All Forum Posts by: Ryan Swan

I think damages would have to be north of $15k for me to file a claim vs just paying for the repair(s) out of pocket. That's just my personal approach because I have the cash to cover repairs of that size. Involving your insurance company can make the process take much longer. Depending on the age of your home, they may also have to do testing for lead based paint and asbestos in the drywall or linoleum tiles and then pay to remediate it before proceeding with work. Your rates almost always go up the next renewal after a claim, so paying for it out of pocket can actually save you money in the long run. 

I had a condo Airbnb that didn't work out due to changes in the HOA and some real busy body neighbors. It was beautifully furnished and decorated. We pivoted to long term furnished rental and it always seemed much harder to rent. Dozens and dozens of inquiries, but all of them asking "can you take the furnishings out?". I'd eventually get it rented to a niche tenant that wanted it furnished, but it probably added 3-4 weeks of vacancy at each turn. Plus, I found that the tenants can be really rough on the furnishings.

Just raised two of my rents by 18% and had zero issue re-renting the houses. I legitimately had over 200 Zillow inquiries on one of the houses within 48 hours, leading me to believe I probably could have gone higher. I am generally not too aggressive with rent raises for existing tenants that pay on time and take care of the house. I've learned over 18 years of being a landlord that my peace of mind is worth more than a few extra bucks a month. It's much easier to raise rents at the turn and start fresh with new tenants. 

PROS

+ Potential for much higher gross and net revenue 

+ Removes the large swings in vacancy commonly associated with SFRs. Instead of being 100% occupied or 0% occupied, your vacancy rate would be more consistent (4 out of 5 rooms rented = 80%). This makes it more akin to a small multi-family property

CONS

- Potentially higher turnover

- You need to keep utilities in your name so they remain on when tenants come/go

- Potential for roommate disputes 

- Potentially more wear and tear on the home 

Hey David

Talk is cheap amongst agents who all claim they "work with investors". Make sure whoever you choose has actual experience with multi-family properties. The 1031 exchange adds an extra layer of complexity to your downstream replacement property purchase. 

Scottsdale, Paradise Valley, Sedona, and other AZ cities have been working to get more control ever since the original bill was passed. These changes are a good compromise to help keep the Airbnb model alive and well in these cities. The extreme party houses and repeat offenders are the ones giving the industry a bad rap and ruining it for the thousands of other hosts that follow the rules. The cities should have some enforcement teeth to regulate the bad apples to the rest of the industry can thrive. 

Phoenix was extremely overbuilt in 2005-2008 and then when the market crashed, there were no buyers for the glut of excess inventory. The wave of foreclosures from 2009-2013 only added to the oversaturation.

The situation over the past ~3 years has been the exact opposite: buyer demand greatly exceeded supply, both in terms of resale and new build inventory. The market was so fierce that many buyers were out bid over and over again until they got "buyer fatigue" and decided to stop trying to compete. These buyers still want to be homeowners, so they will re-enter the market when the time is right (more on that below). 

My predictions are as follows:

• Current inventory is increasing, but the interest rates have made the payments unaffordable for many first time buyers

• Prices will decline until the homes are affordable given a rising interest rate environment. The important thing to note is that price declines do not equal a crash! Prices could go down 10-20% and most home sellers will still have positive equity (compared to negative equity in 2008/2009)

• We're already starting to see the price declines, and that will continue over the next 6-12 months

• Higher priced homes ($800K and up) will be less affected as these buyers are making the decision to still buy and deal with the higher current payment as a fact of ownership. These buyers have the financial ability to buy now and refinance later..."marry the home but date the rate". I just closed a $950k home for a buyer using a dentist loan with a 5% rate and no PMI...5% is certainly worse than 3% but it's not unaffordable for this class of buyer.

• I have boots on the ground experience and I can tell you with certainty the buyer demand is still high here. I wrote an offer on a Phoenix home priced in the $600s that had over 20 showings yesterday and still has multiple offers. The good "no brainer" homes that tick the boxes are still selling quickly. The homes with shortcomings that are priced as if it's still 2021 are the ones that will see the price declines.

Why are they trying to unload it at a discount? 

Is it vacant or tenant occupied? 

Do you get a due diligence period or is it hard (non-refundable) earnest money at contract acceptance? 

The biggest item to research would be the HOA...financial stability, pending litigation, upcoming special assessments or capital improvement fees. Also very important...verify that the complex is warrantable for financing! This could greatly impact both your ability to purchase it, and your exit strategy.

There's a new construction home in Phoenix (actually in Phoenix, not a remote suburb) for $255k??

Central Phoenix actually has a really strong Airbnb market that actually gets overlooked compared to Scottsdale. Some N.Phoenix zip codes also have the benefit of Phoenix municipality (police, water, trash, tax, laws, etc), but with a Scottsdale mailing address. This is the best of both worlds!

My STR clients and I have typically avoided Chandler and Gilbert because there are so many HOAs. Mesa doesn't seem like a strong enough market, and may also have a negative stigma from out of state travelers. A house on the edge of Mesa/Tempe next to the Cubs spring training facility could work well.