All Forum Posts by: Joey Chrisman

Any property on mls in Tempe is 400k and above... even if you get a place for 300k and rent it out for $2100 a month it seems like a bad deal for cash flow.  Is it just me or does it seem like properties are overpriced given current state of interest rates... even if I got a 300k house that needs 30k in repairs and then say refinance and I'm at $1800 payment on a 30 yr at 6.5% with $66k into the property.   $2100 in rent and your still practically at break even cashflow.   Just seems like a crappy return for fixing up a property and then renting it out.  Am i missing something here?   

Quote from @Scott E.:

Quote from @Joey Chrisman:

Quote from @Scott E.:

I'd be interested to see the address of that property in Scottsdale from the original post. The market around here is absolutely shifting. Inventory is up. Prices are softening. But your story represents a nearly 50% hit in price. This story is an anomaly, not the norm around here. Prices in Scottsdale weren't even hit 50% at the bottom of the 2008 crash.

Hey there... yeah it went to auction and I couldn't believe it. The house is completely gutted and nobody wanted to bid on it.  The only reason I can think of is that most buyers assumed the seller would not accept the final price of the auction so they decided not to bid seriously   

I know the area well. I did a flip last year on Latham actually. This guy WAY overpaid for the house. It's worth probably around $550k in its current condition. Do you know what his reserve price was?

How do you figure $550k. I think Property probably needs $150k into it that puts you at $700k into it and right now there are finished properties listed for $750k to 800k that are sitting.  $360k to 400k seems reasonable to me given the amount of time and money required to complete the flip. 

Quote from @Scott E.:

Quote from @Joey Chrisman:

Quote from @Scott E.:

I'd be interested to see the address of that property in Scottsdale from the original post. The market around here is absolutely shifting. Inventory is up. Prices are softening. But your story represents a nearly 50% hit in price. This story is an anomaly, not the norm around here. Prices in Scottsdale weren't even hit 50% at the bottom of the 2008 crash.

Hey there... yeah it went to auction and I couldn't believe it. The house is completely gutted and nobody wanted to bid on it.  The only reason I can think of is that most buyers assumed the seller would not accept the final price of the auction so they decided not to bid seriously   

I know the area well. I did a flip last year on Latham actually. This guy WAY overpaid for the house. It's worth probably around $550k in its current condition. Do you know what his reserve price was?

Well the auction started at $500k. No interest what so ever so they lowered it to 300k starting bid and the highest it was bid up to was $341k plus 5% buyer premium.  There isn't really a reserve since it's a mls auction or something basically the seller has to approve the price but I found it surprising it did not get bid up to even 400k.  I'm sure if this was march it would of.  But I think maybe the fact that it's a non binding auction made it not get bid up since everyone knew the guy paid 643k and would likely not take anything under 500k.  

Quote from @Scott E.:

I'd be interested to see the address of that property in Scottsdale from the original post. The market around here is absolutely shifting. Inventory is up. Prices are softening. But your story represents a nearly 50% hit in price. This story is an anomaly, not the norm around here. Prices in Scottsdale weren't even hit 50% at the bottom of the 2008 crash.

Hey there... yeah it went to auction and I couldn't believe it. The house is completely gutted and nobody wanted to bid on it.  The only reason I can think of is that most buyers assumed the seller would not accept the final price of the auction so they decided not to bid seriously   

First time investor here.... well I have owned my own house since 2010.   I have experience renovating my own home as well as adding on an addition... hired a general to get the project off the ground at first but then did the general contracting role once the framing was up.  Kind of surprised at how relatively simple building a house is after you see it done.  

Anyways I'm in the Phoenix market and I'm finally starting to see some deals popping up. Im looking for a property that requires some fixing up and or significant fixing up/additions. My question is how do you base your purchase price of the flip when the market is potentially declining? Is it best to just sit out the market for a bit letting the market simmer a bit for better deals or does it make sense to be making offers building a buffer for a potential decline in the sales price... I wouldn't mind finding something for a rental but damn... the cash flows seem like they suck even with a 25% down payment at todays rates on say a 350k SFH. What strategy are you guys using to profitable pick up rentals/flips/fixer uppers. Thanks!

Quote from @Drew Sygit:

Will these flippers take a bath or will they convert to STR rentals to try and recoup their investment?

 800k with a 25% down payment is still like $3500 a month payment.  I think the STR market in Scottsdale is very crowded if demand wanes from what it has been last couple of years occupancy and rates could easily drop and the cash flows that support the prices for air bnb may not be there. 

Quote from @Bob Okenwa:

@Joey Chrisman

We definitely have people who are getting caught with their pants down that cannot sell flips at their project ARV. Their projections were way off and they are no left holding the bag. Many investors don't want to catch falling knives and won't take on such projects unless they get it at that very low prices.

Sellers are still using comps within the last 6 months that are no longer relevant to the current market. Hell, closed comps from 3 months ago don't really apply to the current market here as the market dynamic has shifted greatly and buyers are being forced to the sidelines.

I can't wait to see OpenDoor's ad Offerpad's earnings next month as they own a lot of property out here that has been sitting forever, even with them finally doing price reductions. I know they make a decent amount upfront on fees, but they can't sell every home for 70k less than what they paid for it and expect to last. Ask Zillow how that went...

Yeah it seems like there is a big disconnect from what sellers of properties want and what buyers are willing to pay now   I'm thinking the sellers will step down their offer prices in order to move these properties  

Amazed at how fast the market has shifted. It seems like many flippers in the Scottsdale/Phoenix market are getting caught naked as the tide goes out as Warren buffet says. Was looking at an auction property on the mls listed at $300k starting bid. The owner of this property paid $643k in March of 2022 and gutted the property expecting to flip it. Apparently they must of thought the market was going to continue to be strong regardless of what rates do. Fast forward to today and they decided to see if other investors would take their "investment"/problem first they listed it on the MLS for 700k to no luck and then recently put it up for auction on the mls at $500k starting bid. There was no interest so the auctioneer lowered it to $300k start price and the property was bid up to $360k. The auction was non binding and the sellers did not accept. It sure seems like any investors with cash now to buy properties that require a big rehab are no longer being anywhere close to as aggressive as they were just a few months ago. 643k to 360k is a crazy fast drop. I think there are going to be many more of these deals where investors caught in this shift are going to be the first ones to turn into motivated sellers in this market. I am simply amazed at how the demand has fallen off this hard in such a short amount of time. It seems like sellers prices are still in the clouds but buyers are at the ground... if a deal wants to happen it sure seems like the clouds will have to now come down to the ground unlike the past couple of years. Anyone else seeing similar things in the Phoenix market now?

Hello,

May have landed my first off market deal.  Wondering if I need to get a real estate lawyer involved to protect me.  Looking to purchase property as is no inspection and cash sale.  Don't care too much about state of property as I'm basically rebuilding just about everything inside.  If I use a title company and get the title insurance am I really risking a lot by not getting attorney involved?  I understand the risks with the flip but I think my purchase price has more than covered me on the what if's and I know these houses particularly well as its in my neighborhood.  my biggest thing is just making sure my earnest money goes to escrow and title company and then that the title is free and clear and able to be insured.  As long as I Have that I should be ok.  Even if the house burned to ground I still would be sitting on a nice plot of land.  But ideally that isn't the case but I think that's the worst case scenario If say I agree to purchase as is and then a tornado comes through or the house catches on fire after I give earnest money and then the buyer still demands I have to buy the house for said price.  How do most people go about it once you have serious seller?  Unfortunately not to that stage quite yet but could possibly be.  

Yeah I guess maybe I'm overthinking it and I wonder if they really enforce the statute all that much.  I guess I could say I'm building it for myself and when I am done sell it and if everything is done to code and permitted you likely won't have many issues.   probably what a lot of people do like you saying.