Investing in Phoenix

[Vlad Denisov]

Hello everyone!

I live in LA. Cap rates here and tenant-friendly environment aren't what I'm looking for, so I want to invest out of state. 

Phoenix looks good on demographics, jobs and it's also only 5 hours by car. Since I'm not familiar with this area, I'd appreciate every piece of advice you guys can share :)

[Serge S.]

@Vlad Denisov small multifamily 5-50 units is a very tough market in PHX right now. Much more downside risk than upside. Management from CA will be an immense challenge. Labor is very expensive and challenging to source right now and vendors love the CA $$$, looks greener to them:) The neighborhood your looking in is where a lot of out of state guys start so there will be no off market or diamond in the rough deals to be had. You need to hit the street and talk to guys that invest in that space. I would recommend you buy a condo or SFR to start and try the STR game. At the very least you have a safe house when you come and visit and the numbers have a chance to work. If you don't like the experience then you have a fully staged home to throw on the MLS and move on. Easy in easy out. Jump to a 30 unit your looking at minimum $3M for class C/D. Sounds cheap coming from SoCal but that $3M will buy you $15-20k EGI realistically. Pick the wrong street over and your copper will go missing between turns. I'll take 5 units in LA at a 4 cap over 30 units in PHX at a 4.5 cap. Rolling dice on appreciation both ways and in that case I'll bet on CA every time.