All Forum Posts by: Michael Bennett

@Andrew Bravo the price someone is willing to pay is the market value. Not what some county assessor or appraiser says the value is. These people are not investors and are not running numbers like an investor does. Im an agent in Phoenix. I've had about 8 low appraisals this year so far on investment deals. A couple as low as $100k. Does that make them bad deals? Nope. But the appraiser is on the hook to the lender and mortgage servicers for the value so they are cautious by nature in appreciating markets and get paid whether or not the deal happens. County assessors on the other hand might be bound by local rules. Property taxes are based on assessed value. In Phoenix assessed value can only go up by 5% a year. Our market appreciated 20% last year. You will almost always find assessed values are less than market value and they shouldn't be confused with each other.

Hey Paul, I love your motivation. I'm a local investor and agent. We also do property management. The market has gotten way crazier just in the last 6 months. You have to adjust your mindset completely. If you're sitting on cash you are losing to inflation not to mention the opportunity cost of waiting. This market appreciated 20% last year. Forecast is for another 10% this year. People on the internet say the market is going to crash - why? As David said you have 10,000 people wanting 1500 houses. 
We have 8 days of inventory. Think about that. Phoenix metro has been the fastest growing metro in the country for the last 4 years.  

I am buying a SFR in Gilbert right now. $50k over asking. Appraisal contingency waived. Cash on cash return is like 2.5%. Pretty low right? But my equity return is 7% (a tenant paying my mortgage). So now my return is 9.5%. Let's say we only get 5% appreciation this year which I think is a very low estimate for Gilbert. 5% of $450k is $22,000. Add the equity return, appreciation, and CoC return and I'm over 30%. Even if the deal breaks even on rent my return is like 28%. And this is with property management built in at 8%.

The SP500 is up 9.5% on the year. Nasdaq up 3.2%. DJIA up 10.75%. Bitcoin up 31%.

Real estate is providing bitcoin like returns, without the volatility. Not great if you need cashflow now, but this is long term wealth building. 

Hi Yaroslav, I moved to Phoenix from Denver in July. What a great move it has been! Our team specializes in procuring 2-10 unit properties as well as property management. If you want to connect, let me know! Best -Mike

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Hi Neal and Alex, there are already some great replies on this thread, but check out the Phoenix area if you are looking to move. My wife and I hacked a duplex and Denver and by the time we were ready to buy again our options were limited. We ended up relocating to Phoenix and picked up another duplex a couple months ago. There are a lot of options here between $350k and $450k with better rents. Our second unit in Phoenix is a home office/home gym but if we rented it out our share of the mortgage would be about $800. If we lived in that unit and rented out the bigger unit our share would be about $250. Quality of life here is great. Summers aren't that hot :)

Hi Serge! You are in a great spot, Phoenix is one of the best markets in the country and one that still works for house hackers. I'm an investor-agent here in Phoenix and have house-hacked two duplexes. If you want to chat sometime, or grab lunch, let me know! Best -Mike

Hi Chris! My wife and I have a strategy similar to yours. A couple years ago we purchased a duplex in Denver, moved in, rehabbed it, lived there for about a year, rented out both units, then moved to Arizona. We just closed on 1107 W Roosevelt St in Phoenix which is another two unit property. We plan to live here until we can get another loan. I've helped clients do similar and can help you run numbers or answer questions if you're interested. Happy New Year! -Mike

Sterling you're exactly right. Inflation eats the debt. In a high inflation environment creditors are losers. Say you have 3% fixed rate debt but in 5 years the market rate on that same loan is 6% interest, well the creditor is still only getting 3% on the money they loaned you when they could be getting 6%. This is why ARMs exist. In the meantime, inflation is pushing up the nominal value of your asset and the cashflow the asset yields, but your payment remains fixed. So the return on your initial investment gets better and better as inflation pushes up asset values and yield. But it gets worse and worse for the creditor as interest rates go up as they still have hundreds of thousands of dollars tied up yielding only 3%.

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In our Phoenix metro market there are multiple SFR buy and hold groups with serious Wall Street funding. They compete with the small SFR investor and anybody looking for a median priced home to live in, and have the cash to buy a home a day. If not more. They will also underwrite deals to a cap rate much lower than I would advise my clients to purchase at. Now, there is a dollar cap on what they will buy and other stringent requirements, so they can't buy anything and everything, but they do raise prices and keep inventory extraordinarily low. However, they don't buy small multi-unit properties like duplexes and quads and this is primarily the niche we operate in. So yes, they are here and they have deep pockets. We choose to target MF properties with a lower per door cost and better returns. We also manage these properties which is huge for out of state investors building their local team.