Single-family rent and hold in Phoenix or Tucson?

[Elizabeth Phillips]

I am looking to purchase one or two rent and hold single-family rental properties in Arizona in 2021. I've focused my research so far on the Phoenix area, but the numbers I've seen for Tucson for 2021 also look good. Does anyone have insight on the ground? Much appreciated!

[Andrew Kiel]

@Dmitriy Fomichenko - I both agree and disagree with you at the same time.  

Here's where I agree - prices are historically higher than they've every been, in Tucson our median value has just broken $300k, which is up from around $210k at the peak of the market in 2007-2008. I certainly don't have a crystal ball and don't know for how long the prices will go up or even stay stable.  If you are using hard money, or other short term financing you may be in a lot of trouble if the market takes a turn.  One should have a good (and many) exit strategies, if this is the case.

Here's where I disagree - while prices are higher, rents are significantly higher than 2007-2008.  Interest rates are significantly lower as well.  A $150k loan at 6% would have cost me $899.33 per month in 2008 where a $200k loan at 3.25% is only $870.41 a month today.  As a long term investor, I care about cash flow far more than purchase price.  If I can get $500-$700 a month in net cash flow every month I have a strong cushion if we do have a market correction.  Locking in a great long term rate takes the speculation out of the equation, in my opinion.