Home Buying in Scottsdale>Question Details

Dom, Other/Just Looking in Madison, WI

I'm interested in purchasing 2-3 rental homes, what kind of cash flow can I expect in this market?

Asked by Dom, Madison, WI Sat Jul 30, 2011

I'm looking for an agent who understands the rental market and what it takes to maximize ROI/cash flow. What areas in your opinion are the sweet spots right now and can you back it up with current listings and comp rental prices.

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The golden rule in any market for rentals is to have a decent equity in the property. Leveraging no longer works.
My philosophy is expect the worse case scenario and be prepared for it. Vacancy, repairs are some of those unexpected factors. Buying a run down property is an other. Remember the quality of your tenants are a reflection of your property. In times like today I prefer to give the best value and condition to a property to attract the best tenant. Long term tenants are an investment where landlord will raise rent gradually and keep a good tenant rather charging top rent and loosing them in a bad economy.
Multi family residential income properties make more sense than purchasing multiple locations.
Duplex, triplex, quadplex they conform to conventional financing and are easier to maintain and manage.
Locations vary and they are as personal as to individuals requirements. Price is always a determining factor.
Available employment is an other. Transportation and approximaty to schools shopping is an other.
Since I am a florida broker i could only give you advice in generalities. Indeed this is a great market to invest to rental properties. The rental values are indeed going up which is the first indication that real estate values are on the mend. The demand factors looks god for the next five years which means vacancy could be minimum in any metropolitan city. It is why as i started my conversation that the impact of a strong equity determines the return. In five years the property from my calculations should be paid for in full. If you are not able to make such a financial commitment I would stay away from purchasing. Rental properties do not appreciate quickly they throw off a cash flow which in times like today where money in the bank have little value on return on deposits these properties are worth their weight in gold.
0 votes Thank Flag Link Sat Jan 7, 2012
Hi Dom,

There is no doubt the rental market is hot(IN SOME AREAS). Honestly, you need a agent that specializes in RENTALS and will give you the information about each area. There are a couple areas in Phx where you will get a great deal on a home, then try to rent it and find that the area is not very desirable. Also any agent you choose to use should give you facts about the area. Again depending where you buy, you home might be next to a meth lab, sex offender, etc. It is your investment, it is important to know everything about that area.

I would choose a agent , set up a ROI plan with him/her and pick out some great homes.


0 votes Thank Flag Link Tue Sep 13, 2011
Hi Dom,

My top pick in this market would be Surprise, Arizona. Surprise is an area that was hit very hard during the downturn and most of the foreclosure properties are within 10 years old. Generally you will only need to do a paint and carpet reno, and many of my investor's properties are renting within 2 weeks of closing and generating a realistic 9-12% return. True, you may find better cap rates in other areas of town, but be wary of what you are buying. Many of the homes that I am selling were close to $300K at the peak of the market and are now available around $100K. Rental demand is increasing and these properties are beginning to sell very quickly. Surprise features great schools, restaurants, close to west valley amenities and employers. The idea is to buy these on a 3-5 year hold and look to future appreciation gains as well as a nice cap rate in the meantime. Please feel free to call or email me for more information.
0 votes Thank Flag Link Sun Aug 7, 2011
The Phoenix metro area as a whole is ranked in the top 10 for rental home investors according to CNN Money. With home prices at lows we haven't seen since the nineties and one of the lowest cost of living indexes of any major metropolitan area, this is a great place to buy. What kind of ROI are you looking for? Are you planning on paying cash or are you planning to finance your purchases? If you are planning on paying cash, have you thought about purchasing at trustee sale auctions? These will all factor in to what locations you will want to be in. Also, are you looking for single family, mulit-family, condos, townhouses? Are you planning on managing the properties yourself, or would you like help finding a good property management company? If you're going to be buying in Phoenix, you definitely need to find a company who can help you with all aspects of your investments. I have clients making 15% to 20% ROI on their buy and hold properties. I'm happy to help. You can contact me direct at patrickj@artisanrealestategroup.com if you would like.
0 votes Thank Flag Link Fri Aug 5, 2011
Dom: I would also check to Las Vegas, which was just rated the best city to buy a house and rent it out. A $90,000 house with 25% down only 4 to 6 years old will get yoy $200-$300 a month cash flow and ROI of 12%

DAVID COOPER Foreclosure Specialist with 35 Years Investing Experience. *Free List of Bargain Homes check website below or Call +1-702-499-7037
0 votes Thank Flag Link Sat Jul 30, 2011
Generally one needs to put down 40% and buy close to ASU.

You should do quite well buying foreclosed or other short sale condos and town homes
And renting them out. The demand around the University is great.

Away from the Univ. It is based on the economy and number of other vacant units available.

Good luck.
0 votes Thank Flag Link Sat Jul 30, 2011
Before networking with any agents, you probably should check out at least one of the REI clubs in that area.
0 votes Thank Flag Link Sat Jul 30, 2011
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