All Forum Posts by: Account Closed

@Michael Conklin Arizona had the 3rd fastest growing GDP in Q4 2019 according to Phoenix business journal behind Utah and Washington.

www.bizjournals.com/phoenix/news/2020/04/07/arizonas-2019-gdp-growth-among-top-in-the-nation.amp.html

I’d argue that the relative GDP trend of a singular city is much more important than the its GDP compared to other cities.

On a different but equally important note, the Phoenix economy at the moment is diverse and that is actually something that gives me confidence in the sustainability of current trends. See the study below for a few details.

https://www.azeconomy.org/2019/05/economy/how-diversified-is-arizonas-economy/

Just my 2 cents. Appreciate the chance to dig into a few of your points.

@John Farady are you structuring the option fee as non-refundable? If so, those are impressive numbers! I’d love to bend your ear a little on how you’re advertising them.

@Donald Kellogg that’s great man. Love to hear about the success of others. A rising tide lifts all boats! If you come across anything interesting that you just can’t pull the trigger on, let me know! My partner and I are always keeping an eye out.

@John Farady out of curiosity can you share the lease option fee you’re seeking and the prop value? I’ve considered doing the same as an exit strategy on one of my rentals.

@Donald Kellogg are you continuing to seek out opportunities here or just standing pat at the moment?

@Brett Tvenge congrats man! Glad to hear you’re capitalizing on the sellers market. Hope the sale goes smoothly. Will you continue to

Seek out deals in the near term in PHX?

Let’s play a game. I’ll tell you why I’m betting heavily into the Phoenix real estate market. I’ll detail the stakes. I’ll outline my reasoning and then you get to poke a thousand holes in my theory. Ready? Go!!

The Stakes:

I own 3 SFH rentals valued at about $1M. I'm at about 80% LTV collectively with $100k in reserves (dry powder as they say) but minimal cash flow at the moment. I've pressed my leverage button pretty hard. The PHX market has been on a tear the last few years with appreciation, rent growth, and employment gains all registering in the top 5 cities consistently. Mine is an appreciation play which has treated me well thus far though I'm aware it's not exactly the meat and potatoes of the typical BP strategy.

I expect rents to continue to rise which should improve my cash flow. YOY rent growth was 6%+ last year though I don’t expect that meteoric pace to continue. I also expect values to continue to rise at a healthy pace. (8% collectively on my investments last year alone)

The Evidence:

Supply is literally limping along at this point. The analysis that I've read expects that to get worse before it gets better. Lenders have tightened the screws a bit on builders which I expect will slow the pace of development markedly while banks wait to see how COVID plays out. Lower LTV will make less deals pencil out unless rates somehow turn lower than the already record lows of today. The resale market is at an anorexic 2 month supply. Simply stated, I don't see a correction on the supply side coming for quite some time.

Demand is stable. Net migration and the jobs figures would indicate that we should expect demand to remain intact for some time. The mass exodus from California is causing bidding wars left at right at the moment. We’re talking 10 offers or more in 24 hours in North Scottsdale and North Phoenix (I’ve been watching both area like a hawk).

That said...it’s an election year so anything could happen.

Now for the opposing arguments...do your worst.

@Greg O'Brien the standard deduction is a valid point.... though if you own a primary with a mortgage of $200k and an investment with a mortgage of $200k even at 3.25% you’re likely

into the stage where you’re itemizing anyway so it becomes irrelevant. Inheritance tax is another topic altogether but not one I personally will experience!! 😂😂

@Tyler Smith my personal feeling on the topic is that it is better to start with 10 SF properties in B+ or A- areas where you don’t have as many issues with tenants. Once your portfolio has grown and you’ve been able to increase your spread on rents vs fixed costs it may make sense to 1031 in the MF space and hire a property manager. Ideally this would allow you to use leverage and buy better cash flowing assets and at the same time make it so that one tenant missing a rent payment doesn’t affect 10% of your revenue. As usual, it’s a question of risk vs. reward.

This business is ALL ABOUT finding the right tenants. Don’t let anyone tell you differently. My recommendation is 80% based on quality of tenant.

@James Tedrow

James is gaslighting pure and simple. No source, no analysis, no qualifier, no detail.

My research reveals Biden’s proposal would increase capital gains tax on those earning more than $1M...which likely truly affects about 1% of those of us on BP. Source: https://www.taxpolicycenter.org/publications/analysis-former-vice-president-bidens-tax-proposals/full

No mention of 1031 exchange specifically but read between the lines. If your AGI is $1M or above you’ve likely got the ability to seek a tax avoidance specialist to retain your wealth.

Orrrr you can just be triggered by a bozo like tag line.... It’s your life after all.