SFR in AZ

2 Replies

Hey BP world, looking for some advice / criticism / validation / whatever. 

I currently have a SFR in Gilbert, AZ that has a great property manager, solid renters, and although it wouldn't meet the income parameters a bunch of people on this site strive for, it works for us. I lived in that house for 4 years prior to it becoming a rental property, so it wasn't scrutinized in the same way as a new rental property would be. Basically any positive cash flow meant we kept it, and if that changes, we will sell.

Now we're looking to invest in another. 

Purchase Price (max): $199,000
PITI (after 20% down): $981/month
Estimated Rent: $1450/month
Vacancy est. @7%
Repairs/Maintenance (none needed immediately) est. @1% of purchase price/year
HOA is $80/month
PM fee is 8%

Clearly there is not a huge amount of positive cash flow month to month. However, it's a market that we're comfortable with, great schools, and high-quality long-term renters are common. Our goal for REI is not necessarily income replacement, but more for future planning (retirement is still 30 years away for us).

Your thoughts? 

Hi Katy, This probably comes down to your tolerance for risk, because anyone here will likely say there is not a ton of meat on that bone. If you guys are looking for comfort with low risk and low returns this may fit the bill. If you see a chance for appreciation in the area based on home prices over the last few years (or some insider information like a new hospital opening in the area) and you can stomach breaking even on the month to month for the shot at a higher price in 5 years this could work. Otherwise I would probably try and hold out- there is probably a sexier deal somewhere in town with similar benefits and a lower price tag. Good luck!
Originally posted by @Christian Beyer :
Hi Katy,

This probably comes down to your tolerance for risk, because anyone here will likely say there is not a ton of meat on that bone. If you guys are looking for comfort with low risk and low returns this may fit the bill. If you see a chance for appreciation in the area based on home prices over the last few years (or some insider information like a new hospital opening in the area) and you can stomach breaking even on the month to month for the shot at a higher price in 5 years this could work.

Otherwise I would probably try and hold out- there is probably a sexier deal somewhere in town with similar benefits and a lower price tag.

Good luck!

Low risk low returns is a good way to put it, thanks. We are ok with that, although I never thought I'd say that. Honestly, at the purchase price listed, it probably would be too small of a return for me (basically break-even month-to-month). I think we can get the purchase price down about $15k, which makes it a bit more appealing (albeit still on the lower end for immediate returns). 

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