Investing in Phoenix

[Ryan Judah]

Hi BP community, 

I live in WA state and own two MF properties. With SFR and MF prices skyrocketing in our market it's becoming increasingly difficult to find deals that can produce double digit cash on cash returns. That's led me to research other markets (thank you David Greene - Long Distance Real Estate Investing) and for many reasons, Phoenix continues to find its way to the top of my list to learn more about.

I'm interested in learning and networking with people that are investing in the Valley of the Sun. I'm specifically looking at short term rentals and long term buy and hold; mainly as a plan B in case STR's demand dips due to economic or consumer driven changes in the current trends. As always, if you are/or know a top agent in Phoenix that invests in STR's or long term SFR/MF, please pass along their information.

Thank you BP community.

[Melanie Johnston]

Hi, @Ryan Judah. Congratulations on growing your portfolio!

As an agent who invests in and believes in STRs in Scottsdale, one of the most popular tourist destinations in the winter, I would be happy to provide my take on the market.

Your property options include SFRs and townhouses/condos. As someone who deals with pool equipment failures, and landscaping water leaks and keeping a gas BBQ spic and span for every guest, I would highly recommend looking into condos and townhouses over SFRs.

With the HOA taking care of the pool and the grounds, and with a good STR cleaning service (I can recommend one) you could manage this from afar and potentially skip paying a management company to do it for you. Yes, HOA fees are an issue, which is why I recommend complexes that have fees under $250 a month. If you see a complex that has "racquet" in its name...run...as those fees will be in the $400 range due to the added amenities.

I have helped many Canadian winter visitors search for houses and condos, which are almost always booked for the Jan-March high season at least 8 months in advance. Demand is high. A 1-bedroom in a desirable neighborhood easily fetches $2500/mo. for those months and sometimes more. A 2-bedroom may widen your audience a bit, but you'll have to weigh the extra acquisition cost.

Having gone the nightly stay route for my STR (located in a neighborhood without an HOA) I recommend switching to renting for a one-month minimum through the MLS during high season. You attract a high quality tenant, usually a retired couple from Canada or colder U.S. cities with the time to spend 1-3 months escaping the snow.

If your HOA allows less than 30-day stays, then you have the freedom to switch to nightly rentals for the shoulder or summer seasons. Or you could attract longer-term STR tenants, such as people who are moving here for a job and need a short-term place to stay and people with short-term job assignments, such as traveling nurses, etc. This past summer folks moving here from CA for their jobs rented my STR while they got to know the city.

Everyone here will have their own view of the best way to make the highest return. I'm happy to offer my 14 years of experience as an agent in Scottsdale/Metro Phoenix. Feel free to ask me any questions. And if you want to buy and hold, I can recommend cities that offer a lower entry price and a better opportunity to cash flow.

Melanie