Phoenix Area MLS

[Rafael S.]

I'm finding that MLS properties in the Phoenix area are way over-priced relative to the rock bottom rents there (like $.70/square foot) in the sub $150k townhome/condo category I'm looking at. Granted, I use two month's vacancy in my cap rate model but it just seems like anything on the MLS is below 7% cap. Are investors really resorting to direct mail / spam / bandits to get decent deals?

[Pamela Sandberg]

"Overinflated" is a relative term. It implies that the price is above what the property is actually worth. Yes, the Phoenix market is hot right now. Yes, it's been pretty hot for several years now. (Note the dates on the earlier thread.) Does that mean it's over valued? IMHO, no. Rents have been rising steadily. (More than one of the US cities with highest rent increases are right here in the metro area.) Appreciation has been steady and reliable. Yes, prices are rising and there is a higher entry barrier, but there are significant offsets once you're in. 

Of course, in any hot market there will be sellers who inflate the price above what can be reasonably offset with rents and appreciation. Do your homework. Run the numbers and see if they make sense. If they do, don't get put off from a good deal just because there is a higher barrier to entry. 

Hope this helps! Happy to answer any specific Phoenix questions you have.