Buying & Selling Real Estate Discussion

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Phoenix Real Estate: Looking to buy second home to turn rental

Posted Jun 26 2022, 14:35

Looking to buy my second home and turn my first into a rental. Those of you with the knowledge of the market in Phoenix metroplex, AZ. Where and when would you suggest I look? I’m curious to start with simple single family homes or duplexes.

Phoenix, Arizona

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Replied Jun 26 2022, 14:36

Also, looking to maximize my cash flow over the long term like all of us! Would you wait out this market a bit, or jump right in?

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Bob Okenwa
  • Real Estate Agent/Investor
  • Peoria, AZ
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Bob Okenwa
  • Real Estate Agent/Investor
  • Peoria, AZ
Replied Jun 26 2022, 18:16

@Ryan Saint-Amour

The Phoenix market has been tough to cash flow in without getting creative (more money down, ADU, rent by the room, etc.). I'd look in the outlying suburbs (Surprise, Buckeye, Goodyear) as the prices are going to be cheaper than the East Valley and these cities have some pretty good population growth and/or development coming along in the next few years.

You're not going to find duplexes worthwhile as many are overpriced and under-cared for. Multifamily properties are going for about 300k-400k per door these days and the cheaper ones are in the worst parts of the city.

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Replied Jun 26 2022, 20:37

That’s great advice thanks, I’m out here in Peoria area near surprise and know what you’re talking about. Any thoughts on the market out here for the next year or so? AZ has been hot from California and more driving a ton of the demand.

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Bob Okenwa
  • Real Estate Agent/Investor
  • Peoria, AZ
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Bob Okenwa
  • Real Estate Agent/Investor
  • Peoria, AZ
Replied Jun 26 2022, 21:10

@Ryan Saint-Amour

People will keep moving here, so if there's a decent looking home (pretty much anything built after 2000 is in pretty good shape and may just need some paint and flooring in a lot of cases) at a good price, it'll still go fast. No more 3/2 1500 sf selling for 600k in a day kind of listings though.

I think we'll see prices dip a bit. Not many people can pay 600k with 6.5% interest for a starter house. Probably won't see a dip back to "normal" like in 2019 or anything like that as even a 25% price drop from the current median (475k) puts us at 356k, whereas the median sales price in June 2019 was 280k. We'd need to see a 59% reduction to get that low and I don't foresee that happening any time soon.

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Replied Jun 26 2022, 21:33

@Bob Okenwa

Thank you for your insight! Much appreciated!

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John Bradley
  • Lender
  • Phoenix, AZ
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John Bradley
  • Lender
  • Phoenix, AZ
Replied Jun 29 2022, 14:04
Quote from @Ryan Saint-Amour:

Looking to buy my second home and turn my first into a rental. Those of you with the knowledge of the market in Phoenix metroplex, AZ. Where and when would you suggest I look? I’m curious to start with simple single family homes or duplexes.


 Hey Ryan! 
I'm in the east valley personally and have some rentals. You're currently in the Peoria area and looking to buy a property as a rental, you mentioned that you're looking for cash flow, what type of property characteristics are you looking for? Single family, multifamily, long term rentals, short term rentals, traveling nurses, etc? There's a lot of options and the reason I ask is to help pin point your goals to answer your location question :)

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Replied Jul 30 2022, 11:43

Would love to explore multi-family and single family to start! @John Bradley

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Cole Maurer
  • Real Estate Agent
  • Scottsdale, AZ
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Cole Maurer
  • Real Estate Agent
  • Scottsdale, AZ
Replied Jul 30 2022, 15:43

Hey Ryan, 

I am an agent in the Scottsdale, PV, Cave Creek Phoenix area. I fell confident in the market and I expect the rates and economy to slow down our market and help us normalize to a proper appreciation and inventory levels. AZ is in demand, people are still moving here and the city is still growing. All of these as you know are good indicators for a market to be invested in.

I think that you can find what you're looking for. I just ran across a great duplex in N Phoenix for $659k the other day that would make a good rental property. Also, consider expanding out to areas slightly less popular but being built like Goodyear and Queen Creek. As mentioned on a BP podcast, the epicenter of prices will usually expand outwards in hot markets because of affordability. So I would start thinking about areas that are next to be the beneficiaries of this expanding radius. Thus, on the lower cost side, I would start looking at some of those outward cities like Goodyear, Avondale, Litchfield park, and Queen Creek. Hope this helps! 

Best of luck and you can reach out to me anytime.