Any advice on how to start out investing in Phoenix, AZ area?

[Miciah Furbay]

Hi,

I want to get started in real estate investing and so far I am mostly interested in long term rental properties and Multi-family properties. However, I am running into a lot of questions about how I will started in my local area of Phoenix. It seems prices are relatively high in the area and that leads me to wonder if I should keep looking for a good deal locally or if it would be a better idea to invest out of state.

However, I understand investing out of state comes with its own drawbacks so I am not sure if that would be a great idea as a first property. Just for context, I am single and make about $75K a year with around $100K saved up in the bank. What would you do in my position?

Thanks,

[Josh Young]

@Miciah Furbay

Buy a primary residence in a good area using a 5% down payment convention loan, don't max out your DTI, in 12 months buy another primary residence with another 5% down payment conventional loan and start renting out the first one. You will probably be a little negative on cash flow unless you rent by the room or buy the interest rate down or both, but honestly a little negative on cash flow isn't a big deal if you still have most of your cash in the bank since you only put 5% down. Repeat this strategy every couple years.

If you really don't want to buy a primary residence and instead you want to buy an investment property then I would recommend a new build in Casa Grande for under $300k, this will require a 25% down payment and buying the rate down a little to break even on cash flow, but will be a very easy first rental property as it will be brand new and will not require any cap ex for many years and by the time it does require cap ex you will have raised the rent and gained enough equity to do a cash out refinance.