Phoenix vs. Tucson AZ market - Good rental Market for 2018?

Question

Hi Guys, I know the prices have gone up in Phoenix in the past several years. I've made 2 trips there and it's impressive to see the changes in 6-10 months in the market.

However, after analyzing several markets, I realized that the Property Taxes and Insurance in greater Phoenix is actually really cheap and good for cash flow. So I'm now again actively looking at the market.

My question is, Im now looking for Single family homes and Tucson AZ seems to have way more options and newer homes for the price range I'm looking for. So I'm wondering if anyone knows or have any feedback on the Tucson AZ market? Is it a good Buy and Hold rental market for long term? Good cash flow market?

I know lots about the Phoenix/Scottsdale market, but never took Tucson in consideration or even seen it.
So any insight would be appreciate!

Thanks!
Lucien

Cara Lonsdale · Answer

Unless something MAJOR moves in and brings people South, Tucson will never be able to compete with the growth of Greater Phx.

IMHO, the vast majority of people go down there for 3 reasons...School (U of A), Military, and retirement.

Those 3 categories are your biggest opportunity there.

If you were to take a drive down to Tucson, you will pass many ghost towns that were supposed to be the "up and coming Phx" including AZ City, Maricopa, etc.

Now, to be fair, the cost of entry is relatively cheap compared to Phx.  However, as one other poster already mentioned, that comes with a sacrifice of area or condition.

In terms of Phx, it is a broad spectrum, but to give you an idea.... you could expect that a $175K-$200K home will get you a $1,200-$1400 rental rate.  You can run some numbers and see if that kind of deal will give you the kind of return you are looking for.

Naftali Tolibas · Answer

Its sort of a struggle here in Tucson, as in other hot markets.

After personally looking through and analyzing deals here in Tucson, I've come to a few conclusions:

1) The cash flowing properties are in 'bad' neighborhoods. I wouldn't be walking there at night, or maybe even during the day.

2) All the great neighborhoods are too high to create cash flow. So the deals are mainly found off-market.

3) Multi-family has a chance for a deal to pop-up every now and then on the MLS, but those go quick, with multiple offers. It was difficult for someone starting off like me to compete.

To answer your question, I think it is a good Buy and Hold long term. The population grows every year, Downtown is growing, U of A is a great school, there's an Air-Force base and companies such as Raytheon and Caterpillar are bring in lots of job opportunities.

There are deals out there that produce cash flow, however the ones that count (ie in a good location) are difficult to find.

Cara Lonsdale · Answer

Those sound like really good reasons to make AZ your home.  As with any area, make sure you do one of two things; either scout the area personally, or have someone here that you trust and/or knows the various areas, to guide you around the different pockets.

The thing about Peoria is that much of it is so far north of the 101, and blended into Sun City (Retirement community).  Then the part Peoria the furthest South CAN be a little seedy (like along Grand Ave).  So, that leaves a very narrow windows of opportunity throughout those areas.

I like the area of Peoria that is near 83rd ave and Thunderbird.  That general area is nice.  It has great shops and restaurants just north on Bell, and it isn't too far away from Westgate, which is a HUGE outdoor mall and concert venue in Glendale.  I would be happy to further discuss if you want to PM me.  I don't want to distract from the Tucson dicussion the OP wanted to have. :)

Zack Niemeyer · Answer

@Lucien Gautreau

I have two college student rentals in Tempe. Both 4br/2b near McClintock and Broadway. I picked them up for the low 200k's and with a minor rehab they now rent for about $2,100/mo. ASU student rentals are great for cash flow if you can handle the extra abuse on the houses and young tenants. Let me know if this is something that would interest you.

Mario Misuraca · Answer

I have off market multi units. Contact me and we can discuss.

Mario Misuraca · Answer

Tucson will offer a much better return than phx will. Is there a reason you're looking at single family over multi units?

Steven Lowe · Answer

I have been actively been looking for SFR and small MF rehab opportunities in Tucson.  I own property in the area.  Anyone have any interesting deals?

Chai Jonn · Answer

Cara,

Sent you a message

Chai

Ben I. · Answer

Thanks for the advice and yeah let's take this to PM so we don't derail the thread.

Ben I. · Answer

My wife and I really want to move out there for two reasons. 1) The living conditions are much better aligned with our lifestyle. AZ has much more outdoor activities nearby compare to Chicago and the weather is so much better. 2) The organization we are working with in Kenya is building a rehab center/US base in Phoenix AZ. We're Romanian and Peoria is the city that most of the Romanians live in and is where the rehab center will be.

Phoenix vs. Tucson AZ market - Good rental Market for 2018?

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