Buying my first property

9 Replies

I've been listening to the BiggerPockets podcasts and I must say, I'm addicted. I  currently live in a condo in Scottsdale, AZ my parents own that are letting me rent it out from them. I've been looking for my first property/condo to purchase myself, in Scottsdale or Arcadia. I've noticed the prices are increasing rapidly and 1bds/1ba are now in the 200s and 2bd/2ba are in the 300s! I have about 15k saved up and was curious if a 1bd/1ba all renovated is a bad investment? And if 300 range is a huge price for my first condo if I chose to go with a 2 bd/2ba. 

Also, just finished real estate schooling just to be more educated in the process and haven't taken the test yet. Should I wait to finish to buy? Not looking to be a real estate agent, just want to get into rental properties & make the big $$$.


@Kayley Brumagin hey hey. I’m a local investor/realtor in the Phoenix/Scottsdale area. I have 4 rentals going currently with 2 more under contract. I get the fear off your first one, it is far and away the hardest!!

If you’re not looking to be a realtor yet I wouldn’t waste your time taking the test. I’d suggest that you just continue to review the material and get your head around the process and what’s important to you which seems to be the investing side.

I would also suggest that you go with at least 2 bedrooms. This will give you the opportunity to rent out the extra room and cut your monthly cash outlay down significantly. It will also be much easier to unload in the resell market when the time comes.

If you’re looking to chat strategy I’m always happy to swap stories.

Whit

Congratulations on getting into realestate and having the initiative to go to real estate school and the dicipline to save up the $15K. If you have the energy then the Phoenix valley is a great for flipping homes or short term rentals.

For flipping homes you will need to find homes that are below market and/or are in need of some cosmetic renovations and can be staged with the right furniture. Staging has a big influence on both buyers and renters (when renting the staging is very light, but still a few well placed items have a positive effect).  The light renovations will help to unlock hidden value in the property and help buyers or appraisers justify the new price.

 Try to keep as much of the $15K as you can for cosmetic renovations and unforseen expenses.  Try to borrow the majority of what you need for the purchase.  There are some good programs for first time home buyers. Try to avoid the hard money lenders with high interest rates and fees (it adds extra stress to any project)

Right now the cashflow on most long term rentals is 4%, which can quickly be eaten up by repairs. The exception to this is short term renting such as AirBNB which has the potential to really boost your cashflow if you have a desireable property.  I'm currently holding my long term rentals but I've slowed down on buying new ones until I can find a source of loans with an interest rate below 4%.  (One advantage a new investor has is that they can usually get a better interest rate on a mortgage, after you get 10 mortgages some banks will notconsider you or charge a higher interest rate).  

2bd/2 ba is always easier to rent or resell. All that said I tend to avoid Condos due to the high HOA fees and how much you are tied to the value of the surrounding units. It would be hard for the appraiser to go too far beyond the sales price of the last unit sold in the same complex.


Good Luck! 

@Kayley Brumagin

absolutely get your RE license! You can get access to data and connections that will be worth it. 

Just keep in mind that you may have to disclose you are a real estate agent on your deals, as the state of AZ views the license as having a "competitive advantage" over those who don't have a RE license. 

I don't think the $300's for a 2/2 condo is too much to spend in the right area, but be aware of condo communities that are non-warrantable and require larger down payments than what you currently have. 

Also be aware of HOA monthly fees than can easily exceed $1k/mo.

16 year ago when I went through RE school, the "education" and testing was only there to get me enough info to pass the test to get the license and did nothing to actually help me with being a practicing real estate agent. Maybe things have changed since then but based on some of the newbies that I run into, it doesn't look like much has changed. 

Regardless, finish the process, get your RE and if you really value education, find a broker that has those same values. 

Get your Real Estate business.  Your area is hot for buyers and sellers as is the whole valley.

Take those comish checks and save half of them for Real Estate.

" a little less clothes and shoes and a little for for your future".

IF ONLY MY WIFE COULD DO THIS!!!

If any properties need work.

I know a guy!!

Condo investment are underrated for first-time investors and as part of a balanced portfolio. It gives you some safety with the HOA covering roofs, windows, common areas, and the upkeep keeps tenancy high and vacancy low. Your main concern buying a straight investment condo is how the HOA is doing (usually in AZ pretty well) and what the development percentage allowable is for non-owner occupied units.