Arizona East Valley Investors

11 Replies

Hello everyone! I am looking to buy in either the East Mesa, Queen Creek, or possibly San Tan Valley in the coming months (preferably east mesa).  I'm looking for a house that my family and I can live in for the next 3-5 years before turning it into a rental property.  What are some things that you look for when running the numbers of a home to find out if it is a good deal?  How much value would an additional bedroom or half bathroom add? Do you focus more on the number of bedrooms/bathrooms or square feet in a property? 

If you have invested in any of these areas I would love to hear about your experience and any other advice you may have.

As a side note I have began to run some numbers on a couple of properties, mainly using Brandon Turner's 4 square method. What calculations do you like to use?

Thanks in advance!

A few random thoughts: 

* In the East Valley, appreciation has been the biggest factor for many investors. I'd look at the areas that will have the best prospects for appreciation. Consider school districts, nearby amenities, etc. If you want to turn it into a rental, consider buying near the big employers.

* A very experienced appraiser once told me that his valuations are affected more by beds than baths. Since then, I've been more inclined towards an extra bed over an extra bath (though of course this varies with the property, and you still need a functional layout with the square footage you have to work with).

Happy to answer any questions you have about the area!

1) Try to buy something that's similar to other properties that rent well in the same area. So if the best rentals are 3/2, then it would be silly to buy a 5/3 house. It would not only be more expensive to buy, but there may not be the rental demand for it, nor a high enough rental price to make sense compared to your mortgage expense.

2) Finding a 3/2 house with a den/bonus room and then converting that into a usable fourth bedroom can add value both to appraisals and in terms of renting it. 

3) It's a balance of square footage and beds/baths. A 3/2 with 1500 square feet will feel pretty livable for a family, while a 3/2 with 1,100 sqft might feel cramped. 

@Eric Kump I would suggest getting on wholesaler lists. This will give you an opportunity to look at off market properties that will likely have more of a profit margin than the MLS or Realtor.com or Zillow provides.

I just got under contract yesterday for a house in East Mesa with 4 bedrooms and 2 baths that is just over 1500 sq ft that was sent out to me from a wholesaler. The house needs a little bit of work maybe $1000 - $3000. I'm getting it for 165k and the market value is about 215k. I'm planning on renting it to a friend for a year where he will have the master lease and he can sublet the rooms for $650 each (including utilities). He should be able to get 3 roommates, take care of the property for me, and cash flow on the property. After a year will will probably lease options the property.


Finding a similar deal could help you as you start your investing journey.

@Eric Kump I bought a 1976 3/1.75 ranch on 8K lot 1700 sqft' house in west Mesa and lived there for 4 years and put about $40K into it (would not have spent this much if I knew I was going to be an RE investor when I bought it). Close to 3 highways, on a cul-de-sac, B+ neighborhood. I bought it at market value and the house appreciated $110K in 4.5 years. We moved out, placed renters at top market rates and I did a cash-out refi which raised my PITI $140, but I invested the cash in two rentals in OK which produce about $380 in CF total, so I increased my CF 72% with that strategy.

We moved near Val Vista and Baseline to an area with a lot of split level homes on smaller 5K lots to have lower maintenance and more room for our growing family. Private corner, close to highways, close shopping, Gilbert school district. 1990 4/2.75 2100sqft with an office, brand new roof for under $300K. We bought it for $5K under market value and will put about $30K into it. Zillow\Trulia\Redfin estimate we have $10K in appreciation already within 6 months of owning it. We plan to "live n' BRRRR" within 5 years again and then move on to the next. Or, if we do see more a substantial crash in the economy (like in the disjointed from reality - mood ring for rich people stock market) we are living comfortably and below our means which will help us sustain our entire portfolio. It is all about resilience over efficiency these days.

@Matthew Terry

Thanks for sharing Matthew, it’s sounds like you guys are well on your way! You mentioned the first house that you bought you put about 40k in rehab, did you anticipate spending that amount? Any advice on rehabs and what you learned from the experience? I wouldn’t mind getting a house that needed some rehab if I could make the number work.

@Eric Kump

When we bought the house, REI wasn't even a thought in my mind. We rehabbed things we personally did not like, but were absolutely fine for living\renting. We easily could have spent $15K instead of $40K on essentials like new water heater, new HVAV, new irrigation for the back, and a rehab of the front yard for better curb appeal. We replaced perfectly good and attractive tile flooring to LVP which meant all new baseboards and trim and we went high end. We spent $15K on renovating the backyard, which looks much nicer, but not necessary for renters. We renovated the fireplace and bought all new windows and sliders. Basically we spent money as if we were going to flip the house instead of rent. But went you flip, you need to buy well below market value for it to make sense, which we did not. Luckily Phoenix saw one of the highest appreciation runs in the nation over the past 5 years.

With that said, we rented the house within 2 days of being on the market and at the highest rent I saw within 2 miles, so that may speak to the value of using nicer finishes compared to other houses within the comp area. A month later the tenants asked if they could get a dog and agreed to a $250 pet deposit and an extra $25 a month in rent.

@Eric Kump you can google wholesaler Mesa, or wholesaler San tan valley, etc. You can also network with other investors in your area and take them out to lunch and ask them questions.

@Eric Kump I grew up in Queen Creek and my parents are still there. It has been growing like crazy and is only going to continue to grow. When our family moved there, there were no stoplights or grocery stores. There are a ton of new neighborhoods popping up. A family that owned a ton of the land right along Ellsworth heading towards East Mesa recently sold their land, so expect more new development in that area. I would imagine that the areas closest to east mesa and the freeway would be places that will only get more popular.

As many other posters have mentioned, finding a wholesaler with properties under contract and DO NOT do assignments is key to finding the RIGHT wholesaler.

There are a lot of us out there, and many get away with not even having a Real Estate license, or shameless solicit other broker's properties.

I promise there are amazing wholesalers across Phoenix. ;)
 

Tyler Clark
Investment Real Estate Agent #SA690607000
New Western Acquisitions - Phoenix
3033 North 44th Street, Suite #140
Phoenix, Arizona 85018

Updated 4 months ago

As many other posters have mentioned, finding a wholesaler with properties under contract and DO NOT do assignments is key to finding the RIGHT wholesaler. There are a lot of us out there, and many get away with not even having a Real Estate license, or shameless solicit other broker's properties. I promise there are amazing wholesalers across Phoenix. ;) Tyler Clark

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