All Forum Posts by: Melanie Johnston

@Art Webb You will do very well with a fall/winter seasonal rental in Scottsdale! We have such a shortage of inventory that new-to-market homes get snapped up. Our highest season is January through March, but if you don't attract a single "guest" for 6 months, you should be able to easily attract a 3-month and then another 3-month guest. 

I had an STR in Scottsdale that I Airbnb arbitraged. I furnished the home (3 bedroom with an unheated pool) and rented it from my friend for the express purpose of STRing. That was written in our lease. With the pandemic she needed to move back in, so it is on hold for now.

You are asking if it's better to rent for 6 months or for shorter stays. You also have another option...I call it a hybrid strategy. This means you can rent it by the month (1-6 months) but if you find you have open months or when you think you can make more $$, rent it nightly (I would do a 3-day minimum to avoid being a party house) through Airbnb.

So how do you rent it monthly? You can have your agent list in on the MLS and pay MUCH lower fees than you would to a property management company. Tenants who come through an agent on the MLS fill out a formal application and your agent and the tenant's agent do all the work. Normally tenant's agents get about $400 in a one-time commission...a lot less than you would pay either a PM or Airbnb (over multiple stays) to find you a tenant.

When I help an investor buy a home, I list in on the MLS for the lowest fee my brokerage requires, which is $50. I consider that I've already made my commission on the property purchase, so I include MLS promotion as part of my service.

You can turn this listing on and off, so you have complete flexibility on when you want to attract monthly renters. One winter season I rented to a retired couple from New York, followed by a retired couple from Chicago. (Average rent was $5,800/month). These kinds of renters are very gentle on the home so you don't have to worry about wear and tear or wild parties disturbing the neighbors.

I have so much more I can say about this topic. I should probably write a blog post here and include it all...thanks for the motivation!

Many of my STR investors self-manage their rentals, but that does require a significant investment of time.

As far as a STR management company for Scottsdale, one of my STR investors from Seattle did extensive research and chose the person below, who she recommends. I know things are going well because that investor just closed on her second Scottsdale home (with me) that she is prepping to STR.

Janaya Goselin

Arizona Desert Vacations

360-296-4935 (She is local, despite her area code)

Hope this helps!

Melanie

@Ryan Paltridge I have helped 3 BiggerPockets investors buy 4 STRs in Scottsdale in the last 12 months.

My recommendation would be to concentrate on zip codes in popular locations that also have more non-HOA options.

These would be 85251, 85250, 85257 for options near Old Town. Then 85254, which is further north and close to the TPC Scottsdale (home of the Phoenix Open) and shopping like Kierland Commons and Scottsdale Quarter.

There is also a Facebook group for Scottsdale STR operators, which a few of my clients find helpful.

Let me know if I can answer any questions for you.

Melanie

More Good News for Property Owners/Investors in the West Valley! (West of Phoenix)

This the latest in a slate of good economic news for the cities west of Phoenix, collectively called the West Valley.

Highlights of the Phoenix Business Journal article, written by reporter Corina Vanek:

After a search that lasted more than two years and included over 300 sites in 20 different states, KORE Power Inc. will build its manufacturing facility in Buckeye, where it expects to employ about 3,000 people.

Coeur d’Alene, Idaho-based KORE had narrowed its selection to sites in Arizona, Florida and Texas before deciding on the Grand Canyon State a few weeks ago, Lindsay Gorrill, CEO of the company, said. The plant is expected to total 1 million square feet.

...

Gorrill said the site that the company has chosen, at MC 85 and Interstate 10, is perfect because it has easy access to the interstate and there will be an APS substation nearby. The site will also have a solar power setup where the building will store its own energy.

...

The company produces battery cells, which can then be put into a variety of different forms, including for use in electric vehicles including trucks, boats and drones, and can also be used for energy storage, including for solar and wind power that needs to be stored and used at a later time.

Arizona is a growing hub for the production of electric vehicles and its batteries. Lucid Motors, Nikola Corp., ElectraMeccanica and Local Motors all chose to build their EVs in the state. Battery recycler Li-Cycle is building a facility in Gilbert and EV parts producer UACJ Whitehall is setting up shop in Flagstaff.

...The Buckeye plant, which has been named the KOREPlex, is expected to produce 12 gigawatt hours annually, which Gorrill said is enough to power more than three million homes.

Developing the first phase of the Buckeye plant is expected to cost about $500 million. There is room on the site to grow capacity beyond the first phase, but expansions will be dictated by market need, he said. At full buildout, the company is expecting the total project cost to be just under $1 billion. Construction is expected to begin on the site by the end of the year, with the goal of beginning production in the second quarter of 2023.

...

About two-thirds of the jobs at the plant will be manufacturing, he said. Other jobs include engineers and warehousing and distribution positions. Hiring has already begun for some of those jobs.

“KORE Power’s investment in Buckeye to produce clean, renewable energy aligns with the city council’s sustainability goals and our goal for significant employment opportunities for our residents,” Buckeye Mayor Eric Orsborn said in a statement. “This project is not just a win for Buckeye, but for the West Valley, the state of Arizona and the clean energy industry.”

(From Melanie) This is a big win for landlords in the West Valley. I just helped a BiggerPockets investor close on 3 homes in that area and he feels announcements like this "de-risk" his investments, as he says.

This is just one of many announcements about companies moving to or expanding in the Valley (which is what we call the Phoenix Metro area...but you know this if you watched the Suns get ever-so-close in the NBA Finals).

CoStar.com just reported this on the Metro Phoenix market:

Job growth is expected to continue at a healthy pace based on the number of [office and industrial] tenants looking to relocate and expand and who are actively searching for space in the market. Prospects looking to locate in Phoenix during the 2021 fiscal year were up 115% from the previous year, according to the Greater Phoenix Economic Council, a regional economic development organization.

...

The organization assisted in the relocation of 45 companies to Phoenix during fiscal year 2021. The companies account for some of the largest planned build-to-suits, leases and occupancies over the past year. On the industrial side, that includes TSMC (3.8 million square feet and 1,900 jobs), The RealReal (593,600 square feet and 761 estimated jobs), HelloFresh (438,690 square feet and 750 estimated jobs), MLILY (643,800 square feet and 424 estimated jobs) and KeHE (470,000 square feet and 200 estimated jobs). Some of the largest office deals were PennyMac (74,625 square feet and 374 estimated jobs) and Robinhood (34,000 square feet and 182 estimated jobs).

The best news in all of this is the economic diversity it has embedded in our economy.

Keeping you in the know,

Melanie

My clients have had success with Jack The Roofer.

Hope that helps!

Melanie

@Griffin Brenseke congratulations on your success! Sounds like you are on your way to building a strong portfolio! I have helped several BP members buy properties in Metro Phoenix and @Art Shalomov, as a lender and an investor himself, has been a great resource for them. Can't recommend him enough! And if you do what he's suggesting and need a great hard money lender, I have a recommendation for you.

Happy investing!

Melanie

@Mary E Veldkamp

Hi! I am very impressed with your background. As a RE agent in Metro Phoenix (since 2005) who discovered BP a few years ago, I have met some awesome people from around the country. I've also helped several buy and sell property here. Just this week I helped an investor close on two rentals...and we close on his third acquisition in a few weeks.

I would love to discuss our market and see how we can collaborate/network. There are so many paths to success and "squading up" is definitely one of them.

Feel free to DM me!

Melanie

Hello everyone in this thread. Here's an easy way to know where the growth is going in Metro Phoenix and Maricopa County. It has been planned out for years.

In broad strokes, the Valley is expanding to the NW and SE.

I'm working with investors who are buying single-family homes in the NW Valley, SE Valley and the West Valley. And speaking of Verrado, a BiggerPockets investor I'm working with is closing on two single family homes there, where inventory is low for great rentals.

Something to remember is that there are employment centers all around the Valley. Few people commute to downtown Phoenix. With Taiwan Semiconductor building in North Phoenix, there is growing interest there. Of course Intel's announcement of its $2 billion investment in Chandler is attracting attention, and all the surrounding communities will benefit.

I'm out on the mean hot streets of Phoenix every day FaceTiming home tours with investors, so feel free to ask me anything.

Melanie

@Account Closed Would love to connect! I lived here the summer it hit 124 and the planes had to be grounded at Sky Harbor International Airport.

After living through that, 110-115 is a piece of cake  ; )

Maybe you'll invest in an STR here so you can enjoy the cooler temps and all the fun!

Looking forward to future conversations,

Melanie

@Jim G. 

@Dave Foster is absolutely right about you being able to call your own shots as a seller. In our brokerage, which was founded by an investor and is very investor friendly, we created a seller contingency addendum. Basically it details what has to happen for the seller to complete an accepted contract. In your case it would be giving you the time to identify and go under contract for a target property.

Because you would already be under contract for the properties you are selling, your purchase offer will be much stronger. I recently advised a seller to take a contingent offer (highest price among 4 offers) because the buyer's home was already under contract and had passed inspections and appraisal. It was a smooth transaction.

We have lots of California investors looking at Metro Phoenix now. And I can recommend a good property manager, so keep us in mind.

And thanks @Account Closed for the shout out to Scottsdale!

Melanie

@Michelle Oblena

@Paul Welden makes some good points.

Also it’s pretty easy to look at demand for rentals in Casa Grande. You can look at how many active listings there are and you can also check closed listings to see how many days they were on the market before they were rented.

I’m actively helping an investor from California look at a new build in Casa Grande.

Let me run an MLS search for you in the morning and I will DM you a link.

Melanie