I am looking at possible out of state investing. I ran numbers on a couple of properties and the numbers Im getting are pretty low (1-2% ROI after capex/repairs/propertyMgmt). Wanted to hear if there's other experiences.
As a side note, Im also looking to set up a team to look after the rentals if I decide to invest so if you're an agent, contractor or property manager with OOS experience feel free to message me!
Scottsdale, AZ · Member since 2019 · 434 posts · 248 votes
5y
In my experience as a lender, Phoenix is one of the better areas in the Southwest to be cash flow positive. We have numerous out of state buyers that come here for that reason to invest. If you are willing to put down 25% and get the best possible terms, you can be cash flow positive. I look at it from a different perspective, but you can get gross monthly rents of $1800-$2200 on properties that cost $325,000-$400,000. Rental mortgage rates are in the 3.125%-3.625% depending on the downpayment and scenario. Property taxes are cheap in most of these suburbs (Mesa, Glendale, Peoria, etc). Most have small HOA's, $30-$70/mo is pretty standard.
The rental we closed was in Peoria, $340k sales price with 25% down. PITIA payment was $1464. Rental analysis done by the appraiser was avg rents of $1850, but the client thinks he will get $1900+ a month...
If you start creeping into the $500k sales price range, the rents are pretty attractive as well...
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
5y
So you live somewhere other than Phoenix and are hoping to invest in Phoenix? If that's the case, those numbers sound about right. Cash flow in Phoenix disappeared years ago.
Scottsdale, AZ · Member since 2019 · 434 posts · 248 votes
5y
In my experience as a lender, Phoenix is one of the better areas in the Southwest to be cash flow positive. We have numerous out of state buyers that come here for that reason to invest. If you are willing to put down 25% and get the best possible terms, you can be cash flow positive. I look at it from a different perspective, but you can get gross monthly rents of $1800-$2200 on properties that cost $325,000-$400,000. Rental mortgage rates are in the 3.125%-3.625% depending on the downpayment and scenario. Property taxes are cheap in most of these suburbs (Mesa, Glendale, Peoria, etc). Most have small HOA's, $30-$70/mo is pretty standard.
The rental we closed was in Peoria, $340k sales price with 25% down. PITIA payment was $1464. Rental analysis done by the appraiser was avg rents of $1850, but the client thinks he will get $1900+ a month...
If you start creeping into the $500k sales price range, the rents are pretty attractive as well...
Anything will cash flow with enough down payment. The thing you have to remember is that investing is a long term strategy. You may not get good cash on cash the first couple years but in 3-4 years when rents are up 300-400. What does your returns look like then. I bought in 2016 some houses for 200k and at the time rented for 1400, now the house is 350k-400k and rents are 2000.