All Forum Posts by: Wes Blackwell

@Andrea Finkelstein

I'm assuming your rentals are in the Phoenix metro area. First thing I would do is contact your lender and get answers from them on how they prepare to deal with property owners with tenants who are defaulting in mass scale because of the Coronavirus.

As you may know, the AZ Governor signed an executive order delaying evictions for tenants affected by the Coronavirus. See it here:

https://azgovernor.gov/sites/default/files/eo_2020-14_0.pdf

I would contact your lender and tell them your hands are being bound by the state, and then also call your local officials and ask for protection for landlords as well.

Ultimately, the hope is that lenders would offer landlords a loan forbearance, and that landlords will offer the same forbearance to their tenants

@Jason Vassallo

Hey Jason, we'll need a little more information about your strategy and goals to help you make the best investment decision. 

Is this your own property? A buy and hold deal? Do you already have good numbers on the repairs or are these a guess? What's your goal long term? Etc, etc.

The more detail the better. Once we have some more info we can better advise you how to make this deal work in Peoria.

@Anya Sagee and @Brian Larson

Here is some of a post I made in a similar topic about the Phoenix market specifically (I am licensed in CA and AZ and work in both markets).

***

Real Estate in CA is different than other states right now, because CA shut down basically all real estate activity, while AZ considered Real Estate an essential service, so there's it hasn't been nearly as affected.

Ultimately yes, it virus will have some impact, but it's not like housing demand suddenly disappears overnight.

One of my agents did couple open houses last weekend and have 5-6 people through a day like it was nothing. Other realtors are reporting multiple offers, no slowdown in sales, etc. on various message boards and Facebook groups.

Where I think it will impact housing the most is in the higher luxury price ranges, as those buyers and sellers are usually business owners and have a lot of their net worth tied up in other assets more affected by the virus and it's impact on the economy.

But bread and butter homes sub $300k? That market is practically bullet proof here, simply too much demand. Buyers still need to move for their jobs, be out of their old place by the end of the month, and so on. And sellers still need to sell. So not much has changed really.

Now, that all being said, it's still too early to see what the long term affects will be, mostly based on how soon things can return back to normal. 

I think that when the Coronavirus hysteria is over (hopefully within a few months), everything will get back to normal and you'll see some pent up demand unleashed in the summer & fall.

But we'll have to wait and see... I think it's important to keep your finger on the pulse and re-evaluate the market on a week-by-week basis.

@Mick Relef

I wouldn't assume this statement to automatically be true. 

I'm a realtor in the Phoenix area of Arizona, and we're not seeing as much of a slowdown as you might expect.

Yes, it will have some impact, but it's not like housing demand suddenly disappears overnight because of some virus.

Did a couple open houses last weekend and have 5-6 people through a day like it was nothing. Other realtors are reporting multiple offers, no slowdown in sales, etc. on various message boards and Facebook groups.

Where I think it will impact housing the most is in the higher luxury price ranges, as those buyers and sellers are usually business owners and have a lot of their net worth tied up in other assets more affected by the virus and it's impact on the economy.

But bread and butter homes sub $300k? That market is practically bullet proof here, simply too much demand. Buyers still need to move for their jobs, be out of their old place by the end of the month, and so on. And sellers still need to sell. So not much has changed really.

@Mike Imbriglio

Sounds like the main consideration for this property in Tucson is going to be the repairs. He's told you what he wants to get out of it (although he may take less) and the home inspection report should give you a good idea of the condition of the property (although it also depends on the quality of the home inspector).

If they already had one home inspection, the tenants likely know the property is for sale and you might be able to secure a brief appointment to view and inspect some of the items on the inspection report with a contractor or handyman to get more accurate bids.

The big issues you'll want to look for is plumbing, electrical, HVAC and the roof as those are mostly the big ticket items. 

Look for comps / recent sales in the area that were flips or completely renovated, as that will give you a better idea of the ARV. But be conservative if you're new to this. Don't overestimate.

@Mike Imbriglio

Here are a few things you may want to consider:

1) Do you have any current pictures of the interior of the property? If it's newer construction (less than 20 years old) it'll probably look decent on the outside, but tenants may have wrecked the inside.

2) What's the seller's motivation for selling? If he waits one month and cleans up the property he'll get far more than selling it now for a huge discount. So why sell it now for less?

3) Ask to see a copy of the lease, so that way you can confirm it ends in April.

4) The addition may or may not be an issue. Really depends on quality of construction and its current condition. Also, is the property in an area that has an HOA? As they may have something to say about it if they find out.

Other than that, the current value, ARV and your offer price are the biggest considerations. It'll probably be pretty easy to find an end buyer to wholesale to once you've got it under contract for the right price.

@William T Stephens

Rent is likely accurate. There have been three closed leases on the MLS within the past six months in that exact neighborhood. Range is between $1400 to $1640/mo, but all of them had much more sq ft than this property (lowest was 1411 sq ft).

There are four properties currently for rent that you'd be competing with, asking $1395 to $1645/mo, with the lowest rent being 300 sq ft larger than yours. So unless you plan to renovate with some paint, new flooring, etc and get rid of those blue walls, don't plan on getting much more simply because of the competition in that small neighborhood of Phoenix. 

@Monty Bruckman

Your agent should be able to advise you on this, and even provide you with lease forms or help coordinate the actual renting of the property. 

The main thing to consider when house hacking in the Phoenix metro area is the HOAs. Most cities have a limit on the number of unrelated people that can reside in a single family residence (4), and with house hacking you often end up with more than your fair share of vehicles parking in front of the property.  

The way those vehicles are parked, and the constant coming and going of people may catch the attention of your HOA or a nosey neighbor and that can land you in some hot water. Just be cautious not to "disturb the peace" so to speak.

Don't worry about zoning. Nothing wrong with renting a room out or two. City isn't likely to let you rezone it anyway (assuming it's in a single family neighborhood) and it doesn't really become multifamily until you add a second stove and range (like you might in a casita).

All in all, take a look at the CC&Rs and the HOA documents to see if there is any limitation or restriction on leasing your property (such as no short term rentals under 6 months) and do all the normal due diligence and screening of your tenants and you shouldn't have much problems at all.

@Carl Crump

If you've mostly been doing flips and wholesales, probably the biggest change for you coming into the multifamily market is going to be the underwriting of the deal. 

Whereas before with a flip or wholesale, the focus is primarily on the repair costs and the ARV, but with multifamily or generally all buy-and-hold investments there is a lot more to account for: taxes, insurance, maintenance, management, utilities and reserves. Much of the strategy revolves around trying to lower the cost of those figures as much as possible, and increase the revenue as much as possible during the holding period.

It might be easier to get your feet wet with a few partners on a smaller building first, as for 20-50 units you're looking at roughly $2-6M in purchase price for the Phoenix metro areas that might require going through all the extra syndication steps. Especially with everyone freaking out a bit during the current coronavirus scare.

I know we've talked about Sacramento before, so next time you're out in Phoenix let's grab some coffee (assuming the place will allow us to sit down and be within 5 feet of each other LOL).

@Alexandra Feig

I'll second the plug for Phoenix. Here are the four statistics you'll want to consider when researching prospective markets:

1) Job Growth

2) Population Growth

3) Migration

4) Housing Market

And here are some relevant articles about Phoenix to save you some time:

-- Phoenix leads US Counties in Job Growth, New Data Shows

-- Phoenix leads the US in Population Growth, New Census Data Shows

-- Phoenix is the #1 Migration Destination

-- Phoenix is Expected to be Among the Top 5 Housing Markets in 2020

I can practically guarantee none of the other markets you're considering are going to be as strong on all factors as the Phoenix metro area is. But perhaps pricing, location, etc. may sway you elsewhere.