All Forum Posts by: Jared Smith

All,

In 2019 both dollar sales volume and median purchase price for single-family resales reached levels never before seen in the Greater Phoenix/Southeast Valley. Driving these levels up were a limited supply of available homes with high demand to own. High demand to own was fueled by record population growth and the number of people employed has never been higher.

As the population increases for the last 3 consecutive years, the US Census Bureau published data that showed Maricopa County (Greater Phoenix/Southeast Valley) gained more people than any other county in the US. Expect in 2020 that again, it will be the #1 county in the US for population growth! 

Also it is important to note that there are 1.6 MILL Housing starts for 2020.

2020 will be another fantastic years for real estate, building materials and investors!

If you have any questions on real estate in AZ please reach out.

-Jared

Mesa ranked #5 in job growth by CityLab

CityLab, formerly The Atlantic Cities a digital magazine which focuses on innovation and pressing issues facing today's global cities and neighborhoods, recently ranked the top 10 cities with the fastest growing job markets and fastest growing populations. Mesa made both lists. Coming in at #5 when it comes to job markets and #8 in population growth. 

Arizona is still on the rise with only 1.1 months inventory. 6 months inventory is a balanced market between buyers and sellers. 

There are +220 people moving to our Sunny State every day!

Jared

@Daniel Kim thank you very much! 

@Anthony Porembski @Rene D. Thank you very much - I appreciate it!

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Cleveland.

Purchase price: $150,000
Cash invested: $37,500

This is my very 1st multi-family home in the historic Tremont area in Cleveland, OH and still my best performing property!

What made you interested in investing in this type of deal?

Location! It is in the heart of Cleveland just 1.2 miles walking distance across the bridge to Progressive Field - Home of the Cleveland Indians. It is walking distance to many trendy restaurants and bars including Michael Simon's restaurants and right next to Lincoln Park.

How did you find this deal and how did you negotiate it?

I looked at everything for almost a full year and then as soon as I stepped foot into this property, I knew it was perfect. It was listed for 149k and I bought it for 150k over 7 years ago after being on the market for just 2 days. Best investment of my life to date!

How did you finance this deal?

Traditional Financing with 25% down at 3.98% over 30 years.

How did you add value to the deal?

Renovations and increasing rents!

What was the outcome?

$3,100 in monthly rents with a $977.89 mortgage.

Lessons learned? Challenges?

Forecast longer time lines for major Renovations down to the studs and budget extra expenses. Always pick location first and then I make sure that any property I buy that I would personally live in. I figure this way that I can get the highest market rents and eliminate vacancies which I have been successful over the past +7 years self-managing long distance from +3 time zones away!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes - Me, Myself & I!

Couple quick points and then some feedback from the AZ Economic and Real Estate Analysis.

This is a look into the “fear based mentality” that some of my peers are operating from:

A startling survey result stated “that 58% mortgage/loan originators think or feel there is mgoing to be a housing crash in the next 2 years and are fueling the public perception of housing market”; yet, there are “zero” economic or statistical indicators pointing us in that direction.

We have to rise above and consistently combat misinformation and sometimes “disinformation”, which is deliberately spread to influence someone’s opinion or decision.

Overview of Single Family Housing

• Current conditions in the single family market are the polar opposite of 2007-2011

• No signs of oversupply of housing

• Signs of strong pent-up purchase demand- also PHX-Mesa-Scottsdale area is consistent top 5 for job and population growth

• With rising interest rates, affordability does become more of an issue BUT housing in AZ remains very affordable…

(a 1% rise in rates lowers buyer housing affordability by 7%-a $275K purchase lowers to $256K)

• While the housing market will be under pressure over the near term, the outlook over the next 5 years is excellent

If you have any questions on the Arizona Market - Please reach out!

-Jared

@Daniel Kim Thank you!

@Gaby Liu Please reach out with any questions you may have, happy to help.

@Mike Dymski @Account Closed

I can appreciate the difference in opinion and being risk averse. My risk tolerance is extremely high which has paid off tenfold and beyond by my personal real estate investments in Arizona.

Here are the facts that justify investing in Arizona:

• · Intel announced a $7 BILL investment in Chandler, Arizona = JOBS!
• · Google announced a $1 BILL investment in Mesa, AZ = JOBS!
• · Amazon's $700 MILL plan to retrain employees benefit Arizona!
• · Governor Doug Ducey passed legislation: Arizona became the first state in the nation to recognize occupational licenses for those who move here. More opportunity to enter a profession is not just good for Arizonans, but all those looking to work. This is the best place to invest in Real Estate! #OpenForOpportunity
• · 220 people move to AZ every day which is roughly 80k people every year.
• · The average median price for a home in AZ is now over +300K.
• · Phoenix is the 5th most populated city in the US and surpassed Philly.
• · The market is strong and even though sales prices and rent prices have steadily increased over the last 5 years, all indicators show this in going to continue.
• · It is still a seller’s market with only 1.1 months inventory (more demand and not enough homes).
• · Arizona GDP increases +4.0%.
• · Arizona's Booming Tourism Sector: Revenue Reaches $1 BILL!
• · Multi-family continues to boom with healthy housing starts far surpassing the national averages.
• · Interest rates are currently at 3.75% for a 30 yr. fixed and the Fed will lower rates 1 more time before the end of the year, which will increase purchasing power and real estate investors will continue to enjoy the robust appreciation the next couple of years.

The Arizona economy continues its long winning streak. Employment is expanding, population growth is solid, and wages are rising. Further, Arizona continues to far outpace national growth rates.

The outlook for 2019 remains solid for the state and nation. The current national expansion is very much on track to be the longest on record.

Arizona added 78,800 jobs in 2018, which translated into 2.8% growth, according to the latest revised data from the U.S. Bureau of Labor Statistics. As Exhibit 1 shows, that was up from 2.5% in 2017. Employment gains also accelerated in the Phoenix Metropolitan Statistical Area (MSA), rising from 3.0% in 2017 to 3.3% in 2018. In contrast, job growth decelerated in the Tucson MSA, from 1.3% in 2017 to 1.2% last year. Nationally, job growth was 1.6% in 2017 and 1.7% in 2018.

Just my $0.02

-Jared

@Ryan Bourque No problem! Please reach out if you have any questions at all on markets, financing, business etc. I just bought my first new construction home right in the Heart of Scottsdale!

Real estate investing is one of the best ways to diversify a portfolio and make a little side cash. It’s one of the most stable markets there is, and you can leverage others’ money to make it happen.

According to CNN Business, 2019 may be a good time to invest in rental property, thanks to the reduction of home sales and increase in rentals.

Additional inventory will help contain rapid home price growth and open up the market to prospective homebuyers who are consequently — and increasingly — being priced out,” National Association of Realtors Chief Economist Lawrence Yun said. In other words, as the demand for these houses decreases, prices will begin to fall, making it a great time to swoop in and make a profit from rental properties.

But real estate investing is only as good as the market you’re in. It’s important to judiciously research a potential investment area to ensure it will lead to profits. In Arizona, you’ll want to carefully watch the following markets.

Scottsdale

For decades, Scottsdale has been one of the steadiest thriving communities in the state. It’s certainly not the most affordable market with the median home price reaching over $871K. However, the rate of appreciation has been steadily rising at nearly 4 percent per year for the last 20 years. It was one of the few places that didn’t completely tank during the 2008 recession.

The total real estate appreciation over the past 8 years has been recorded at 102.77%.

There’s also a fantastic tourist community here, which drives great demand for Airbnb and VRBO rentals. The average rental income for Airbnbs is nearly $1,600, which has a cash return rate of 1.2 percent.

You can double that rate by investing in traditional rental incomes instead, charging upwards of $3,300 with a handsome rate of return at 2.34 percent. It doesn’t get much better than that for rental property income!

Investing in condos, apartment complexes, or single-family homes to rent out as traditional rentals or vacation options is a great way to maximize any investment. Scottsdale home appreciation will continue to rise, so get in before prices take off.

Phoenix

Like Scottsdale, Phoenix seemingly never falls off the charts for great real estate investing. This giant metro area features a booming economy with quality job opportunities, shopping, nightlife, arts and entertainment, educational opportunities and more.

You can invest in pretty much any type of investment property here thanks to the various interests of the massive city, from fix and flips to vacation rentals. However, I recommend that you stay away from the downtown area.

This is because the cost of renting in the Phoenix Metro Area is becoming less desirable than homeownership of a similar size. The laws of supply and demand suggest people will buy a home if they can afford it.

Instead, look to the suburbs in residential areas like Mesa, Ahwatukee Foothills, Gilbert, Rio Vista, Desert View, Deer Valley, and other top-rated neighborhoods in the area. You’re more likely to see demand for rentals in these areas. 

Please reach out on any questions on Arizona Real Estate Investing!

-Jared