Hello RE investors in Phoenix !
I was thinking about buying an investment property in tempe, probably near 85281.
the idea is to rent it out to ASU students. My budget is about 100k to 150K, so probably a condo.
I am looking for an approx 5% cash on cash return annually and wait for the appreciation.
I am not from the area, given the current RE market, do you think this would be a good investment ?
Or do you have other recommendations ?
Any input is appreciated !
Get in touch with Renters Warehouse down there. An agent can help you determine rent before you buy, that way there won't be any surprises.
5% cash on cash? If you put 50% down on a 250k condo in San Diego, you can get this return. I assume you can get similar in the bay area as well. Appreciation will be much higher in the bay area than Tempe in the long term.
Hi Michael! I'm a beginning RE investor in Tempe. To piggyback on what @Patrick Ryan said, Renters Warehouse has been doing a ton of advertising here recently. Although I have no personal experience with them at all. I do have one SFH rental in 85283 and have my primary residence in 85282. I am very familiar with Tempe. I can't offer much in the way of procedural RE investing advice as I am very new myself. But I'd be willing to answer any questions I can regarding specific areas. For example, I can look at the houses around a property and help you develop a better context for what you'd be purchasing. I can tell you what retail is nearby and things like that. Just let me know if that would be helpful! PM me or we can continue on this thread.
Not a fan of condos due to HOA potential problems and eats into returns. Rental market is strong in Phoenix and always good around th university if you can find them and set it up correctly so kids don't destroy it. Better returns around the smaller universities in Glendale you may look at as well as houses are much cheaper than Tempe and still strong demand. Let me know what your looking for and would be happy to send you links from the MLS as I am licensed and have rentals as well. Feel free to PM me.
Thanks for your reply
I do live in the bay area where the real estate is very expensive.
Getting a 5% cash on cash return is not so easy here (for investment property)
using my house as an example, the house is 800K, 50% down would be 400K, let's say mortgage rate is 2.7%, property tax is $800/month, home insurance $80/month, don't even consider the property management fee, every month cost would be around $2500.
let's say I can rent the house out for $3500/month ($3200 to be fair) I can get 1K/month and 12K/year, 12K / 400K, which means cash on cash return is 3%. And we have not even considered some bad case scenario.
In this case if you have 400K cash to invest, you'd better do something else.
I don't know about San Diego.
I was thinking about Tempe because I have a friend goes to school there. RE is also a lot cheaper. His rent to price ratio makes sense. Considering all the cost, If he bought a condo 3 years ago he could have been rent free and even make some money, but he didn't.
Now I see the price is lot higher around ASU, I think it still makes sense if you buy and live in the property. I am just not sure whether it is still worth for investing.
Hey @Michael Shao , have you considered private lending as another investment option? You could easily earn double the 5% cash-on-cash return you're seeking without the hassle of a property ownership, especially out-of-state ownership.
I have 3 rentals now, and I look to get 7-9% here in the southern metro of the Minneapolis/St Paul area, specifically Apple Valley, Farmington, Lakeville. I do have some niche expertise that might drive that #, because I am a real estate agent and home flipper. I am further strengthened by my Wife, who has done 250-300 tenant placements for Renters Warehouse here in the area. If your willing to seek a higher ROI through a professional management service in a different area, please reach out! I also just spoke with a colleague who manages roughly 12,000 doors, and he is openeing up a management office in St Louis. I picked his brain and he started showing me homes there on the market for $20-$40k that fetch $600-$800 per month....he said places are being paid for in rent in 3 years.....that kills it. Let me know if you want his info, or mine.
All the best,
Hey @Michael Shao , any luck yet finding any deals in 85281?
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