All Forum Posts by: Stone Jin

@Zack Francis The Phoenix metro is an appreciation play.  People were saying the same thing pre covid, costs too high rents too low, no cashflow etc.  Then the market went insane and is up 40% from 18 months ago.   So this is a calculated gamble, if you think the market is going to continue to grow over the next 3 years, then even if you cashflow 0, the appreciation would be tremendous.  At 6% appreciation 400K house goes up 70K over the next 3 years, divide that by 36 months and you get almost 2K per month in appreciation.  You can take the cashflow route and get a safe 300-500 a month on a SF in the midwest, and come out worse.

But it's a gamble and real estate is hyper local.  Pick the house in the price point that you see actually appreciating.  Maybe the 10M house is not going to appreciate as well as the 300K one.  

That is expensive.  I just buy windows at Home Depot 150-300 each plus I pay a handyman to install about $100 per window.  

Welcome to the game.  We invest in Mesa.  Mostly single families in east Mesa but recently purchased very unique small Mf in north Mesa.  

@Nicholas Ward There is opportunity in every market. We have bought something in Phoenix every year since 2009, including this year. We just buy off the MLS and our strategy changes based on the asset. The latest one we bought we are renting furnished and our returns are insane good.

I don't think anyone in this market is short selling.  Almost everyone has some equity.

@Lisa Caracciolo

Have you driven the neighborhood? Though close to downtown chandler that area is not close to gentrifying. The wholesaler has been marketing that property for maybe a month now with only a 2k price drop.

600 sqft for a 2bed is very small and will limit the upside rent potential.

I’d be very cautious on this one esp since it’ll be your first property.

@Bryan Field We have a decent remodel going in Mesa and definitely feel the squeeze.  Luckily I sub out the work my own properties and have relationships built in the last decade to get my project pushed up.  

If you want to list your actual list of remodel tasks, the community might be able to recommend someone(s).

However, since you do not have a shovel ready project, many contractors will not be willing to commit time to help.  It's the chicken and the egg problem you are dealing with.  You don't want to buy the project unless you have contractor and you can't get a contractor unless you have a project.  

@Ryan Stumbo no need to get defensive.  I'm just simply stating that the arcadia area is one of the hottest sub markets in the metro therefore the price to rent is not going to be favorable for long term buy and hold investors.  We own property here and out of state so I get the need to chase yield.  

As @Jay Hinrichs stated previously, the FHA loan is only for owner occupants. It doesn't quite sound like you wanted to house hack, just a clarifying statement. If you wanted to go conventional with the investor loans, then your lowest down payment may be 20%. When you run your numbers with 20-25% down are you still negative?

Leverage and time are your best friends starting out.  I highly encourage using debt in the current low interest rate enviroment, just got to be sure you are using the right type of debt when running your numbers.   

As a landlord in the valley, the rent growth is no joke, rent has almost doubled in the last 6 years with no slowing down I'm afraid.  There will be an affordability issue in the working class neighborhoods, but in white collar neighborhoods the rents will continue to soar.

If you wanted to spread your 150K across multiple properties you may only 1-2 in the Phoenix metro as the average purchase price for SF is over 300K and 25% down is 75K.  

Just trying to provide some insight, not rain on your parade.

Best of luck

@Ryan Stumbo

Of course your returns are going to be horrible when you are trying to put 3.5% down (owner occupied loan) on a triplex in the hottest area in town. Especially when you don’t factor in rent growth or appreciation. Day 1 returns will be negative because your down payment is small and the debt payment and fixed costs will be high.

Arcadia is a neighborhood where sf family home easily can be 1m plus so getting doors at 250k doesn’t seem unreasonable. I don’t fault you for making offers based on your numbers but the reality is that it likely will not happen.

If you want better rent to price ratio then you have to look for more working class neighborhoods. You have experience with travel nurses then look at historical neighborhoods near downtown Phoenix. Those are nice but not as hot as Arcadia.

Best of luck

@Ryan Stumbo

Post your numbers so we can all see what negative 90% returns look like

I recently bought a 3 plex in Mesa and will be getting close to 20% when I finish the value add for short term rental or 12% for long term.

@Elyse G.

Hi and welcome to real estate investing. We invests locally and long distance and actually have considered the Greensboro and Charlotte market,

I think once you get 30 min away from your house you might as well treat it as 3 hours away. You’ll mostly hire out maintenance issues and possible use a property manager. If you want to self manage then investing locally will save you the 10-14% management cost which will significantly increase your return.

You may consider other niches in your local market. Would renting by the room or doing short term rentals be better in your appreciating market?

Don’t get stuck in thinking there is only close vs far. Explore all the options and see what might work best!