First timer here, opinions on Phoenix Market?

Question

Hello everyone, been cruising the forums for while now and im starting to consider seriously looking into my first investment rental in the Phoenix market for a few reasons.

Mainly, i have family there that can assist with any issues, i live in California and if necessary could be there in half a day, and more importantly i have a contractor whom i know i can trust on quality and pricing.

While not dead set on this, being completely green to investing, i certainly feel this may help me get started and diminish my risks as opposed to say Texas, or the Midwest, where it is completely foreign to me.

I know the phoenix market is hot, some would say overpriced, right now. Id be looking at long term investing of small multifamily, not really SFH. Whats the general opinion? its worth it and you just have to have a good agent and wait for something? Or is the buy in prices just a little to high for someone like myself (really cant afford over 300k, 350k max)?

much appreciated.

George Mevawala · Answer

@Adam Zamboni Phoenix is a great market to invest in. With the continued downfall & uncertainty of California as a state overall, it has only helped the growth of the Phoenix market. Many California residents ( and other residents in states such as Washington, Oregon, Colorado, New York, etc...) are targeting Arizona and relocating here not only for growing economy, but to take advantage of many benefits such as low property taxes, strong appreciation and great weather 9 months of the year.  Multifamily is extremely competitive, and you will have more difficulty in finding a buy ( trust me, it is like striking gold when you find a nice value add opportunity at a good price). I think it is best to determine what your long term goals are? What type of cap rates are you happy with? New builds vs remodels?

There are still PLENTY of good SFH buys in the Valley, you just need to do a little bit more homework or find an agent that knows the city like the back of their hand. I target value add product and although it has slimmed quite a bit in the last 10-14 months, there are plenty of up and coming areas of Phoenix that I am seeing be turned into B+ and A- minus neighborhoods, which I am targeting for my future investments. Hope this helps and always here to chat!

Bob Okenwa · Answer

@Adam Zamboni

The Phoenix market is hotter than the summer weather here lol. Being that you're next door in California and can easily get out here, and have a vital team member in a contractor, your 350k will do just fine out here.

With that being said, as the others have mentioned, inventory is tight and creative deal-finding is crucial. Off-market is the really the only way to go these days to avoid overpaying.

I suggest you do a cursory search on Zillow, Redfin, Realtor.com, etc. with your max budget of 350k and see what results you get and see what areas have the most properties. Those with the most will be the lesser-desired neighborhoods. The better neighborhoods are going to be in the northern part of Phoenix, northern part of Peoria, parts of central Phoenix, Scottsdale, Tempe, Ahwatukee, Chandler, Gilbert and the far West Valley.

Hope this helps.

Account Closed · Answer

@Adam Zamboni obviously there are plenty of options out there when choosing a city to invest in. Personally I chose Scottsdale to begin my investing journey. 4 years ago prices here were very reasonable and I liked where we stacked up in terms of avg income vs. avg home value.

Everybody has heard about Phoenix by now so the supply is being squeezed. We are under 3 months supply right now so it’s a sellers market all the way. Bidding wars are a regular occurrence.

That said, the jobs and net migration metrics are in our favor. The market is hot for a reason, tho arguably less lucrative than 4 years ago with the appreciation we’ve experienced.

Personally I’ve turned to wholesalers, pocket listings, and preforeclosures for the best opportunities here. There are less than 5 HUD homes listed here at the moment which gives you an idea of the competitive atmosphere for investing. A good realtor is a critical tool to have here (and everywhere else)!

If you have specific questions, fire away!

Account Closed · Answer

I picked the Phoenix area. But, it's really tight on the multi-families with people over paying, so I stick to single family and I've been quite happy with my decision.

Adam Zamboni · Answer

ahh this is all very good info, so certainly a challenge to find something that will work in my price range, maybe i should consider SFH, gives me something to think about. Appreciate the responses everyone!

Bryce Deeney · Answer

• Phoenix has less than two months supply
• Prices continue to increase month-over-month
• Interest rates are at historical lows
• Outside investors keep lining up to buy

Reality is, you can always find a deal in any market, but all of these factors make it that much more difficult. In your price range I would consider looking at the outskirts of town for SFHs, or condos and townhomes in Phoenix or Scottsdale. You will have a very difficult time finding a Multi Family property below 350k that is in a B- or better neighborhood. Appreciation is likely going to be very fun for long term investors over the next decade or so.

Melanie Johnston · Answer

@Adam Zamboni A public service announcement to anyone searching online, Redfin and Realtor.com have the most accurate status updates. Can't tell you how many people reach out to me about a property they find on Zillow, only to find out it's been under contract for several days (or longer). Best of luck in your search!

Melanie

First timer here, opinions on Phoenix Market?

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