All Forum Posts by: Wes Blackwell

@Andrew Martherus

No matter what market you're in, whether it's Tempe, Phoenix, Sacramento or anywhere else, all that matter is how your deal compares to the averages for the area.

The 1-2% is the bane most beginners on here lol, because it works in one market and people try to expand it to apply nationwide. I've probably made 20+ posts about it, no lie haha.

When you think about it, the median home price here is $270k, which would make 1% rule of $2,700... so why would anyone pay that when 5% down with a 5% interest rate would make for a mortgage of $1925 or so?

And the same thing applies to multifamily... just the numbers a little different (not as big a gap).

What I do for my clients is analyze what ALL the similar deals have offered in terms of ROI, and that way the investor can see what deals in that market are offering on average, and then truly compare this deal vs. what's normally available.

That's the only way to know if it's a deal or not, as some metric used in another state with different prices, rents and appreciation will be of no use here.

Ultimately, you have to ask yourself if the deal makes sense for you and your family. Calculate what your obligation to the monthly mortgage would be with your family living in one of the units, and if you're okay with that number then move forward. 

One of the things about trying to house-hack a fourplex is that you have consider the numbers AND what works for your family. Sure, maybe you could find a better investment somewhere else in town... but does your wife also want to live there? Are you ok with the school districts for your daughter? Way more to consider than what your ROI is.

If you want help analyzing the actual specifics of the property just send me a message with the address and I'll let you know what I think.

@Allison Meggison

If you're working with an agent in Phoenix, they can easily find the tax mailing address for the home owner, which would likely be the place the LLC has all their mail sent to. So why not just send your letter there and ask for a call back?

@Fernando Garcia

Most likely, you're looking at a degree in civil engineering or business / management. And that may be needed to get you the right job that helps you get the experience you need. 

"As a developer in training, you want a job that exposes you to the maximum amount of the development cycle with the maximum possible learning velocity (time and speed). You will need to learn all of these components of a development deal: land acquisition, site selection and sourcing, zoning and entitlements, architectural design management, deal underwriting, financing, construction, leasing, property management, and sale or asset management.

I would suggest working for companies that already develop the types of projects that you are ambitious to build in the future. Search for companies in your local area: google search, look for ads that are selling or renting new projects and identify the developer, read news of company announcements, and most importantly, build your networks. Networks could be: local builders exchange, local and regional homebuilders association, search on websites for NAHB, NMHC, ULI, attend real estate meet-ups, attend real estate conferences. 

Your likely job title will be: assistant project manager, analyst, development associate.Whatever it is, you will be working for a more seasoned project manager or senior project manager. Know this: that person is worth their weight in gold, and can be the primary person that you run things past or ask questions as you move through your day. 

An alternative could be that you intern for a small development company, with the express purpose of gaining development experience, or at least that's how you should communicate it to them. You may have to work for free or at low cost to the small company, as they will be very sensitive to cash flow and costs.

The development business is one of the most complicated businesses that I know of combined with risk in land markets, underwriting, financing, and construction. While each component part is not overly hard to understand, there's a ton of steps, and each step has risk embedded in it AND you are dealing with people all along the way: brokers, land sellers, planners, politicians, bankers, construction folks, renters, property managers, and buyers. So your ability to both understand the process better than anyone else AND to convince other people to go your way, agree to allow you to do your project, or support your project with investment, is of paramount importance."

Best of luck in Phoenix! If I can be of any further help just let me know!

@Jason James

I have seen this in Sacramento and Stockton area, and usually is only done by savvy investors who know what a property is worth and can get a good sense of what it needs just by viewing the property themselves. For all you know, they were a contractor or took theirs with them when they viewed the home. 

Plus, if the home is generally in decent shape, what could REALLY be wrong with it? AC goes out a year later? That's peanuts to get the right house for your family or investment portfolio. And Stockton is such a competitive market you're going to see Bay Area money thrown around like that. Ridiculously hard to compete against, no doubt.

@Jared Smith

Bummer man! Sorry that happened!

No way to estimate cost, as the damage is behind the drywall, and you won't know how much there is or exactly what needs to be fixed until you get in there and look. Could be something as simply as an overflowed toilet that just simply needs to have a clog removed.

Best advice is discern what caused it the best you can, and then have several plumbers come take a look. If they know they are competing for the job you'll get better pricing and a more accurate diagnosis. Best of luck and I hope the damage isn't too bad!

@Dan Gauthier

If you're just getting started, I would recommend at least learning how to run the numbers in your own backyard first (Phoenix). The #1 thing that messes up out of state investors is a lack of knowledge about the market they are investing in. They get sold up a river by some turnkey property flipper and end up paying way more than a property is worth, buying in a bad area, etc. 

Plus, if the crap hits the fan you can always drive to the property to fix the issue. Not take a week off of work to fly to Tampa to remove the alligators swimming in your living room because of the latest hurricane. The Tampa-St. Petersburg area has an 11% chance of feeling the impacts of a hurricane in any given year, so I don't know why you'd take such a risk when Arizona is measurably a safe bet. 

Arizona is #4 in the country for job growth, #4 in the country for population growth, #2 retirement destination in the US with 10,000 baby boomers per day turning 65 and retiring, and has Californians coming by the truckload gladly paying the $270k median home price because it's twice that where they're coming from. 

Not trying to dissuade you from your plan, as I couldn't tell you any stats about all the other stats in such detail as you may be able to. But I think there's a great opportunity in your backyard and it will be far easier to learn the market with far less risk than looking out of state. Just my two cents.

@George Hariri

The answer is that it totally depends on your investment strategy, level of comfort with the area, and financing. What's a deal to you might not be a deal to someone else, and vice versa.

If you're just getting started and are simply learning how to run the numbers on a neighborhood, then I highly suggest starting with the neighborhood you live in. You're in it every day, know the neighbors, drive by open house signs and for sale signs all the time, so it makes the job a million times easier vs. starting with some other part of town you've never been in and know nothing about.

Start with your neighborhood in Peoria (nice area) and then once you get the hang of it and know more about what kind of deals you're actually looking for, THEN you can start scouting other areas in Phoenix because you'll have the know-how to actually find the deals.

Because right now, using a metric like the 1% rule will be useless to you because it's completely useless for higher property value states. The median home price here is around $270k, so 1% rent would be $2,700 -- and no one is going to pay that when the mortgage on the property with 5% down and a 5% interest rate is only ~$1,900/month. So why would anyone pay $800/mo more to rent it when they could own it for way less?

Start with your neighborhood, learn the numbers, metrics and analysis, and then once you know what to actually look for you can go about finding it. 

P.S. A knowledgeable agent will help ease your learning curve dramatically, as this is what we do for a living. Happy to help if needed :-)

@Justin Spruell

Awesome plan! Lots of people are currently moving to the Phoenix metro area, so you won't be alone in your thinking. Using this strategy will definitely show it's dividends down the road vs. buying single family homes.

The first thing you need to consider is your relative experience and familiarity with the Phoenix Metro Area. Have you ever lived here before? Have you ever visited in the summer? You're looking at a 30 degree difference compared to Washington in the middle of July. Are you sure your wife will be okay raising kids in the neighborhood where the fourplex is located? How close will this property be to your work when you move here? Are you used to rush hour traffic that could take you an hour to get home? Etc.

These are important questions to consider when looking at a fourplex, because if you plan on living there in one of the units, often what you want out of a rental and what you want out of a home to live in are at odds with each other. If you'll be renting a separate home to live in here as well, you still must consider the area where the fourplex is located and you comfortably with the crime, school ratings, and overall quality as well.

As @Frank Procopio said, the #1 thing you can do is find a savvy local agent who knows the area and understands your goals as an investor. Because most agents don't. And you should find someone who's willing to be your boots on the ground and go look at properties for you and send you videos and pictures while you're out of state. That will make you far more confident in your decision whether to purchase a specific property if you aren't familiar with the area.

If you have any more specific questions about the Phoenix area, just reply and we'll help you get them answered :-)

@Randall Prosise

https://www.scottsdaleaz.gov/codes/swimming-pools

Scottsdale’s current swimming pool barrier requirements apply to all single-family residential swimming pools, spas and hot tubs constructed after July 20, 1995.

Since the requirements are not retroactive, pools constructed prior to July 15, 1992, need only comply with the 54” perimeter yard fencing and gate requirement in effect at the time. Pools constructed from July 15, 1992, until July 20, 1995, must meet the current requirements, except perimeter fence height, which was 54” (4’-6”) at the time.

An outdoor swimming pool, including an in-ground, above-ground or on-ground pool, spa or hot tub, shall be surrounded by a barrier which shall comply with the following:

1. The top of the barrier shall be at least 5 feet (1,524 mm) above grade measured on the side of the barrier which faces away from the swimming pool. The maximum vertical clearance between grade and the bottom of the barrier shall be 2 inches (51 mm) measured on the side of the barrier which faces away from the swimming pool. Where the top of the pool structure is above grade, such as an above-ground pool, the barrier may be at ground level, such as the pool structure, or mounted on top of the pool structure. Where the barrier is mounted on top of the pool structure, the maximum vertical clearance between the top of the pool structure and the bottom of the barrier shall be 4 inches (102 mm).

2. Openings in the barrier shall not allow the passage of a 4-inch-diameter (102 mm) sphere.

3. Solid barriers which do not have openings, such as a masonry or stone wall, shall not contain indentations or protrusions, except for normal construction tolerances and tooled masonry joints.

4. Where the barrier is composed of horizontal and vertical members, and the distance between the tops of the horizontal members is less than 45 inches (1,143 mm), the horizontal members shall be located on the swimming pool side of the fence. Spacing between vertical members shall not exceed 1¾ inches (44 mm) in width. Where there are decorative cutouts within vertical members, spacing within the cutouts shall not exceed 1¾ inches (44 mm) in width.

5. Where the barrier is composed of horizontal and vertical members, and the distance between the tops of the horizontal members is 45 inches (1,143 mm) or more, spacing between vertical members shall not exceed 4 inches (102 mm). Where there are decorative cutouts within vertical members, spacing within the cutouts shall not exceed 1¾ inches (44 mm) in width.

6. Maximum mesh size for chain link fences shall be a 2¼ inch (57 mm) square, unless the fence has slats fastened at the top or the bottom which reduce the openings to not more than 1¾ inches (44 mm).

7. Where the barrier is composed of diagonal members, such as a lattice fence, the maximum opening formed by the diagonal members shall not be more than 1¾ inches (44 mm).

8. Access gates shall comply with the requirements of Items 1 through 7 above, and shall be equipped to accommodate a locking device. Pedestrian access gates shall open outward away from the pool, and shall be self-closing and have a self-latching device. Gates, other than pedestrian access gates, shall have a self-latching device. Where the release mechanism of the self-latching device is located less than 54 inches (1,372 mm) from the bottom of the gate, the release mechanism and openings shall comply with the following:

8.1. The release mechanism shall be located on the pool side of the gate at least 3 inches (76 mm) below the top of the gate; and

8.2. The gate and barrier shall have no opening larger than ½ inch (12.7 mm) within 18 inches (457 mm) of the release mechanism.

9. Where a wall of a dwelling serves as part of the barrier, one of the following conditions shall be met:

9.1. The pool shall be equipped with a powered safety cover in compliance with ASTM F 1346;

9.2. Doors with direct access to the pool through that wall shall be equipped with an alarm which produces an audible warning when the door and/or its screen, if present, are opened. The alarm shall be listed and labeled in accordance with UL 2017. The alarm shall:

9.2.1 Activate within 7 seconds and sound continuously for a minimum of 30 seconds.

9.2.2 Be heard throughout the house during normal household activities with a sound pressure level of not less than 85 dba when measured indoors at 10 feet (3,048 mm).

9.2.3 Reset automatically reset under all conditions.

9.2.4 Repeat 9.2.1, 9.2.2 and 9.2.3 until the door, and/or its screen, if present, are closed.

9.2.5 Be equipped with a manual means, such as touchpad or switch located 54 inches (1,372 mm) or more above the threshold of the door, to temporarily deactivate the alarm for a single opening. Such deactivation shall last for not more than 15 seconds. Doors that remain open after 15 seconds shall activate the alarm as outlined in 9.2.4.

9.2.6 Not be equipped with an on/off switch of any type other than the temporary deactivation switch.

9.3. Other means of protection, such as self-closing doors with self-latching devices, which are approved by the building official, shall be acceptable as long as the degree of protection afforded is not less than the protection afforded by Item 9.1 or 9.2 described herein.

10. Where an above-ground pool structure is used as a barrier or where the barrier is mounted on top of the pool structure, and the means of access is a ladder or steps:

10.1. The ladder or steps shall be capable of being secured, locked or removed to prevent access; or

10.2. The ladder or steps shall be surrounded by a barrier which meets the requirements of Items 1 through 9 above. When the ladder or steps are secured, locked or removed, any opening created shall not allow the passage of a 4-inch-diameter (102 mm) sphere.

P.S. Your agent should've told you this.

@Tammy Ly

Ultimately, it's going to depend on your criteria and strategy, but I would say yes. There is a massive migration going on in California. The largest homebuyer segment is millennials under the age of 37, and they are moving out of the pricey Bay Area and into Stockton, Sacramento, Phoenix and Nevada.

As for Stockton, where else are you going to find a decent home for $250k? See map below:

Recently listed a home in Stockton and got 3 offers on the first weekend. Market is hot.

So, in my advice, yes. Stockton is a good place to invest. But it all depends on your strategy, experience, goals, etc. just like any other market. 

If you have any more specific questions about Stockton just let me know, grew up there so I know it like the back of my hand.