Which home type is better?

Question

A big hello to this wonderful community !!

We are going to buy a property for purely rental income in Phoenix AZ area with good schools. We plan to keep the property forever. We are not local so we will be managing this property remotely. The goal is highest rent for lowest investment cost and lowest maintenance. Ideal tenant would be families.

Given above scenario, what type of property make sense for us? Single family, Townhome, Condo/Apartment??

If there are any pockets of Phonix you can recommend that would be great too.

Thanks,

Ana

Kyle Gardner · Answer

Congrats Ana, I'm a realtor and general contractor in the Phoenix metro. I've sold over 200 properties, many of which were investments.

You'll have to decide what's most important to you. New build means low maintenance but new properties aren't a low investment. Good schools and great neighborhoods typically means higher purchase price and lower cash flow. Outskirt towns are less expensive but may see less appreciation if any at all. Condos and townhomes are nice but HOA fees eat into your profit.

So low maintenance with good cash flow: buy a brand new duplex, I just built and sold one and am building 2 more. But it's not a great area.

Mesa and Chandler have decent homes in good areas with decent rent while still being close to everything. But the homes are a little older.

Gilbert has the best schools in the State but prices are higher and rents are only slightly higher.

Give me a call and we can find the specific niches that you'd like to learn more about. 480-468-6611

Moussa Koulbou · Answer

I am a local investor and would recommend the following cities given your criteria: Gilbert, Chandler, Tempe, Peoria, North Phoenix in that order.

Bruce Woodruff · Answer

I am newer to the greater PHX area, but living over in the West Valley and driving around a lot I see these developments going in as fast as they can build! I'm also looking for some future investment properties so I'm always keeping my eyes open.

As I said, I am new to the area, so check out with a Realtor (one of the guys here on BP of course :-).....I see a lot of opportunities just West of Surprise. Very nice and reasonably priced houses. I saw some 3/2 and 4/2 for $300ks in nice neighborhoods. But Surprise and the West side are pretty far (45 min - 1 hr) from actual downtown. Down by Buckeye area is closer, esp to the airport.

But don't forget about these new chip factories and other BIG businesses moving into the west side. Not only off the northern 303 by Lake Pleasant, but down south by Cactus and Indian Hill as well. HUGE factories and tilt-ups going in all over...My RE sense (which is almost always usually right Lol) tells me that the West Valley will be the next boom area in the Valley. And it is often overlooked (and looked down upon) by long-time PHX residents

But once again, I am not giving advice just observing with a seasoned eye....see what others think....

David Avery · Answer

It's hard with interest rates and homes between $350,000 to ,$500,000. To have high rents.

But in this Phoenix area Appreciation is King.

Your house will double  in Price in less than 5 years.

Lots of area's in Mesa and Apache Junction.

Get a good Realtor. 👍

Best of luck.

Theresa Harris · Answer

You want what everyone wants-highest return with the least amount of investment.  Generally speaking anything with a HOA is going to give you a lower return.  I'd go for a single family home.  Also look for places that will attract a good tenant.  If you are buying the cheapest home in a not so great area, the returns on paper look great, but you will have a lot more costs than you expect due to a lower quality tenant.

Josh Young · Answer

@Ana Vhan as others have pointed out there are lots of good areas to invest here in the valley; but what I have found is that the highest rent for the lowest investment is single family homes in Casa Grande. I have been helping clients find, analyze, buy and manage these with great success. I have a client who just closed on his second one yesterday, this one is a new build $322k purchase price, and will rent for $1900. And I have another client under contract on a 2020 build for $272k purchase price and will rent for $1700. These rent prices are conservative and will rent quickly to great tenants.

Ana Vhan · Answer

Thank you so much everyone for the responses. Always appreciate such detailed responses.

As many of you pointed out, of course, we want to be in an area where we can attract the right tenant. Price range is 400-550K. Looking in good commuters areas with best schools. Please recommend locations.

Thanks again !

Ana

Bob Stevens · Answer

ITS ALL about the math, thats it!!

Allie Pfannenstiel · Answer

Also check out assumable loans, that might still be a good option in east and west side to get into something newer and with lower rates without shelling out too much cash.

Kyle Gardner · Answer

Gilbert and Chandler have the best ranked schools in the state. However there are some areas of southern mesa that are in Gilbert school districts but are technically Mesa so they have better prices. Plus, they're within 5 minutes of the 60 freeway so they're great for commuting.My wife and I bought our first house in one of these areas of Mesa. Home prices were about 20% less than Gilbert but we got highly ranked schools in the Gilbert district. 3 minutes to the freeway and if schools are a priority then this is a solid hack to get more rent while still getting great schools. I know Phoenix has pockets like this as well, you just have to do the research and look everyday for the right deal.

Which home type is better?

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