Quote from @Joshua Amezcua:
Quote from @Noah Corwick:
Quote from @Joshua Amezcua:
Quote from @Noah Corwick:
I'm in Phoenix as well, and it certainly has been feeling that way for at least the past 3-4 years. As others mentioned, AZ used to be this hidden west coast gem that you could get in at a low price and walk out pretty nicely deal wise. "If you can't afford to invest in Cali, invest in AZ" is how I sum it up.
I think the rates dropping to 3% brought additional awareness. I believe this made people stop and ask "why don't I just buy a house and then eventually rent it" without even knowing house hacking has been used for a while as a strategy.
Also AZ is a huge testing ground for new "innovations" in real estate. Tech companies test out real estate software and use Phoenix as a playground. Also from a real estate law standpoint, they use PHX to test the waters a lot as well.
Not to mention that people are flocking to get their real estate license left and right (and then most will leave in 1-2 after they struggle to find leads).
AZ is definitely a bit congested. We just need to let it run its course.
This is great information. I know I can't go back in time to get started when rates were 2-3%. My first VA home loan was 2.25%, current one is 3%. I am definitely happy to own a good property with a solid rate and a low payment. I don't plan on giving that up. I'm trying to devise a plan to put our equity to work in this current market. If I have to wait a bit longer, so be it. But man am I motivated and wanting to get started today!
Trust me, I shake my head once a week for waiting so long in my life to start investing myself haha.
You have a really solid foundation already in place with your two homes and the ability to utilize VA benefits. I agree in keeping your current homes and tapping into the equity you have. Assuming you have at least 20% equity in them, utilizing a HELOC might be a logical move to consider.
I'm curious, are you leaning towards a strategy in investing in rentals or flips?
Overall you are definitely ahead of the curve compared to most who are just starting out, so major kudos for that. The bones are there.
That is a great question, and one that I'm not entirely sure of the answer yet. When I show people before and after pictures of our first house and our current house, their initial response is typically "holy ****" followed by "you should flip houses". But the thing is, I did these renovations slow and steady, finding good deals on supplies and only working on one project at a time and only on the projects with the most ROI. Taking on a full gut, or even just a 30 day flip where I'm just swapping flooring, painting, cleaning up the landscaping, etc. feels very stressful to me. I easily become paralyzed when multi-tasking on our house projects. But strangely I have a very hard time letting go and letting someone else do the work. I also have been reading that investors are getting crushed financially in AZ right now due to the higher rates and people not necessarily wanting to buy. I haven't researched enough to fully understand the financial or legal implications of getting stuck with a property that won't sell at my expected ARV.
All of this is to say that BRRRR
feels like the right strategy. At this time I would say I'm on the fence, but my feet are hanging over the BRRRR side. On the other hand, it may be foolish not to capitalize on our renovation skills to flip a few houses, raising capital for a few rental properties. Then we go back to the original question of, how many investors are there in this market and how likely am I to actually find a good deal or have one present itself to me.
^a lot of this is me thinking out loud :)
You definitely have a competitive advantage with your renovation skills regardless of the path you decide. This will undoubtedly come in handy at some point in your investing journey. One thing to note specific to Arizona is the Handyman Exception. Essentially you/a handyman can conduct unlicensed work (labor and materials) for anything up to $1,000 on a particular portion of the rehab. I would suggest looking more into this yourself, but the legal breakdown can be found at: https://www.azleg.gov/viewdocument/?docName=http://www.azleg...
BRRRR makes sense, but unfortunately you likely won't be able to pull it off as effectively as you could in a more normal/balanced market. As someone mentioned on this post, it's currently an equity play instead of both an equity & cashflow play. So if cashflow isn't as important for you at this exact moment, then you could be fine.
I also completely understand the time anxiety that would come with a flip. It's not for everyone and if you decide to do a lot of work yourself, it might suck all the fun and joy out of doing your own renovations.
The financial implications of getting stuck with a property that won't sell at your expected ARV is likely one of the following: 1) either understand why it's not hitting your price point and assess if it's worth continuing to add to the rehab 2) BRRRR it. Rent it out for 12 months to hopefully let the market work in your favor and assess the situation at that point 3) Sell it at a loss, claim the loss on your taxes, learn from it and keep on moving.
