Plan To Invest In Phx, AZ - Insights Appreciated!

Starting Out
9yFollow

Plan To Invest In Phx, AZ - Insights Appreciated!

Aaron Sauceda
Austin, TX · Member since 2016 · 31 posts · 5 votes

Happy Thursday Everyone!

My brother and I would like to invest in Phoenix, AZ real estate. He currently lives/works there and would owner occupy the property. He's currently renting and the plan is to "house hack" via purchase of 1-4 units around Q4 2017 or Q1 2018. This could be through living in one unit and renting the other(s), renting rooms in SFR or combo of both.

I've posted a few questions below that we'd really appreciate local investor insights on. I recognize everything is YMMV and depends on individual situations, goals, etc, so a caveat: if this were you later this year/early next at ~26 years old, what would you do?

Questions:

1. First, should we even be investing? I know the market has recovered quite well in most areas since the crash. I get the sense, while perhaps not a bubble, we may be getting towards the top of the next correcting point. Recognizing you'll likely never be able to perfectly time the market -- neither sell at highest nor buy at lowest -- should we be investing later this year / early next? We're in no rush and want to ensure we're strategic about allocating investment dollars. Would you be buying later this year / early next?

2. If Yes, Best Areas To Invest? For the best value and slightly "young person" leaning, what zip codes should we be looking at (e.g., good mix of fun experience and cash flow)? Even if it isn't quite there yet today, what's "up-and-coming" or might have the early indicators of such? Similarly, in 10-20 years, what zip codes could rival Scottsdale or "Scottsdale-lite"? James Wise's Ultimate Guide to Cleveland Neighborhoods is awesome and would be amazing if this existed for Phoenix; does it?

3. Cash Flow / Pricing Discount Possibility Expectations? This is certainly YMMV and depends on goals, neighborhoods, etc ... we were thinking we'd like to target $150-200 in cash flow per unit. Is this realistic? Should it be higher or lower? As for pricing, what type of discounts is the market seeing on "good deals"? For instance, in Orange County, CA, seems like 90% of ARV is the most common "really good deal." What about Phx; 80%? 75%?

4. Recommended Local Meetups? Are there 2-3 local meetups you strongly recommend where we can learn more and connect with local investors?

5. Publications / Tracking Market? Are there certain publications you read that detail the local Phx market well? What are KPI's we should be looking at and trending to track local markets?

6. Strong Local Team Recommendations? Any strong investor-focused realtors, wholesalers, lenders, contractors, property managers we should reach out to and connect with?

A lot of questions I know; any insights are really appreciated! 

0Reply
25 views

4 Replies

Jump to latestLatest
  • Patrick McCandless
    Residential Real Estate Broker · Paso Robles, CA · Member since 2015 · 196 posts · 58 votes
    9y

    Thats quite the intro post. lol. I think the best general answer to your questions is "it depends". Yes, you should invest in good deals. Not bad deals. Duh. Area depends on a lot of things including where you feel comfortable living when talking about house hacking. You're not giving enough info to answer your cash flow question. Assuming you're not paying cash since you asked that question. AZREIA will be recommended by many. Just start following market activity to get to know the numbers and flow. Nothing better than just analyzing a bunch of deals in my opinion. Even just getting set up with an MLS portal and evaluating those. Do a few a day. Feel free to reach out if I can help. I've helped other BP members with their first endeavors as well. Shoot me a message.

    0Reply
  • Carlos Altamirano
    Investor · Los Angeles, CA · Member since 2015 · 325 posts · 75 votes
    9y

    @Aaron Sauceda

    Hello, welcome to BP! Any answer is a good answer. I think it all really depends on your actual goals. What steps and strategies do you need to take to reach some of your goals. Some people like piles of money while others enjoy streams of income. I enjoy streams of income rather than having piles of money. CA has not been the best for cashflow, al though I am sure their are submarket out there that provide good cashflow. That doesn't mean we can't go out of state, like some of the east coast states. I attend as many meet ups as I can and build my investor list. I also wholesale deals in a few markets including out of state. Now a days you can invest in any market thanks to technology. Happy investing! 

    -Carlos 

    0Reply
  • Richard Trayer
    Real Estate Agent · Phoenix, AZ · Member since 2015 · 36 posts · 20 votes
    9y

    Aaron,
    Welcome, glad to have you here. It seems you have done some homework on the subject and have some good questions. I will do my best to offer some advice. So you know, I am a licensed agent that works specifically and directly with investors. I wholesale properties and do some of my own investing (SFR).

    Should you be investing? If you have the appetite for it, there is little to be said against Real Estate as a primary investment vehicle.

    I think you are correct in your assessment of the current market...the down is coming, but how soon? No one could say for sure. With that in mind, you have to consider that the best time to purchase a "good deal" is always Right Now. So, whats a good deal? In SFR, my group wholesales properties with an expectation of:  

    Purchase+Rehab=between 80% & 85%(ARV)...depending on the area.

    That said, these are Fix-n-Flip deals. A Buy-n-Hold strategy often works on a slimmer margin or allows for a higher purchase price w/ less invested into repairs. It sounds to me that you are looking for a Buy-n-Hold sort of opportunity...Yes? At 26, I would say you found the path at a good time. 

    Again, as it relates to timing, I agree with Patrick that you should begin, now, to study the market activity. Maintain your goal to purchase Late'17/Early'18 but also be prepared to pull the trigger if something great comes up sooner than expected.  

    Best areas is a personal preference. Especially for a live in/ house hack. You will also have to factor price point and expected ROI when making this determination. Really, you need to speak, in detail, with an agent to determine the Best Areas for you to be looking.

    Cash-Flow of $150-$200 per unit seems to me, a little ambitious. However, I can't really say because cash-flow is not to be looked at as a lone factor. I say loan because that is an other real factor in this sort of evaluation. Will you be using financing? 

    The AZREIA is absolutely a great MeetUp to start with. Then from there find the subgroups that most suit your interests.

    Hope I have been of some help. Feel free to reach out in PM if you like.

    0Reply
  • Aaron Sauceda
    OP
    Austin, TX · Member since 2016 · 31 posts · 5 votes
    9y

    @Richard Trayer @Carlos Altamirano @Patrick McCandless

    Hi All - I really appreciate your contributions and insights here, that was really helpful context. My brother and I are in the process of closing on a 4br/2ba SFR in Tempe, going to do a house hack there.

    I'm still interested in pre-emptively building out an RE team to help support our growing business. On that note, does anyone have recommendations they swear by for general handymen, contractors, plumbers, electricians, roofers, HVAC people, etc? I want to ensure that when things go wrong -- and they surely will -- that we have the right people in place to help us in a relatively efficient way. In other words, I'd like to avoid being a chicken with its head cut off when things go awry.

    All recommendations for (A) people and (B) types of people we should reach out to are greatly appreciated!

    Cheers,
    Aaron

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free