Where in AZ are you investing for CF and Why?

[Kevin Moules]

Hello BP members!

I am new to REI and joined BP several months ago. We live and Turlock, CA and are looking for buy and hold multi family opportunities for cash flow. Unfortunately our area will not support cash flowing properties (at least ones listed on the MLS). I have looked at other cities up to 2 hours away and it looks like the same story to me. Hard to cash flow even with 25% down. This has led me to look out of state, something I would not have thought about even 2 months ago. I read Brandon Turner's  book on rental property investing and am working through David Greene's book on Long distance investing.

I am looking at both OH and AZ as possibilities of areas to invest. OH because I spent about a month and a half there in 2012 doing missionary work and AZ because my sister in law and her husband live in Gilbert. I did not realize how beautiful AZ is! I love the low maintenance landscaping! I tried to convince my wife to let me do this to our front yard but she was not interested :( 

Anyways I started I thread asking folks where they invest in OH and have learned a great deal so I figured why not do the same in the other area I would like to invest. Check out the thread here. Where in OH are you investing and Why?

Wanted to know for those of you investing in AZ where are you investing? I am looking at Phoenix and  suburbs like Mesa, Gilbert, Chandler. Any other I should be looking at? I would love to get $200 per door cash flow if possible, but am quickly learning this is a unicorn in Northern OH and maybe the same in AZ. I am flying to AZ in December for a wedding and would love to meet up with investors or RE agents and learn about the area. 

If you are near to me in CA I would love to meet with you and discuss what you have learned about investing in AZ.

Thanks you all for your input!

[Wes Blackwell]

@Kevin Moules

Hahaha thanks for the compliments. I'm all about creating value for people and as agents we have access to critical information on the MLS that can really help investors make better decisions about which properties they decide to move on. I have other clients in your exact same shoes that are trying to make the decision between Sacramento / Stockton and Phoenix.

Real estate is truly neighborhood by neighborhood, street by street. And so my general recommendation is to find a property where the numbers work for you first, and then decide if the neighborhood works for you. There's no sense in looking in a good neighborhood where the ROI isn't there, and neighborhood quality is a supremely personal point of view.

For example, an investor from the wine country in Napa and an investor from the worst parts of Oakland will have a totally different opinion on the exact same neighborhood. So my general recommendation is invest in a neighborhood if you'd be willing to live there if you had to. Not if you wanted to lol, but if you had to. And only you can determine that. 

There aren't any investment maps of the Phoenix metro area that I know, and probably for good reason. The Phoenix metro area is HUGE. So for one person to know all of it that well is bologna. Plus, the best person to know it all is an agent, and we can get in super hot water with the state department of real estate by giving neighborhood ratings, etc. Trust me, I did in California for my map of Sacramento and Stockton. No bueno!

So, the first step is to know all of your numbers: 

• What's your budget? 
• How much are you pre-approved for? 
• How much are you putting down? 
• What's your interest rate? 
• What ROI are you looking to get?

Then, take a look at all available options and run the numbers. 

• What's the asking price? 
• What's it really worth? 
• How much can I get it for? 
• What are the current rents? 
• What could the rents be? 
• How much money will it take to fix it up to get those rents? 
• What are my expenses? 
• What's the ROI?
• How does this compare to other properties I'm considering?

Then, once you've found several properties where the numbers could work, analyze the neighborhood. The first step is to drive by the property and get the gut feel of it in person. If stray dogs are running the streets, there's trash and furniture out on the curbside, and suspicious looking characters loitering around up to no good, it's probably not a neighborhood you want to invest in. 

If you can't drive by, do a virtual driveby on google maps. It's not nearly the same as being there live in person, but it's as good as it gets if you have to do it remote. If you're investing in another state, have your local agent act as boots on the ground and go scout the area for you and send you some live videos. I just did this for a 12 unit apartment complex some investor clients of mine were considering. I walked all around the property, up and down the streets, and sent them like 10 minutes of video. Almost as good as being there in person.

Lastly, check the local crime maps. You can go to any city's police department website and see what crime site they post their reports to. Then scout the neighborhood you're considering and look back the past 6 months to get a good idea of the area over time. Ignore minor crimes like petty theft, loitering, stolen license plates, etc. That happens in every neighborhood. But drive-bys, shooting on an occupied dwelling, and assault with a deadly weapon only happens in the worst of neighborhoods.

Once you've identified an area that works, then expand the search a little bit and see if there are any other properties nearby that may work for you. And now you'll know that any new listings that come in that area will fit your neighborhood criteria. But once again, if it's totally overpriced and the numbers don't work... who cares?! That's why you start with the numbers. 

Hopefully that helps you analyze properties here in AZ and back in CA as well. If I can be of any other help or answer any more questions for you just let me know :-)