciation, principal pay down, equity capture on a discounted by and forced appreciation gain for a well targeted rehab.

[Wale Lawal]

@Miciah Furbay

To invest in investment properties, consider Phoenix's affordable neighborhoods and out-of-state cities with strong rental demand. Network with local agents and leverage savings. Consider a hybrid approach with one property in Phoenix and one out of state. Conduct thorough property inspections, market analysis, and financial analysis for informed decisions.

Good luck!

[Drew Sygit]

@Miciah Furbay You may have to look at 100 properties, to write offers on 10 at amounts that cashflow (below asking price), to maybe get one accepted.

YES, it's a lot of hard work! Who said RE investing would be easy?

Just be careful of chasing properties in cheap, Class D neighborhoods and expecting Class A results. There's a reason they are cheap and investors rarely realize their paper ROIs with these types of properties.

[Nicholas L.]

@Miciah Furbay

house hack

[Perry Pelitera]

I would look for local investment groups on BP for meet-up events. You could look to mentors to guide you through the process but be sure to do your due diligence before spending any money. I know Mesa area has a meet up group - check out @Shiloh Lundahl

@Shiloh Lundahl

[Justine Phillipson]

I am going to send you a message!

[Mike Dmuchoski]

Welcome Miciah! You could go FHA and live in the home for a year before renting it out.

[Zachary Yelder]

Miciah,

Phoenix market has changed drastically since 2020 and has made the cash flow market very tight if you're not walking around heavy in liquid. Your average cap rate in Maricopa county is 5%, which for the starting investor isn't anything worth doing as most people buying the rentals are doing it for write off purposes more-so than cash flow. My first step would be to grow your capital by investing in rehabs, partnering before purchasing your first buy & hold. Our purchase market is very strong so you'll be able to grow capital relatively quickly partnering with someone who's actively developing and rehabbing sites. Every partner I've had over the years starts there and when they're comfortable with the capital they have then they can branch and purchase some long term assetts. You're welcome to message or call me for more discussion but I hope that helps.