Investing in Pheonix or Colorado Springs (Climate Future?)

Real Estate Broker · Killington, VT · Member since 2015 · 19 posts · 8 votes

5y

Vermont real estate is super hot right now - an exceptional seller's market. 1st it was driven by AirBnb and STR opportunities, then it was the COVID migration from the cities and now, we are beginning to see climate change driven relocations. I'm currently working with four buyers citing climate change as their reason for moving here - one from OR and one from UT, both citing smoke from forest fires and two from New Orleans, for obvious reasons. Even with the extraordinary appreciation in the past two years, Vermont could still be an outstanding place to consider for real estate investment. In full disclosure, I own a brokerage in Killington - I'm not looking for buyer clients here, just sharing investor insights with fellow BiggerPockets members. I am currently renovating a foreclosure in Rutland and with such low inventory, I am going to begin targeting additional Rutland properties. With Lake Champlain, UVM and the great city of Burlington, Chittenden county has experienced housing shortages for a decade; with their proximity to Killington and Pico ski resorts, Lake George and Lake Bomoseen, and employment centers like General Electric and Rutland Regional Medical Center, Rutland Town and Rutland City could very well be the next high growth markets in VT. My personal investment strategy is to buy and hold, yielding the best of both worlds - earn rental income in the near term and experience asset appreciation in the long term.

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Dan Schwartz

Real Estate Investor · Tempe, AZ · Member since 2012 · 874 posts · 648 votes

5y

@Michael Paccione quads exist in Phoenix and the surrounding cities, but not in great numbers. Prices are frequently on either side of the $200K/door range. I don’t study them specifically, but this is what I’ve seen. Good luck!

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Michael Dumont II

Investor · South Burlington, VT · Member since 2015 · 76 posts · 38 votes

5y

I concur with Kyle in many of his statements of observation, as I have seen the same in the greater Burlington area. Also it is true, we as much of the rest of the country have had a huge housing shortage. The one caveat that I like to emphasize is that real estate is always a local endeavor. Vermont and specifically Burlington area have been a stable market historically, even in 2008. VT even then had the shortage, making our "sellers market" less of a "sellers market" but more an status quo.

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Daniel HillmanPro Member

Realtor · Colorado Springs, CO · Member since 2017 · 22 posts · 21 votes

5y

I just bought my first property in the Springs, single family home that we are house hacking into a duplex. Colorado Springs makes it into the top 10 list for best cities to live in in a number of newspapers. I think we will continue to see incredible growth here, and I plan on buying a multifamily in the next 6-12 months.

Water issues are also a problem in Colorado and could definitely be a more serious issue in the future.

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Stuart Grazier

Investor · Parker, CO · Member since 2016 · 550 posts · 389 votes

5y

My vote would be Colorado Springs because it is AWESOME! Tons of people are moving to Colorado and the market is booming. It isn't California prices (yet) and you can still find cashflowing property (and have a great chance of it also appreciating significantly).

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Michael Paccione

OP

Member since 2017 · 2 posts · 3 votes

5y

Thanks for all your replies... Colorado springs definitely seems appealing for being outdoorsy type and colder than the desert. Albeit I do have some family in Arizona so that would be a very strong base to start from.

Really interesting to hear that Colorado as well has its own water issues.

If I was on the east coast Vermont definitely would be a strong candidate :)

Been looking at both locals on loopnet for some starter property that isn't too involved.
https://www.loopnet.com/Listin...

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Bethany TuronPro Member

Property Manager · Durham, ME · Member since 2019 · 179 posts · 102 votes

5y

@Michael Paccione Let me know if you decide you're open to Maine. You will find huge opportunity here! 30% COC-ROI is realistic in Class B areas. Happy to connect if you'd like to hear more.

1 Reply

Chad McMahan

Residential Real Estate Broker · Sedona, AZ · Member since 2017 · 754 posts · 504 votes

5y

Michael, I think both markets are strong. LOTS of opportunities. I recommend you get an exceptional Phoenix realtor and an exceptional Colorado Springs realtor, and get on the same page. Let them know you' are scoping both markets, and start looking at listings and talking it through with your agents.

Good luck!

1 Reply

Jason Cacioppo

Real Estate Agent · Commerce CIty, CO · Member since 2018 · 127 posts · 78 votes

5y

The implication is that you think you're gonna own these homes for the next 50 years when in reality you probably wont. You seem like the type who over thinks things then ends up not buying at all. Go where the money is.

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Tanner Crawley

Realtor · Lone Tree, CO · Member since 2017 · 139 posts · 112 votes

5y

@Michael PaccioneHaving lived in both CO and AZ I would much rather invest in CO Springs. Phoenix is screwed in the long run and is already unbearably hot with 170+ days over 100 degrees. In addition to climate change Phoenix has insane urban sprawl and the heat-island effect is enormous. As water shortages happen all of the grass lawns/greenbelts/golf courses will likely convert to xeriscape, or worse (turf) which will only amplify this heat islanding. In summary, yikes. Colorado Springs is great. It sounds like you are considering selling some appreciated assets to reposition into real estate? If this is the case you should consider investing into Opportunity Zones which will let you defer your capital gains, reduce the basis, and exempt all further gains for quite some time. Colorado Springs has one of the best Opportunity Zones I have seen and I spent some serious time analyzing dozens of deals for a national Opzone Fund. The SE shoulder of Downtown is an Opportunity Zone and is already experiencing rapid redevelopment. I am actively looking for something there for myself.OpZones aside. I love the Colorado Springs Market. Tertiary cities and lifestyle cities will likely be the biggest winners from the pandemic and rise of remote working and CS fits the bill perfectly.

I have PM'd you some relevant articles.

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Scott Mac

Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes

5y

Hi Michael,

I think the Arizona Bay theory (Bill Hicks, Tool, etc...) says Arizona will be Ocean front property and California will slide into the sea.

Ex President Obama just bought a house directly on the ocean front--he's not worried.

Banks are still lending on oceanfront property and properties in all of the so-called danger zones--and they don't seem to be worried.

If owning something in a particular area worries you, then buy in an area where you have no worries.

Good Luck!

2 Reply

Doug McVinuaPro Member

Property Manager · Queen Creek, AZ · Member since 2016 · 608 posts · 426 votes

5y

@Michael Paccione Arizona is doing great! All new subdivisions are required to guarantee a 100-year water supply before the Department of Real Estate will approve the subdivision. Another interesting anecdote is that much of the land being displayed into rooftops is agriculture and rooftops use less water than agriculture. Portions of Pinal County are in Water Management areas and it's expected that at some point in the future approvals may become more difficult for new subdivisions. We have thousands of homes being built in an effort to keep up with demand but losing ground in regards to the population growth we are experiencing.

As a broker and property manager, we are finding Arizona properties for investors that work! We have multiple bay area investors in the market that have purchased properties and we continue to manage the same properties.

[email protected]602-751-7577

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Leslie Pappas

Professional · San Francisco, CA · Member since 2014 · 876 posts · 301 votes

5y

There plenty of other opportunities elsewhere, my clients are involved in institutional grade properties across the country. My recommendation is to choose cities in safe and economically diversified areas with above-average income and population growth. It can also be safer to diversify your investment properties across the country. There is still good money to be made in AZ, FL, GA, TX and other states, however, picking the right submarkets is key.

A very good source of local analysis is rereport.com

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Account Closed

Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes

5y

Originally posted by @Michael Paccione:

Hello, I am a San Francisco local who has a $250,000 derivatives portfolio currently.

Looking to disperse a significant portion of those funds into real estate to diversify and eventually get a solid cash flow real estate business. I have done many things for work/business in the past but now am a Software Engineer and can work from anywhere.

I am considering purchasing quadraplexes in Phoenix but am concerned about the future climate change. Phoenix will have more months that are extremely hot as well as the real problem of having to acquire enough water for the city.

The other consideration potential would be Colorado Springs. From my research Vermont, Maine, and Colorado are the three states that will suffer the least climate induced damage in the coming decades.

Any thoughts on all of this? Phoenix is quite close so I would prefer that but am skeptical... Any tips from the AZ people?

Your comment: "Phoenix but am concerned about the future climate change. Phoenix will have more months that are extremely hot as well as the real problem of having to acquire enough water for the city."

It was 110 degrees today in Phoenix. There is a drought. Arizona's share of water from the Colorado river is in dispute. Have a happy day.

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Chad McMahan

Residential Real Estate Broker · Sedona, AZ · Member since 2017 · 754 posts · 504 votes

5y

Michael, I have similar concerns with heat and water in Phoenix. I expect both issues will be talked about a bit more, over the next 5+ years. I'm predicting real estate to be mildly (likely not noticeable) impacted somewhere in that next 5 years, and more noticeably impacted over the 10 years+, following that.

To be honest, I'm surprised water is not more of a discussion- but, like I said, it will be. When that discussion publicly and regularly surfaces, and the PHX market starts to take a hit, Sedona will be even more desirable, as we are cooler and have a 500+ year supply of clean/clear water.

That being said, I don't think PHX is something to be too concerned about, if you have an exit strategy of 5-10 years from today, which in real estate investing is a long a time. Great ROI's and other opportunities in PHX, for sure.

Personal bias- I love Colorado Springs. There's always been a special place in my heart for Colorado.

1 Reply

James Carlson

Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes

5y

@Michael Paccione

I don't think there's any place immune from the effects of climate change. Here in Colorado Springs, we definitely feel the heat more, and the smoke from those damn west-coast fires obscures our amazing views at least a few weeks a year. And then there's the issue of water here. Colorado Springs actually does have a decent plan in place to shore up their water supply for the next few decades, but every place in the west is going to have some issues eventually.

That said, I think Colorado Springs has huge upside appreciation wise. There's an influx of people from Denver and from out of state. We have low unemployment. An increasingly diverse economy that also still has a strong foundation in the military that won't go anywhere. And the downtown is like what Denver was in the early 90s when they got the Rockies. Colorado Springs will never be Denver, but it did just open its new professional soccer stadium downtown. Nearby are numerous new developments including housing that will in the next five years only bolster the existing urban hub of bars, restaurants.

We currently own two places here, and we plan to buy a few more in the coming years. Good luck with whatever you choose!

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Investing in Pheonix or Colorado Springs (Climate Future?)

Investing in Pheonix or Colorado Springs (Climate Future?)

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