Just got through with purchasing my first investment property in Arizona. Picked up a condo in central phoenix and so far things are going well. Wanted to put up my numbers/lessons learned and see if anyone else has properties near central phoenix. Plan is to hold and use it as a cash flow property. I will definitely sell if it appreciates enough , but not banking on that.
Purchase Price 148,000
Cap Rate (includes hoa vacancy insurance etc etc) 7%
Rent per month - $1220
Closed on it last month and it will be rented to tenants within 2 days. Excited to get things rolling and learned a lot throughout the process.
No buying Agent-
My original buying agent turned me onto the condo complex which was great. But later on when we found one come up for sale, he called and said it was a good deal so he was going to place a bid on it. I of course let him go shortly after and continued the process on my own. What i found was that in the hot az market, leaving a buyers realtor out of my purchases seemed to give me a competitive advantage. Prior to this purchase i had bid (sometimes over list ) on many properties with my buying realtor. This time i went direct to the selling realtor and took her recommended buying realtor. I put an offer in with her and it was accepted (slightly under list). I think giving her the option to run the entire deal or recommend her own buying realtor really made the difference in the purchase.
I want to avoid dealing with a bank for my next place. It's a major pain and takes away bargaining power IMO. Going to try to put together cash myself for next one or get private loans.
Using electronic forms (cozy.co) for application/screening etc was well worth it. Made the process really easy. In the future, I plan to get the lease on docusign as well.
Above about sums it up, of course any feedback or thoughts are always welcomed. Tenants move in tomorrow!
Way to go man. Re #2. There is no "IMO" about it. Dealing with banks are a pain. If you have one you have a good relationship with you can bid "cash" on deals and still finance them. That way you get your benefit of being a cash buyer but benefit of leverage.
Nice work! Getting going is he most important part. You can't teach experience you can obtain it by going through the process. Banks are really tough. Everything is by the book and they are really risk adverse. Finding private funding or working with a small local bank or credit union is your best bet.
Time to find the next deal.
Congrats! Great deal. If you don't mind me asking, how much are HOA's, and what city is it in? What was your process finding and selecting tenants?
Alex, HOA is $140 a month and it's in Phoenix. I used a combination of Craiglsist and Zillow to find tenants. Zillow turned up a lot more leads than Craigslist (Zillow syndicates them to other sites). In addition, it provided a quick blurb on each perspective applicant which was helpful.
Then i schedule a few showings and after showing, I had them put in applications (i may reverse this order next time but worked well for me). Applications were submitted using cozy and this worked awesome. After reviewing applicants I asked one of the perspectives to pay for the credit and background check provided by cozy. They passed that and then i called on their previous housing references who all checked out. So far so good and I am using cozy for rent collection/security deposit as well. Tenants moved in 3 days ago.
One thing i didn't do was to ask for paystubs from their current jobs, I would likely do that in the future.
Update to this post from a year ago.
At this point I have 2 additional rental properties (1 with a partner). The lessons above still hold true for me so far. Now onto finding new area's to buy in AZ. Getting much harder to find deals in areas I have been buying in.
One additional lesson.
Review HOA's heavily prior to buying a condo. My first property has a well managed HOA. The second property does not . While it will pay off in the end ( I joined HOA and think I can add value), I spend more time on this property than my other 2 combined. I am ok with this for the learning experience and value add, but I will not buy another condo unless i can confirm the HOA is run well.
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