Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
I'm wondering if all of you Arizona investors are still active at the moment. We have had quite a run up but things feel as though they are starting to slow down. Feels like a dangerous time to buy and cash flow is getting tight.
I have not done much of anything in Maricopa county instead concentrating on Pinal, Gila and Cochise counties. Still not easy to find deals but definitely easier than metro PHX.
Would love to hear what kind of AZ opportunities people are working on.
Rental Property Investor · Queen Creek, AZ · Member since 2013 · 368 posts · 191 votes
12y
We are still busy we recently acquired a SFR for 160k with an ARV of 240k in N PHX and we got this off the MLS. It's thinning out but off market deals are still pretty consistent.
Investor · Paradise Valley, AZ · Member since 2012 · 366 posts · 214 votes
12y
Serge, things have definitely slowed down here in Maricopa Co. Prices will probably slide a bit this spring.
I am trying to find flips on the MLS. Just got one under contract. However, as you know, the deals are few and far between. The one I just found is an REO where the same buyer fell out of escrow twice! The bank was probably frustrated and took my low ball cash offer.
As far as buy and hold, I don't see any good deals out there. Those of us that invested heavily from 2009-2011 are spoiled so no deal looks good compared to the "old days" :)
Rental Property Investor · Queen Creek, AZ · Member since 2013 · 368 posts · 191 votes
12y
We are still busy we recently acquired a SFR for 160k with an ARV of 240k in N PHX and we got this off the MLS. It's thinning out but off market deals are still pretty consistent.
SFR Investor · Tempe, AZ · Member since 2013 · 15 posts · 4 votes
12y
Hello Gentlemen,
I'm by no means experienced here but we just closed on a SFR last month and we are currently looking at another deal soon. So finding deals on the MLS might be hard to find but they are out there.
Glad to see that there are other Arizona investors out there. I have been looking to set up a Meet-up in the East Valley. Interested? Let me know.
Residential Real Estate Broker · Kingman, AZ · Member since 2014 · 131 posts · 18 votes
12y
Hello, I am not in the Phoenix area but am in Arizona, I am working on Bullhead City, Lake Havasu City and Kingman areas and there are some interesting properties out this way but not alot of investors. My husband and I are starting out wholesaling and working towards fix and flips. Good luck to you...
Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
12y
@Laura Moore - very interesting regarding Northern AZ. I have seen some great looking deals in your area but have not built the network to feel comfortable executing buy and holds out there yet. I'd love to chat with you about any wholesale deals you may have particularly Bullhead City, Kingman and Lake Havisu.
@Albert Hasson I know from your previous posts that you are active in PHX. I agree with you that the buy and hold deals are far and few in between. Spoiled indeed, so hard to pull the trigger on a home that is a "deal" at $150k that could have been had for $70k just 2-3 years ago. Are you sticking with your preferred region or venturing out? There are still deals to be had in other counties if you look hard enough.
@Rebeca B. East Valley meetup would be great. We have some active investors from our area out here. @Tracy Royce and @Justin S. interested??
So ... my question for you PHX investors, still buying to hold or is flipping all that is left? I know some out of state, primarily CA investors buying out here and I don't get it. Granted our prices are still attractive compared to SF or LA BUT if your going through all the trouble to invest out of state why stick with AZ for 4-5%? I am not one to invest out of state but our prices have me considering other options. I see some of the returns that members in Milwaukee, Chicago and Indiana get and its tempting. But then I see the property taxes, snow, boilers, insurance costs and I'm right back to Arizona! Can't stomach snow and 3%+ property taxes, I'll take my sunshine and .5% all day:)
Residential Real Estate Agent · Chandler, AZ · Member since 2009 · 1k+ posts · 928 votes
12y
@Serge S. - Yes, the market has been slowing down since October of last year. I'm still buying but not as much I want to right now, I have 7 properties in various stages. If you need help buying let me know. As for a meetup, I'd be glad to meet with fellow investors.
Specialist · Phoenix, AZ · Member since 2011 · 698 posts · 629 votes
12y
@Serge S. Being an Ilinois resident, I am atracted to consider moving to AZ with the low property taxes. However, at one time we had reasonable property taxes in IL until our state government ran defecits, took from state pension funds with no plan to repay - and now IL has huge underfunded pensions for teachers, state workers etc. Temporary income taxes are becoming permanent and real estate taxes are expected to rise again. They just proposed a sales tax on soda pop (for "health reasons" - not the fact that increased taxes on soda would be collected from adults and children of all ages) that would increase the cost by 50% for soda.
Does Arizona have similar situations to look out for in the future? I read that some teacher pension changes in AZ was made in the recent past, but the teachers union (or other group) are fighting the changes and they have not been implemented.
Are there big state liabilities that may cause a rise in property taxes in the coming years in Arizona?
Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
12y
@Jerry K. Good points. Property taxes are always variable in the future. AZ was running a budget deficit of over $1B during the recession days but has since got it somewhat under control with "temporary" sales tax hikes. Generally the teachers unions (and unions in general) are under control in the state especially compared to states like CA and IL. We have taken the charter school system to another level and they compete with the public schools to keep costs low. That being said our spending per pupil is in the bottom 10.
Arizona relies heavily on retirees and population growth. As such there is much incentive to keep property taxes low. We have almost no state property tax, just city and county. Thus property taxes vary greatly by city but almost always around 1% sometimes less. I pay more in property tax on a mobile home in Casa Grande than I do on a 2200 sq foot home in Mesa. I am generally very comfortable that property taxes will stay reasonable. We have a conservative legislature and for better or worst you can count on them to fight taxes.
Another huge benefit is our cost of insurance is very low. On a nice 1700 sq foot home built in 1985 in Mesa I generally pay around $300 in insurance and $700 in tax, all in $1000 per year. Current valuation on such a home is $160k-$200k. When I looked at a similar home in Milwaukee or Chicago I was seeing nearly $3k in tax and over $1k in insurance. Thats a very big chunk of cash flow gone right off the bat. Combine that cost with PM, travel and winter maintenance and the advantageous out of state cash flow doesn't look so great. I've pretty much decided to sit it out or wait for the right deal in my home state than push the envelope and chase cash flow. I would rather sit on cash than acquire an out of state nightmare. I see people preach the benefits of out of state investing all the time but when I dig in it never looks so pretty.
Investor · Colorado Springs CO · Member since 2014 · 535 posts · 253 votes
12y
Husband and I are CA residents but own 2 fourplexes in Scottsdale (and a triplex here in CA). Bought one fourplex in 2011 and the other in spring of last year (locked in a low interest rate just weeks before they started shooting up). We bought there because the numbers didn't make any sense here in CA. We are still looking to buy more, and have made a few offers (then got out-bid), but so far haven't been able to justify any numbers lately. You're right, we got spoiled by the numbers we were getting a couple years ago. I'm starting to investigate other states too, but it's nice being less than a 6 hour drive from our Scottsdale rentals if we need to go out there for something. Plus the low taxes and insurance, and you never have to worry about freezing pipes!
Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
12y
@Account Closed Agreed. I see deals in Pima county as well as Cochise county and have started working both. I've done well in Benson and Sierra Vista. The military base at Huachuca City provides great tenants. Prices have increased there as well but not as much as Maricopa county. Its much less competitive and I've scored some deals that would rival Maricopa county circa 2010.
@Kimberly T. Glad you took the leap to AZ when you did. I too am originally from CA and found the prices too good to be true when I made the move. I'm curious as to how your multifamily investments are doing. Many CA investors jumped into older PHX properties and have had much difficulty managing. I see this group selling packages of homes all the time. Multifamily investing here is a bit of different breed and I couldn't imagine doing it successfully out of state. I look for a very specific type of multifamily property out here and will not consider most of the stuff out there due to location and tenant class that these properties attract.
Investor · Colorado Springs CO · Member since 2014 · 535 posts · 253 votes
12y
@Serge S. The fourplexes we bought were built in the 1970s. Nothing fancy, but we have been able to get tenants that meet our screening criteria (min 600 credit score, no evictions, 3x rent as income, etc.). We have anticipated some of the expenses we have incurred so far (new roof, update kitchens, etc.), but recently had a major sewer drain line failure under some toilets that has resulted in some extensive abatement/repair/reconstruction expenses that we were not planning on. Has not been a pleasant experience, but we plan to get the rest of the lines camera-inspected so we can proactively address any other issues we may have before they become major headaches. Overall, they have been pretty profitable, but we've only owned one for 2 years and the other for almost a year, so we'll see what the future holds.
Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
12y
I've been hunting for my first deal in Maricopa County for 6 months and haven't had much luck. I follow MLS closely (in my farm area), I'm on a number of wholesale lists, and I watch the REO sites closely as well.
I am in the business to do rehabs and haven't had the opportunity to do my first project yet. In the coming weeks I plan to start a marketing campaign to lock in properties off market, which I'm hoping will yield results by the end of Q2.
I know there is opportunity out here and there is money to be made, but there is a lot of competition and margins are tighter than ever.
To those suggesting a BP meetup, I'm IN! I'd love to connect with like minded people here in the valley.
Realtor · Mesa, AZ · Member since 2014 · 158 posts · 56 votes
12y
I'm a newbie investor who just moved to Mesa so I'd jump at the opportunity to meet with others in the area and listen to your experiences.
@Serge S. I can share my experiences of paying $8k a year in property taxes on my 1000 sq ft home back in NJ. Boilers, cast iron pipes, and knob and tube are all concerns but the bright side is much of those taxes go toward the school systems (that are generally very good), which bring stable family tenants.
I'm curious what you mean when you say multifamilies are a different breed?
Real Estate Investor · Phoenix, AZ · Member since 2013 · 58 posts · 32 votes
12y
Inventory has increased, and appreciation has slowed, especially in the lower price end of the market. The market always slows during the holidays, but we will have to see if we get the after holiday boost. If not, be careful.
Rental Property Investor · Phoenix, AZ · Member since 2014 · 71 posts · 20 votes
12y
It all depends on what you are trying to accomplish, if you are a cash buyer, or have financing options that make sense... We have been forced to create better financing options to help investors capitalize on current goals. Our acquisitions have been lower, but sales are steady!
Investor · Colorado Springs CO · Member since 2014 · 535 posts · 253 votes
12y
@Carole G. We paid mid- to upper- 100,000s for our first one over 2 years ago, and mid-200,000s for the second one last year. They are in southern Scottsdale (which is not as nice as north Scottsdale), but not in the neighborhood called Holiday Park (which is an area I would never buy in). They have been very profitable for us, with the exception of a recent major sewer line issue we had on one of them.
Real Estate Investor · Encinitas, CA · Member since 2013 · 225 posts · 91 votes
12y
"I see some of the returns that members in Milwaukee, Chicago and Indiana get and its tempting. But then I see the property taxes, snow, boilers, insurance costs and I'm right back to Arizona!"
Exactly... "winter" causes a lot of problems. Frozen pipes etc.
Also, AZ's tenant/landlord laws are VERY favorable. IL's for example is NOT.
Additionally, if the investor is in CA, it is VERY convenient to get to Phoenix from any major metro area. Basically, 1 hour on Southwest. Much different if you ever need to get to the property and it's in the Midwest.
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
12y
Originally posted by @Serge S.:
Another huge benefit is our cost of insurance is very low. On a nice 1700 sq foot home built in 1985 in Mesa I generally pay around $300 in insurance and $700 in tax, all in $1000 per year. Current valuation on such a home is $160k-$200k. When I looked at a similar home in Milwaukee or Chicago I was seeing nearly $3k in tax and over $1k in insurance. Thats a very big chunk of cash flow gone right off the bat. Combine that cost with PM, travel and winter maintenance and the advantageous out of state cash flow doesn't look so great. I've pretty much decided to sit it out or wait for the right deal in my home state than push the envelope and chase cash flow. I would rather sit on cash than acquire an out of state nightmare. I see people preach the benefits of out of state investing all the time but when I dig in it never looks so pretty.
I recently bought a 3 bedroom, 1 bathroom home at 923 square feet rented for $900/month. It was "built" (sort of) about 7 years ago. (Actually moved from one location to another but everything but the framing was new.) I paid $39,900 for it. Insurance is $700/year and property taxes are $3,270.18.
So about $4,000 per year compared to your $1,000 per year.
Then I did a search in Mesa, AZ for 3 bedroom 1 bathroom homes built in the last 10 years about the same square footage and sorted by lowest to highest price. The lowest price I found was $115,000 for 991 square feet (although it did have 2 bathrooms not one). Per Zillow rent should be about $933/month so let's call it about the same as the rent for the house I bought.
Should I pay about $75,000 more than I did on the house in the Midwest even though I'm paying $3,000 more per year? This would mean my break-even point on the difference between the property taxes and insurance would be 25 years. I could then use that $75,000 I saved to buy a couple more houses.
The main benefit of out of state investing in the other areas is the acquisition cost being so much lower. I've always said that if investing out of state makes anyone nervous, they shouldn't do it no matter what the numbers are.
Homeowner · Phoenix, AZ · Member since 2011 · 14 posts · 6 votes
12y
I'm still in the 'read everything' phase, but I would love to see an east valley meetup, get a chance to meet and talk to others in the area with similar goals.
All my friends eyes seem to glaze over whenever I talk about investing.