All Forum Posts by: Stepan Hedz

The Phoenix real estate market continues to be a hot spot for investors looking to maximize returns. But if you're aiming for a BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy, finding the right balance between affordability, appreciation potential, and cash flow is key.

So, where should you be looking? While there’s no official A/B/C/D classification of Phoenix neighborhoods, here’s a data-driven breakdown of some of the best areas to invest in, based on median purchase price, average rent, and investment potential.

Top Phoenix Submarkets for BRRRR

Area	Median Purchase Price	Avg Monthly Rent	Appreciation Potential (1-5)	Cash Flow Potential (1-5)
Maryvale	$320,000	$2,000	4	3
Alhambra	$350,000	$2,100	4	3.5
South Phoenix	$375,000	$2,200	5	3.5
Tolleson	$360,000	$2,150	4	4
Avondale	$380,000	$2,250	4.5	3.5
Glendale	$400,000	$2,300	4	3.5
Mesa (East)	$420,000	$2,400	4.5	3
Paradise Valley	$1,500,000	$5,500	5	2

Breaking It Down

• If you're looking for the best appreciation potential:
  South Phoenix, Avondale, and East Mesa are seeing rapid development, infrastructure improvements, and rising demand, making them strong contenders for long-term value growth.
• If cash flow is your priority:
  Tolleson, Alhambra, and Maryvale still offer affordable entry points with solid rental demand, making them attractive for investors looking to generate monthly income.
• If you want a balanced investment:
  Glendale and Avondale offer both rental income and appreciation upside, making them ideal for investors who want the best of both worlds.

What’s Trending in Phoenix Renovations?

To maximize your BRRRR success, you'll want to focus on renovations that appeal to today’s buyers and renters. Some of the most in-demand upgrades include:

✅ Modern, open-concept layouts – Knocking down walls to create larger living spaces
✅ High-end but cost-effective finishes – Quartz countertops, LVP flooring, and neutral color palettes
✅ Energy-efficient upgrades – Smart thermostats, updated HVAC systems, and LED lighting
✅ Curb appeal improvements – Fresh exterior paint, desert-friendly landscaping, and modern front doors

Final Thoughts

While finding a property that offers both appreciation and cash flow is tough, there are still solid BRRRR opportunities in Phoenix if you know where to look. Focus on areas with strong rental demand, strategic rehab projects, and financing options that allow you to scale your investments.

Quote from @Cosmo DePinto:

Hi all. Does anyone have a map breaking down the Phoenix market area ? (A,B,C, D areas)? Or just any suggestions for the best bang for your buck areas that offer at least a little cash flow and appreciation ? I know, I know…it’s hard to find, but I’m looking to BRRRR in the area. 

Thanks ! 

Phoenix has a pretty diverse market, and while there’s no official A/B/C/D breakdown map, you can generally categorize areas based on price points, rental demand, and appreciation potential.

For BRRRR, you'll want to focus on places where you can still find properties at a reasonable price, add value through renovations, and get solid rental returns. Some areas worth looking into:

• Centrally located neighborhoods like Alhambra and parts of Maryvale still have affordable properties with strong rental demand.
• West Phoenix (Tolleson, Avondale, parts of Glendale) offers good price points with room for appreciation.
• South Phoenix is seeing a lot of development and has solid long-term potential.
• Mesa and pockets of the East Valley can work, especially if you find something that needs light rehab but has strong rental demand.

It's definitely tough to get both cash flow and appreciation in today's market, but if you're strategic with your buy, rehab, and financing, BRRRR is still doable in Phoenix. Let me know if you need more specific insights on certain areas!

Quote from @Scott E.:

Did ChatGPT write this? Between the neighborhood recommendations, the renovation "trends", and the "challenges to navigate" I'm praying that a local realtor didn't actually write this.

I get what you're saying about AI, but this is just a real take from someone in the business. The neighborhoods being recommended aren’t just random. They’re areas where investors can actually find properties at a good price, put in some work, and turn a solid profit. Scottsdale is a great place to live, no doubt, but from a flipping standpoint, the higher buy-in costs can make it harder to see strong returns.

On the renovation side, a lot of investors in Phoenix are focusing on modern, open-concept designs with high-end but cost-effective finishes. Things like quartz countertops, LVP flooring, and neutral color palettes appeal to a wide range of buyers. Energy-efficient upgrades and smart home features are also huge selling points right now. Those details can really help a flip stand out and bring in top dollar.

At the end of the day, it just comes down to what you’re looking for. If you want a personal residence, that’s a different conversation. But if you’re in it for the investment potential, it’s all about finding the right balance between price, renovation costs, and resale value.

Quote from @Dylan Robinson:

Quote from @Stepan Hedz:

Estimating rehab costs is where a lot of investors either make or lose money. It’s easy to underestimate, and those surprise expenses will eat into your profits fast. The key? Break everything down and leave room for the unexpected.

First, know your market. If you're flipping in a high-end neighborhood, your rehab needs to match that level—think quartz countertops and high-end finishes. If it's a rental in a working-class area, you're looking at durable, cost-effective materials like LVP flooring and mid-range fixtures. Over-improving kills your ROI just as much as under-improving.

Next, get detailed with your numbers. Walk the property with a checklist and write down everything—roof, HVAC, electrical, plumbing, flooring, kitchen, baths, paint, landscaping. Don’t just throw out a random $50K estimate. Break it down into individual costs so you have a clear picture of where your money is going. If you’re new to this, get a contractor or experienced investor to walk the property with you.

Also, always, always add a contingency. No matter how well you plan, surprises will happen—hidden water damage, electrical that’s not up to code, or even just material price hikes. A solid rule of thumb is 10-20% extra in your budget.

If you’re looking for a solid resource, J Scott’s The Book on Estimating Rehab Costs is a must-read. But the best way to learn? Get out there. Walk properties, talk to contractors, and learn from other investors who’ve been through it. BiggerPockets is a great place for that, so keep asking questions and refining your process.

At the end of the day, estimating rehab costs is a skill that gets better with experience. The more deals you analyze, the sharper your numbers will get—and that’s what separates the pros from the amateurs.

Thank you very much! Really appreciate it

 You're most welcome!

Quote from @Chris Seveney:

Quote from @Quinzel Waiters:

Hello all I'm new to the Real estate space but I'm working on getting my first off market deal

Currently I'm looking at a heavily distressed property that's priced too high. It's a complete gut job. Needs new everything floors, kitchen, bathroom, paint, roof, landscaping and also has termites and a tentant that's not currently paying rent, for a 1000 sqft property they want 160,000 for it, but my comps say for a rehabed house in similar sqft property in that zip code would sell at 220,000k and I would say it needs atleast 65,000 to 75,000k in repairs so my offer price was at 100,000 to 110,000 and the buyer will not entertain my offer

I would like to offer more but if there are any surprises I'd like to be prepared for those cost during the rehab process. Should I move on or does anybody have any strategies on how to negotiate? Also they don't want to do any creative financing.

 Move on. Even at $110k I think you are pushing it as if you were to get a loan for $150k say your holding costs for that loan and closing costs could be $20k+, then you have selling costs of say 8% which is another $16k. So if all stars aligned and you were in it for $185k + 36k you are at $221k - just lost $1000.

If it needs $75k in work I would probably be around $85-90k for that home.

Negotiating distressed properties takes skill, and a lot depends on the seller’s situation as well as the property's condition. If the place needs major repairs, that should absolutely be factored into the price, otherwise, you’re just overpaying for problems. I’ve found that showing a seller actual repair estimates can sometimes help bring them back to reality, but not all sellers are reasonable. Some are stuck on a number no matter what.

At the same time, knowing when to walk away is key. Some deals just don’t make sense, no matter how much potential a property has. And I totally agree with the idea that curb appeal matters, even with distressed properties. If you’re trying to flip, what’s the point of fixing up the inside if the exterior still looks like an abandoned lot? Buyers will never make it past the front door.

Quote from @Colleen F.:

@Stepan Hedz  having looked at phoenix area flips lately it is obvious to me that some flippers aren't doing a great job. Thanks for pointing out some key points. The devil is in the details.   A couple of key points:  Painting low quality cabinets they are still crumby cabinets. If it is not decent quality to begin with budget for replacing.  Curb appeal is not a load of gravel, make some effort. It is a dessert not a parking lot.  If you fix the inside of the house spend a bit of money on the outside. you don't have to break the bank but make an effort.  Great interior pictures and someone does a drive by and exterior is in poor shape, no one in buying it. 

You make some excellent points! Cutting corners on quality, whether it’s cabinets or curb appeal, can really hurt a flip’s success. Buyers notice when things are just covered up rather than truly improved. First impressions matter, and if the outside doesn’t match the effort put into the interior, it’s a deal breaker for many. A little investment in landscaping and exterior upkeep goes a long way. Thanks for sharing your insight!

The Phoenix real estate market continues to evolve, offering both exciting opportunities and unique challenges for house flippers. As someone who's been watching this market closely, I want to share insights about what's happening in Phoenix's house flipping scene in 2025.

 Current Market Conditions

Phoenix has long been a hotspot for real estate investors, particularly those interested in fix-and-flip projects. After the pandemic-fueled housing boom cooled somewhat in 2023-2024, the market has found a new equilibrium that presents interesting dynamics for flippers.

Key statistics worth noting:

- Median home prices have stabilized around $450,000, representing a 3.5% increase year-over-year

- Average days on market: 42 (up from the frenzied 12-15 days seen in 2021-2022)

- Inventory levels have increased by approximately 25% compared to early 2023

Where to Find Flipping

Growing Neighborhoods

Several Phoenix neighborhoods are showing particularly strong potential for profitable flips:

1. **South Mountain** - Still relatively affordable with growing appeal to first-time homebuyers

2. **Sunnyslope** - Ongoing revitalization is attracting young professionals

3. **Maryvale** - Offering some of the best price points for entry-level flippers

4. **Mesa's Eastmark area** - Strong school districts driving family demand

 Property Types in Demand

The most profitable flips currently involve:

- 3-4 bedroom single-family homes built between 1970-1990

- Properties with pool potential (but without existing pools)

- Homes with generous lot sizes that allow for expanding square footage

 Renovation Trends That Sell

Phoenix buyers in 2025 are particularly drawn to:

- **Energy efficiency upgrades** - With Arizona's extreme temperatures, smart thermostats, improved insulation, and energy-efficient windows offer significant appeal

- **Outdoor living spaces** - Covered patios, pergolas, and native landscaping that requires minimal water

- **Modern desert aesthetic** - Clean lines, earth tones, and natural materials that connect to the Sonoran landscape

- **Flexible spaces** - Home offices or multi-purpose rooms that accommodate remote work

 Challenges to Navigate

 Water Concerns

The ongoing drought situation means water-conscious renovations are no longer just trendy—they're essential. Xeriscaping (low-water landscaping) is increasingly mandated in many HOAs, and buyers are scrutinizing water-hungry features like traditional lawns.

Rising Construction Costs

Material costs have fluctuated significantly, and labor remains tight in the Phoenix construction market. Successful flippers are:

- Building relationships with reliable contractors

- Ordering materials well in advance

- Being strategic about which renovations will truly deliver ROI

 Regulatory Environment

Recent changes to Phoenix building codes have emphasized:

- Stricter energy efficiency requirements

- More rigorous inspection processes

- Additional permits for certain types of renovations

Be prepared for longer permitting timelines than in years past.

Financial Considerations

The financing landscape has evolved significantly:

- Hard money lenders are offering more competitive rates (7-9%) than the 12-14% seen in 2022

- Several Phoenix-specific investment groups have emerged that pool resources for flips

- Traditional lenders now offer more renovation loan products tailored specifically to the Arizona market

The Bottom Line

The Phoenix market in 2025 offers solid opportunity for house flippers who approach projects strategically. The days of quick, minimal-effort flips yielding massive returns are largely behind us, but prepared investors with an eye for neighborhood-specific improvements can still achieve healthy profits.

The most successful flippers in today's Phoenix market are those who:

- Conduct thorough due diligence on neighborhoods and price points

- Build robust contractor relationships

- Focus on sustainable, energy-efficient renovations

- Stage properties impeccably for the target buyer demographic

For those willing to adapt to changing market conditions, Phoenix continues to offer one of the most dynamic house flipping environments in the Southwest.

The fix-and-flip game is always changing, and what worked a few years ago doesn’t always cut it today. With rising material costs, shifting buyer preferences, and tighter margins, investors have to be smart about their approach.

💡 How are you finding solid flip deals in this market?
💡 What upgrades are actually worth the money right now?
💡 How do you keep rehab costs under control and avoid surprise expenses?
💡 Noticing any shifts in buyer demand that affect your strategy?
💡 Tips for working with contractors and keeping projects on schedule?

Let’s talk real strategies, real challenges, and what’s actually getting results. Drop your insights below! 🚀

Quote from @Troy Baack:

I am a partner on a flip in Phoenix, AZ. The hard money is coming due and we are still unable to find a buyer at any price. The property is in a great area and the flip was done very well adding a bedroom and modernizing everything. I am at my wits end with what to do on this to avoid losing everything on the deal. I've accepted that I will take a significant loss on this, and have already learned a ton from it, but I would like to reduce the total loss as much as possible. Any and all help is appreciated. Property is 3021 E Shangri La Rd, Phoenix, AZ 85028.

I hear you—this sounds like a tough situation, but you still have options to minimize your losses. We actually have an in-house realtor who specializes in selling flips and can list your property for just a 1% listing fee. Since they focus specifically on flips, they understand how to position the property to attract the right buyers quickly.

If you're open to it, shoot me a text to go over your options and get the property listed right away. Let me know how you'd like to proceed!

Quote from @Duane Williams:

We’re a family-owned fix-and-flip company operating in San Antonio, TX, and Northern Virginia, managing everything in-house—from wholesale acquisitions to rehab & construction (with our own project managers and crews) to listing & selling through our licensed brokerage. Our Challenge is We’ve successfully completed 8 flips in 24 months and are ready to scale to 20-30 flips this year. However, our current hard money lender only funds one loan at a time, limiting our ability to take on multiple deals simultaneously. For those who have scaled their fix-and-flip operations, what are the best lending solutions you’ve used? Have you leveraged lines of credit, private lenders, portfolio loans, or other creative financing options? We’re actively seeking lenders who can fund multiple properties at once.

Open to discussions on flexible financing strategies that have worked for others.

I'd love to hear from fellow investors, lenders, and finance professionals—how have you navigated this challenge? Any insights, experiences, or recommendations would be greatly appreciated.

This is a very common situation with most investors trying to find a way to scale, and it is really nice that you are looking for solutions proactively. Most of the fix-and-flip investors combine the financing strategies to get past their limitations.

Some options that might be viable for you include:

Private Lenders – Such investors usually offer short-term lending but provide greater flexibility compared to a traditional hard money lender.
Lines of Credit – Another alternative could be an excellent option to finance several deals at once using a business line of credit or HELOC (if it applies).
Portfolio Loans – Also, community banks and credit unions offer portfolio loans to finance many properties under one loan structure.
Debt Funds – Some lenders focusing on fix-and-flip portfolios have blanket loans or credit facilities designed for volume investors.
Partnerships & JV Deals - Partnering with other investor partnership capital partners can spread the risk and enhance deal flow.
This consideration may be worth it in terms of approaching local banks or credit unions with an understanding of real estate investment because they are generally flexible in offering loans compared to national lenders.

It would be great to hear from others what has worked for them! Who have you worked with and what methods or strategies helped scale efficiently?