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Updated 11 months ago, 01/02/2024
Starting Out In Phoenix At 24!
Hello BP Community!
Been doing a ton of research on REI over the past few months and am ready to pull the trigger next year. I wanted to cover my why and what first to give a good picture of where I'm at current state, with a background and what I'm looking for below.
My why: I recently got married and moved from San Diego to Scottsdale this year. I've realized how much I'd like to spend time with my wife and have time for our kids one day. I've always looked to the stock market or starting my own business to one day reach financial freedom but love what I've seen in real estate more! My goal with REI is to gain financial freedom, spend more time with family here and that are out of town (and therefore cost more to go see), and to be able to buy the things I want ( I love cars and live very close to some luxury auto dealers lol)!
**Disclaimer**: Being young, I don't have a lot of responsibility so I am fine with being more hands on now to be able to have more time to spend with family later on.
My what: I'm looking to buy small multi-family property to house hack and gain equity quickly over the next few years. From there I'd look to refi and use the cash to then acquire STR's or potentially bigger multi-family/apartments. I'm also open to flipping once I have some more funds on hand as I have some friends here I know that could help me with the right contractors to work with and start to make some money that way to get more properties. Overall, my plan is to get as much equity as I can in this market to then invest in more real estate, then optimize in the end for cash flow.
Some background info on me: My wife and I are both 24 years old, each of us make a good living for this area and are fine saving money and living in an apartment with cheap rent at the moment. We've saved about $40k so far but with bonuses at the end of this year from our jobs we should be over $50k very soon. We also save around $3k-$4k a month and are good with our money. We have credit scores over 730 and have been "soft approved" for around $750k.
Alright, so now you know all about me let's get into where I could use some guidance. I'd love to hear any thoughts on my strategy if you'd stay away from Multi-family or if that's the right call. I'd also like to connect with someone who is in the local market that can offer me some guidance, I'm happy to pay for lunch/coffee/drinks!
Thank you to this community for offering so much help already, I wouldn't have a what or why at all if I hadn't found BP!!
-Jackson
I love where you mind is at and how organized your post/plan is. Also love that you guys are getting started so young. I did my first deal at 25 years old (a house hack) and getting started early benefited me in many ways.
It'll be tough finding multifamily deals where the numbers make sense right now. Multifamily pricing is really high in the A and B neighborhoods around Scottsdale and Phoenix. With high price per door and high rates, you wont find any cash flow.
STR market is also very saturated and we're seeing more regulation there.
I'd keep the end goal bigger multifamily deals. And for the short term goal, do a house hack as you have planned.
If you need any more direction send me a message. Would be happy to meet up and discuss your goals in more detail.
#4 House Hacking Contributor
- Cleveland, OH
Jackson,
I wish I was in your market because I love your story!!! Reminds me of myself in many ways. I'm 22 (23 next month) and looking to do a lot of the same things.
My why is exactly the same as yours. Looking to win back time that I'd rather be spending with my wife and kids in the future.
I'm personally looking to start the exact same way as you with a multifamily house hack.
It's great that you already have an idea of how much $ you qualify for so that you know what locations to start looking in. You also know the type of property that you're looking for. I would keep doing what you're doing and network as much as you possibly can. It's clear that is something you're actively doing as well! Network with an agent who has worked with house hackers and start looking at properties and running your numbers.
You said: "I wouldn't have a what or why at all if I hadn't found BP!!"
This is the truth. My mindset switch over the last couple years has been incredible and I don't just think that I'm going to achieve FF through real estate and personal finance, I know so.
All the best to you, Jackson!
Hey Jackson!
Way to make this post and put it out into the universe that you are ready to jump into REI.
Getting into multi family in PHX is a bit of a high barrier to entry and the number of options you'd have are super low. For example, there are a grand total of a whopping 34 multi family properties currently on market for under $500k.
I definitely feel that a house hack strategy is an excellent way to start. It kills many birds with one stone. You can also target a SFH that has a casita or has room for one to be built. They just passed pro ADU laws here. And as this fleshes out and rents continue to rise, I feel like it's only a matter of time till renters are more open to this type of living. Going this route creates a multi family scenario creatively.
Hope this helps!
Jackson, firstly congrats! I also relocated from San Diego to Scottsdale, and started in real estate when I was 25! Sending you a PM :)
Hey Jackson - welcome and congrats on jumping in and making some moves!
@Jackson Harris as long as your definition of MF is duplex, triplex or quads AND your willing to live in some of the tougher (or at least, less desirable) neighborhoods AND you have patience your plan can work.
As others have noted the number of MF properties in the greater Phx area is low compared to many markets and the number for sale is even lower. I live in Phx but we do most of our investing out of state, so I’m not also the most current on local trends: so find yourself a good local agent to confirm that:
- it’s going to be hard to find anything at < $150k / door. Rehab will be required.
- you may need to look outside of Phx to markets like Gilbert/Mesa or even Tucson. Most of the Phx pockets of small MF properties have been turning over for the past 5 years. Not too many left.
- When you find them, they won’t be in neighborhoods with luxury car dealerships. More likely cash checking and pawn shops.
- Given the demand, buying on through MLS will be tough. You'll have to be very lucky or willing to buy a problem child property and/or neighborhood. You might want to start investigating methods for locating off-market opportunities that appeal to you. These are high effort low success processes that pay off big if/when they hit.
Good luck!
Thank you all for your responses! It's really helpful to get some insight into this market and what others have done.
Quote from @Scott E.:
I love where you mind is at and how organized your post/plan is. Also love that you guys are getting started so young. I did my first deal at 25 years old (a house hack) and getting started early benefited me in many ways.
It'll be tough finding multifamily deals where the numbers make sense right now. Multifamily pricing is really high in the A and B neighborhoods around Scottsdale and Phoenix. With high price per door and high rates, you wont find any cash flow.
STR market is also very saturated and we're seeing more regulation there.
I'd keep the end goal bigger multifamily deals. And for the short term goal, do a house hack as you have planned.
If you need any more direction send me a message. Would be happy to meet up and discuss your goals in more detail.
Glad you said it, I didn't want to come off as being negative
@Jackson Harris the Phoenix area may not be for you with that kind of money yet for all the reasons Scott mentioned. Metro areas in AZ for that matter are along the same lines. Don't be afraid to invest out of state to get started. Of you can relocate and house hack, I highly recommend that so you give up less cash upfront.
Good job not spending your stack on some bad *** pick em up truck or other nonsense young people would otherwise spend it on!
Absolutely, it's clear you've put thought into your real estate journey, and your aspirations for financial freedom are commendable! Your focus on building equity and achieving independence aligns well with your chosen strategies. Starting with a small multi-family house hack is a smart move, offering the benefits of living rent-free and equity building. Just be mindful of Scottsdale's regulations on short-term rentals (STRs) in residential neighborhoods. Leveraging the equity from your house hack for future investments, whether in STRs or larger multi-family properties, is a strategic plan, but ensure your initial property performs well before taking on bigger projects like flipping. Given the competitiveness in Scottsdale, exploring duplexes or triplexes might be a more feasible alternative to larger multi-family units. Keep an eye on the STR regulations, and as you progress, consider diversifying your portfolio with other asset classes like commercial or single-family rentals for added stability. Your thoughtful approach sets you on the right path for success!
Hello Jackson and welcome to BP! I love the why and your current game plan. I also wish I had started thinking about REI at your age. I applaud you and your wife for thinking about this so early and your apparently great ability to save money for this next step!
The only thing I wanted to recommend was trying to find a strategy you like and getting really good at that strategy. The house hack would be a great way to start. From there you mentioned STR, Multifamily and fix and flip. You can certainly do any/all of these. However, I see a lot of people achieve success by getting really good at one thing. Finding which of those strategies works best for you, your goals and interests could help you speed up your investment journey while gaining experience, confidence and eventually expertise in your chosen area.
I'd love to chat more or possibly meet for coffee!