Arizona Out of State Investment
Rental Property Investor · SF Bay Area · Member since 2016 · 234 posts · 103 votes
I work with a lot of investors coming here from multifamily, usually from appreciation states like CA where cash flow is tight. Here is a general breakdown of each of the major areas:
Apache Junction
Apache Junction is a small little town out of the far, far east side of the Phoenix Metro Area. It only has a population of roughly 35,000 and definitely has a small-town feel. Lots of mom and pop shops and small local businesses. It’s a lower income area, where the median income is $36,771 compared to Phoenix’s $43,960.
I question how much this area will grow into the future, since it’s just such a small town. It only gains about 1,000 people per year on average. Small towns like to remain small towns, and not many millennials will make this their choice when moving to the area
Chandler / Gilbert
Chandler and Gilbert are located far south off the 202. If you’re going to live in the southeast valley, this is the place I think you should be. Both areas are known for their schools. Chandler is a more diverse and younger, and is located near Intel’s facility where they plan to bring 3,000 high paying tech jobs into the area… those employees will need housing. Gilbert is more homogenous, and largely Mormon. It’s probably best known for being the #2 safest town in America for its size.
Mesa
Mesa is more of a mixed bag… on the far west side close to the 101 it’s a bit of a ghetto and there’s lots of crime, same goes for much of south mesa. But in east mesa it’s a different story, and that’s where I would try to buy. The area is HUGE and seems to go on forever eastwards, and the area is full of people who commute back in the central PHX area for work. So in a sense, it’s a commuter town for a lot of people.
Tempe
Being so close to ASU, there’s a good chance at least half of your tenants will be students. Especially if you’re within walking or biking distance. This has it’s pros and cons… as you’ll have higher turnover than average, but the units will be very easy to fill too. Another potential option is buying two larger homes here (5+ bedrooms) and renting them out to fraternities, sororities, or the sports teams. I have a client in Stockton successfully doing that near UOP.
Scottsdale
In general, this is the nicest area in the Phoenix Metro. It’s broken up into two parts, north and south. The south side is older and has a lot of old town charm, and the north part is newer and mostly built around all the resorts and golf courses. Not too much multifamily though... but there is some. Although to get into the nicer parts your budget would probably have to be bigger.
Glendale
Glendale is a little rougher of an area… but it’s not too bad if you can find something out closer to the Cardinals Stadium. A lot of gentrification is happening in that area, and being roughly $20k below the median sales price for the Phoenix Metro area it has more room to grow since it’s so affordable. But, Glendale is general has a lot of crime, so it’s kind of like Stockton where you have to carefully analyze the deal on a street by street basis. Buyer beware.
Phoenix
Being located in the heart of the metro area, this is probably where you’re going to end up. If for no other reason than it has the widest selection in your price range. You’re close to freeways, downtown, the airport, and in the middle of everywhere. So it’s not like Chandler or Gilbert where you’re completely on one side of town. You’re more likely to find properties in the upper end of your price range that have already been renovated, so you can buy something turnkey or at least see the potential.
...
Hope that gives you enough info for the basic rundown! If you have any more questions just ask and we'll try to point you in the right direction :-)
We just closed on a student housing property in Tucson. The PM only does SH not market properties.
Student housing is an interesting niche like @Jeff Greenberg does, but if you're looking for MF properties, there are some here in Phoenix, but you're going to have to open the checkbook for some decent ones. Most of the good ones go for around 300k. Phoenix metro area makes up 2/3 of the state's population so it would be helpful to be in a major city if you're looking for appreciation as well as cash flow. Not sure what your budget is, but if you want to talk about it in depth, I'll answer any questions you have. Just PM me.
I couldn't have said it better. There is a very limited supply of MFR properties and the ones that are around are usually older and/or in rougher parts of the city. There are some decent ones here, but it is nowhere near as prevalent as you see in the Midwest or East Coast.
I work with a lot of investors coming here from multifamily, usually from appreciation states like CA where cash flow is tight. Here is a general breakdown of each of the major areas:
Apache Junction
Apache Junction is a small little town out of the far, far east side of the Phoenix Metro Area. It only has a population of roughly 35,000 and definitely has a small-town feel. Lots of mom and pop shops and small local businesses. It’s a lower income area, where the median income is $36,771 compared to Phoenix’s $43,960.
I question how much this area will grow into the future, since it’s just such a small town. It only gains about 1,000 people per year on average. Small towns like to remain small towns, and not many millennials will make this their choice when moving to the area
Chandler / Gilbert
Chandler and Gilbert are located far south off the 202. If you’re going to live in the southeast valley, this is the place I think you should be. Both areas are known for their schools. Chandler is a more diverse and younger, and is located near Intel’s facility where they plan to bring 3,000 high paying tech jobs into the area… those employees will need housing. Gilbert is more homogenous, and largely Mormon. It’s probably best known for being the #2 safest town in America for its size.
Mesa
Mesa is more of a mixed bag… on the far west side close to the 101 it’s a bit of a ghetto and there’s lots of crime, same goes for much of south mesa. But in east mesa it’s a different story, and that’s where I would try to buy. The area is HUGE and seems to go on forever eastwards, and the area is full of people who commute back in the central PHX area for work. So in a sense, it’s a commuter town for a lot of people.
Tempe
Being so close to ASU, there’s a good chance at least half of your tenants will be students. Especially if you’re within walking or biking distance. This has it’s pros and cons… as you’ll have higher turnover than average, but the units will be very easy to fill too. Another potential option is buying two larger homes here (5+ bedrooms) and renting them out to fraternities, sororities, or the sports teams. I have a client in Stockton successfully doing that near UOP.
Scottsdale
In general, this is the nicest area in the Phoenix Metro. It’s broken up into two parts, north and south. The south side is older and has a lot of old town charm, and the north part is newer and mostly built around all the resorts and golf courses. Not too much multifamily though... but there is some. Although to get into the nicer parts your budget would probably have to be bigger.
Glendale
Glendale is a little rougher of an area… but it’s not too bad if you can find something out closer to the Cardinals Stadium. A lot of gentrification is happening in that area, and being roughly $20k below the median sales price for the Phoenix Metro area it has more room to grow since it’s so affordable. But, Glendale is general has a lot of crime, so it’s kind of like Stockton where you have to carefully analyze the deal on a street by street basis. Buyer beware.
Phoenix
Being located in the heart of the metro area, this is probably where you’re going to end up. If for no other reason than it has the widest selection in your price range. You’re close to freeways, downtown, the airport, and in the middle of everywhere. So it’s not like Chandler or Gilbert where you’re completely on one side of town. You’re more likely to find properties in the upper end of your price range that have already been renovated, so you can buy something turnkey or at least see the potential.
...
Hope that gives you enough info for the basic rundown! If you have any more questions just ask and we'll try to point you in the right direction :-)
85006 largely consists of the Coronado and Garfield historical districts. Coronado has undergone major gentrification and revitalization due to flippers coming in and fixing up the 100 year old homes. Garfield has less flip activity as it lies on the other side of the 10 freeway where flipped homes can sell for 100k-200k cheaper. 85051 is the City of Phoenix area that borders the 17 freeway and Glendale. Properties west of the 17 in this area sell for less than they would in Central Phoenix near downtown.
You'll probably find more multifamilies in the 85006 zip code than the 85051 zip code, though the class of the building and the tenant renting in a multifamily in 85006 may be a bit lower than 85051 as the buildings near downtown would probably be a bit older.
I've never heard of the Valentine Group, but they are well-reviewed by multiple sites so that is a good initial indicator, but I'm sure you'll get a better feel for how they work once you interview them.
Absolutley man! Always glad to help.
@Wes Blackwell Thank you! This thread is golden - Do you see any other commentary worth noting a year later?
@Cody Z.: The MF inventory is still tight here. One thing that's become popular is house hacking properties with a casita or MIL suite. (I didn't see any discussion of that on the earlier thread.) The description of historic downtown v. Scottsdale still applies.
Feel free to PM me if you have any specific questions about current market conditions here!
The overall descriptions mostly remain the same. Probably the main thing you have to consider if you are wanting to invest in Arizona or more specifically the Phoenix Metro Area is:
1) What's your strategy?
2) Migration Patterns
What's Your Strategy: Arizona offers multiple strategies for real estate investing. Single family vs. Multifamily as always, but you've got several different sub-markets for rentals to consider as well:
AirBnB: Shorter-term seasonal rentals are really popular here, primarily in Scottsdale, Tempe and Downtown Phoenix. We have thousands of people visit the area during the winter months because it's so nice here compared to colder areas like Michigan, Canada, etc. And during spring training, PGA Open, Barret-Jackson Auto Show, etc. you can make a killing.
Luxury: There's always a market for luxury rentals here, and obviously the cash-flows can be really high if you need to store a bunch of money somewhere. Probably not the best for noobies obviously, but you can build up quite the portfolio if you know what you're doing and have a good method for bringing in renter leads.
Retirement: Arizona is the #2 destination for retiring baby-boomers, just behind Florida at #1. Why people would want to move to Florida with all the humidity, gators, and hurricanes is beyond me lol. Anyhoo, There are lots and lots and lots of retirement communities out here, and they get plenty of seasonal renters from the colder states who may buy your property after renting it several years in a row. Good exit strategy.
Migration Patterns: Besides the ones I talked about above, California is exporting nearly it's entire middle class into other states. Arizona, Nevada, Washington and Oregon being the main contenders. Arizona gets a lot of it's population growth from Southern California since it's only a 6 hour drive back to SoCal and you can buy nearly twice the house for half the price.
According to the America 2050 Project the Arizona Sun Corridor (from Prescott to Nogales) is set to DOUBLE in population by 2050 up to 12 Million people. As a logical thinker, I wonder where the hell we're going to get the water for all those people... but if we solve that problem it seems quite plausible. More people = more need for housing = more job growth = mucho bueno for investors of all kinds.