Torn

6 Replies

I have been looking for my next purchase for months mostly for 2-4 unit properties and some SFR but it seems I have to choose between C/D neighborhoods at $70k per unit, or B neighborhoods at $125k per unit. I have looked mostly in Phoenix and the east valley. Finding a SFR under $200k generally means it needs tons of work or in a terrible neighborhood, or both. The valley has terrible cash flow and good appreciation in general but when it gets to where we are now, how much more can it appreciate given local incomes?

On the latest podcast about the guy who had $10k and grew to 52 units in 3 years - wow that just wouldn't be possible here. 

I have about $50k in savings and a HELOC with about $180k available. With these constraints I have been looking in South Phoenix and Mesa mostly. The Globe/Miami has much lower price points but seems like a dead market. Casa Grande is also cheaper and the strongest in the area (Maricopa, Coolige, Eloy, Florence, etc.) BRRR seems impossible to do finding properties at 70-80% at of market value. I have been tempted to buy out of state but don't have any boots on the ground and not sure I could vet a turnkey operator enough to feel comfortable.

Where to make my play?

Justin Owens, Real Estate Agent in AZ (#SA543754000)

You should take a look at rootstock website, there is also one or more podcasts out about roofstock. I have no affiliation to them, but I like how they operate. They gave me a different perspective on possible out-of-state investment. 

Paul Santos, Real Estate Agent in AZ (#SA658540000)
(480) 469-8200

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@Paul Santos I am looking at the website, it seems you can buy individual properties or buy REIT style funds?

I like the website much better than other turnkey offerings I have seen. Thanks!

@Benjamin Riehle I have a bit. I have access to MLS here but not in Tucson. I have searched via Zillow in the area. Have seen a few 2-4 plex units down there. I have been there several times but never looked at real estate. Where to you suggest looking?

Justin Owens, Real Estate Agent in AZ (#SA543754000)

@Justin Owens the owner of the company has been interviewed a few times on other podcasts. I like the way they list their properties and all the information they provide. Very well organized and detail information, majority of the properties look like they would be good rentals. Roofstock definitely has the turnkey process down to a science. Try and listen to their interviews and you'll a better feel for what they are all about and probably feel better about out of state investing. Ideally, you find an out state investment in a state that you would be like to visit occasionally (like Florida) and get some additional tax write off for the trips to the properties, and still vacation as well. Good luck!

Paul Santos, Real Estate Agent in AZ (#SA658540000)
(480) 469-8200

There are a lot of investment opportunities in pockets around the University that have not been fully exploited. We are still finding a lot of deals in pocket neighborhoods around UofA. There are two streets north of campus that we have done 14 student rental conversions, turning rundown 2 and 3 bedroom houses to fully remolded high end student rentals with additional bedrooms and living square footage added.

There is also substantial opportunity in the older neighborhoods near downtown that have yet to be revamped. My investment fund just acquired 12 distressed homes in a neighborhood within a mile of downtown that we expect to provide substantial returns from rental income as well as asset appreciation. 

Next time you come to town let me know and we can link up and Ill give you tour!

Are you looking to manage yourself or use property management?  I think there are still niches you can get into under 200K.  You can leverage and get a couple of condos in Scottsdale or Phoenix, in A/B neighborhoods and use the VRBO model or AirBnB.  I think the returns are fairly strong still for that.  I think if you want to buy C class multi family you are looking at an old building likely with deferred maintenance or a rehabbed unit in a terrible neighborhood.  I think a lot of the buy and hold investors are no longer buying in the valley, like you said the ratios just aren't favorable.  I would look at non traditional rentals, perhaps a nursing home model or college rental model.  There are a lot of housing near Grand Canyon university that can be converted into college rentals (4 Bedroom house at 2K rent per month during the school year, $500 per room).  At this stage of the market, you need to start looking outside of the traditional model in Phoenix metro.

Good luck hunting,

Stone

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