Given that it's super difficult to find flip properties in Arizona I'm wondering what I should do with a property I'm about to purchase. Seems like "wholesalers" around here are more like "retailers." The place I have found Is in a good neighborhood in Tempe. Would pick it up for $190 and the comps are in the $230-$240 range. It will need $20-25k to rehab. Other rentals in the neighborhood are in the $1600/month range.
Given the odds for finding more properties is fairly slim, possible but slim, would it make more sense to hang on to it and rent it out than to flip it?
Rental Property Investor · Chandler AZ and Sylvania, OH · Member since 2009 · 708 posts · 561 votes
9y
Depends on your strategy and what phase you are in. The pricing doesn't make it a BRRR candidate. If you just want to park money, likely the house will be worth more next year than it does this year. If you want to make money then this flip is really slim, with holding costs and closing costs, you might break even at the end of the day. Seems like a lot of hassle to try to make 10K on a flip. You should also check your rent numbers, I'm not sure a 220K house would rent for 1600. We have houses worth more than that rent for less in Chandler.
Specialist · Los Angeles, CA · Member since 2016 · 221 posts · 58 votes
9y
That's pretty tight even for a buy and hold. You should make sure your rehab numbers are correct or you'll up with a house worth less than what you spent in getting in good shape.
Rental Property Investor · Chandler AZ and Sylvania, OH · Member since 2009 · 708 posts · 561 votes
9y
Depends on your strategy and what phase you are in. The pricing doesn't make it a BRRR candidate. If you just want to park money, likely the house will be worth more next year than it does this year. If you want to make money then this flip is really slim, with holding costs and closing costs, you might break even at the end of the day. Seems like a lot of hassle to try to make 10K on a flip. You should also check your rent numbers, I'm not sure a 220K house would rent for 1600. We have houses worth more than that rent for less in Chandler.
I manage some Tempe rentals and would be glad to provide a look at the Rental opportunity for the property if another opinion on that would be helpful.
Tempe rentals have done well, the demand is high. Depending on the area of Tempe students are often interested so be prepared for that element of applicant to be in the mix. Students aren't all bad, just needs a little more filtering and a watchful eye.
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
If your numbers are accurate then neither ... the margins are too thin either way ... maybe as a move in as your primary and house hack it, but even then, not enough meat on the bone to take the risk and effort for me.
I'm not asking for the easy route. Just wondering. I'll totally put the work in to chase down leads. Not asking for an "easy" button. All the places I've seen have totally unrealistic ARV's and super high asking prices.
Chandler, AZ · Member since 2014 · 67 posts · 34 votes
9y
@Mason Aitken we are getting good deals all the time in the East Valley ... but it really comes down to who can act quick. If it's a real deal it is rare it lasts more then a few hours. But let me know what you are looking for and I can call you first
As for tempe .... what neighborhood? A 190 in tempe is probably a pre 1970 house and has all the things an inspector likes to call out. I have never rehabbed a tempe house under 28-30k minimum, even for rentals. Now, if you have the cash out can take a 200k tempe house to a 375-399k pretty easy as long as it conforms to the area or by campus. But those are always a 60k+ rehab with added sqft. Give me a call or text and we can chat. Thx
@Adam Dahlberg I would love to chat with you about purchasing in Tempe and other areas. That price range sounds perfect. Are you going to the meetup this week week?
Rental Property Investor · Phoenix Tempe Scottsdale, AZ · Member since 2014 · 184 posts · 55 votes
9y
I would say your numbers are off on the rehab closer to 30+, and the rental income seems very high.
Not sure who you are working with to buy that house but try to get it for 160-170 tops to compensate for the work to be done. Otherwise its not a deal.
Residential Real Estate Broker · Paso Robles, CA · Member since 2015 · 196 posts · 58 votes
9y
Yeah I'll echo what the rest have said. Those numbers are found on a daily basis no problem. When you say "I would pick it up for $190k..." what are you going by? Is that just the asking price? What's preventing you from making an offer for $170k?