All Forum Posts by: Ryan Hoover

Nice to meet you Eneyda!

I also live and invest in the greater Phoenix area and work with a lot of newer investors to start their RE investing journey.  Let me know if you ever want to connect.

Great update @Zach Wain!  As always you deliver great information and amazing service.

 What type of project are you building in Phoenix?  

It seems the credit crunch will show up in the commercial market far before residential.  Checking in with my local lenders, there hasn't been any tightening of lending standards yet for conforming products, even with the recent banking issues.  Time will tell if that changes.

 Agreed, I don't claim to have the market figured out.  Just giving my perspective as I'm constantly working with investors on the ground in this market.  I find it interesting how we have essentially went from an insanely strong sellers market, to balanced, to a buyers market, back to balanced, and now transitioning back to a sellers market all over the course of 1 year.  That's based solely on the supply and demand of the residential sales in my market.  Yes there are some national headwinds to get through, but for those investors that think that waiting will have better opportunity, I'm not seeing it in Phoenix.

 I agree that seems to be the narrative for 2023.  High rates were able to crush the demand last year during the seasonal buying season though.  There was a lot more uncertainty with the rates/market at that time. 

The end is here! Or is it just near?

After almost a full year of receding prices and extended days on market, we have finally turned a corner. I’m not sure if it is the fact that rates have been elevated for some time now and buyers are getting used to the “new normal” with mortgage rates or prices have come down enough to meet the pent up demand waiting on the sidelines, but sales were up significantly in February and that trend will only continue as the buying season is in full swing

I’ve been beating the drum for a while now, that we aren’t going to have another huge drop in pricing, contrary to what some national click bate headlines might have you think. This is not 2008. Distressed properties remain low as most homeowners are sitting on a lot of equity and not motivated to move with a record low interest mortgage anchoring them down.

This is creating a bit of an inventory issue, yet again. We topped out at about 21k available properties In October and as I’m writing this we are under 14k available properties! Welcome back to the time of multiple offers and waiving contingencies. It was nice to get a bit of a break, but guess what? Here we go again…

Where are we going next? Prices have stabilize and this competitive market it going to drive them up the next leg higher.

If you are one that has been waiting to time the market for this perfect bottom, sorry I think you already missed it. That’s the problem with attempting that strategy, you don’t really know the bottom until it’s already passed. Don’t stress though, the second best time to buy, besides yesterday, is today. Now is the time for action.

Getting traction with a brand new STR in certain Scottsdale areas is difficult due to all the new listings over the past 2 years. With that being said overall demand is still high, though new inventory seems to be outpacing demand. Price per night will continue to go up as travel demand is expected to stay high, thus overall returns can still be good even with the higher vacancy.

I do think certain areas are better opportunities than others right now. Scottsdale, especially near Old-Town, has been all STR lately, making that challenging to stick out over the competition. There are other neighboring markets that are very much in demand as well, with less competition.

The greater Phoenix area is still a great choice for long term rentals.  Rent growth and overall demand will keep putting upward pressure on rental prices.  Yes, finding a cash flow property day one is a challenge, but the long term rent growths and ability to refi when rates come back down will make it an attractive investment. 

Hey @Nate Wiger, as a few members already outlined, there is not true hands off investment, but with an established team in the area it only takes a small amount of time to check in on your properties.

I work with a lot of investors from CA that 1031 into small multi-family or multiple single family properties in the Phoenix/Scottsdale areas for long, mid, and short-term rentals.  They are much happier with how far their money goes in a market that is a very good balance of appreciation and cash flow.  Send me a message if you would like to learn more.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $435,000
Cash invested: $150,000

Found this value add home in an upcoming area of Surprise, AZ. I was able to take advantage of a small dip in mortgage rates to lock in a 4.99%. We immediately went to work for a full remodel on this property to open up the space, improve the functionality and bring the interior up to todays standards.

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

MLS property on the market for 45+ days

How did you finance this deal?

Conventional 30 year fixed

How did you add value to the deal?

Complete remodel. Left the cabinets as they were in good shape.

What was the outcome?

Cash flowing in year 1 is about the best one can hope for in this market.

Lessons learned? Challenges?

Timing a market is always challenging... if I waited a few months I could have got a better deal from a purchase price perspective, but the rates are now significantly higher. So the overall cash flow would be about the same.