All Forum Posts by: Ryan Hoover

Yes agreed that the Arizona market has remained strong and seems to still have a very long runway from here! It's still possible, yet challenging, to find cash flowing deals from day 1, even on the MLS.

@Michelle Oblena. @Mike Delprete. @Jana Crum @Dale Miller

Glad you all liked the content!

Investment Info:

Single-family residence buy & hold investment in Peoria.

Purchase price: $430,000
Cash invested: $90,000

Long term value add buy and hold purchased from the MLS. There was a small margin for cash flow in the as is condition of when it was purchased, but I opted to complete a full interior remodel, along with redoing the back yard landscape. The updates should net an additional $400 a month in cash flow.

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

Looking for a larger SFH to add to the portfolio, which would bring in higher rents.

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

Found this one on the MLS and I was able to negotiate a price drop by removing my buyer's agent commission, since I was the Realtor.

How did you finance this deal?

30 year conventional mortgage at 3.625%

How did you add value to the deal?

Renovated the full interior and backyard landscaping.

What was the outcome?

Property is currently being marketed at $3000 per month.

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

Zach Wain, from Wain Capital is the best lender at offering financing solutions for investors with complex files.

I posted a similar market update for the Phoenix area market earlier in the year, which seemed to add value to those interested in diving into the market.  Some highlights from my perspective while working with investors and traditional buyer and sellers:

• The market inventory is slowly improving, though not quite reflected in these stats below.  There were only about 5000 active single family homes in Maricopa County back in May.  By the end of July, we were up just past 7000.  Still nowhere near a balanced market, but a steady improvement in the right direction nonetheless.

• Properties that are priced correctly are only lasting a few days on the market before they go under contract. If sellers weren't holding out for more offers at higher values, since they know they have the upper hand, homes would truly be absorbed within the first 24-48 hours after going live in the MLS.

• Even though inventory is slowly improving, to land a home, bidding wars are still common place.  As an example, I listed a home in the far west valley at the beginning of this month.  List price was $379k for a 4bed/2bath/1738SF in good condition, but still in need of some renovations to get to todays standards.  The accepted offer came in at $415k with $15k in low appraisal guarantees, or $36k over asking price.  On the other end, I'm working with clients to purchase a "luxury" home near Scottsdale, we submitted in an offer on a $730k home for $783k with appraisal guarantees and a 1 month, no charge, leaseback to the seller and we still did not end up as the successful offer... crazy!  In the $300k-$500k price range, the $20k-$35k over asking seems to be close to the right amount to secure a properly priced home, but in the $600k plus market it can be anywhere from $10k- $150k, making it very difficult to create a sound pricing strategy.

• With all of that said, I still wouldn't shy away from the market for investment properties.  Since the beginning of March, I have helped clients close on 8 rental properties that were able to cash flow from day 1, even with today's pricing and competition.  As you can imagine the appreciation gains have been a huge perk as well.  The best opportunities are value add properties and under performing single family rentals, in my opinion.

@George Cocokios  

Totally agree with @Bob Okenwa on the state of the market today.  We hit a brief pause for COVID and unfortunately all the builders cancelled their upcoming development projects as well.  Once the market picked back up, we were already way behind the demand based on the 200+ people a day moving to the valley.  Since there is a shortage of inventory to buy, people had to rent, which drove up the those rates significantly.

As a Phoenix native, I am excited about the boom to our economy and rapid growth.  It is a tale of 2 economies though.  Those that own homes have done very very well, but anyone looking to bridge the gap to buying their first property are getting priced out by all the influx of cash offers.

I would have to echo some of the comments already made in this thread. Really is going to depend if cash flow or appreciation is your biggest driver.  Best cash flow opportunities lately have been short term vacation rentals in great areas like Scottsdale.  Upfront costs are much higher though as well as property management fees. 

There are still some great areas for a good balance of cash flow and upside appreciation in SFR. I like Peoria a lot for this reason. That price point is now in the $400k's and still requires going significantly over asking price to get the deal under contract.

Small multi-family inventory has become so anemic, that a break even deal is getting hard to find.

@Johnny McKeon I am right there with you!  Always feels, when you look back, that prices were so cheap, should have bought more.  Doesn't feel so much like that when you are in the middle of it though.

@Account Closed Couldn't agree with you more!  That which is difficult is always the most rewarding.  If it was too easy, everyone would be an investor.

@Paul Welden Agreed!  New home builders have already distanced themselves from investors as well.  Going to be even more challenging to find a property that pencils out going forward.

I also work in the White Mountains and this FHFA rule will have a negative effect on the summer homes and cabin markets as well.

@Nick Brockelman Yes it has been brutal as most my clients are resale buyers or investors looking for a cash flow property.  Or at least a break even deal at this point!  It’s like the Wild West of customer service right now... good luck getting a response from a listing agent.

@Jared Sutherland I am hopeful that the rising rates could settle things down a bit,  it affordability is becoming a major issue as prices increase 15% and rates jump 1% in rapid fashion.  What’s bad for us investors is the Fannie Mae guidance for the amount of investment loans they can have as part of their portfolio.  Already increasing investor rates significantly.

I am getting a lot of questions from out of state investors, asking how is the housing market in the greater-Phoenix area?  I thought that it's a lot easier to share that data for anyone that was interested.  In short, the market is HOT!