Diane, Other/Just Looking in 95014

I was recently in AZ looking for investment rentals in the Mesa, Chandler area. I was ready to place an offer on a triplex and asked for rental

Asked by Diane, 95014 Mon Sep 27, 2010

comps to confirm rents. Rents were somewhat in line with what I'd expected, but the DOM were a stunning blow, with all the comps on market at least a month or two. Several were 3-4 months and one was almost 6 months! Then I remembered that everywhere I'd been, there were "for rent" signs. What has happened to your rental market? I own rentals in the SF bay area (San Jose) and I've never gone a month without renting a property and usually have them rented before they're empty. Someone suggested that maybe the new immigration law has sent many a family packing for other areas and therefore leaving many rentals empty. Is this the case? Please give insight as I would still like to invest in the area if I understood the market better.

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I would say the grapevine is correct. Most of the triplex were rented by low income Hispanic families. These properties have been hit hard by SB 1070. You will here yah-hoos keep battle crying how illegals need to get out but the majority of them are gone (at least from AZ). Most of central Mesa is abandoned. However, you may very well get some cheap buys still worth purchasing.
0 votes Thank Flag Link Mon Sep 27, 2010
I think you need to consider the condition of the units. well maintiained and nice units always rent faster than ones that need work. Renters are pretty savy.
Also your rental application and approach impact on renting. Some of the large compnies have really hard credit policies that eliminate good tennants. As a long time landloard, with different formats, it is always a challenge to do it right.
Do your due diligance, and good renting.
0 votes Thank Flag Link Wed Oct 20, 2010
All about timing.

If people were clamoring to live in a triplex in Mesa, they wouldnt be selling for 50k. You are competing with endless amounts of vacancy at 'luxury' apartment complexes that were built recently, that have resort style amenities. Your doing the right thing, be cautious and do your due diligence.
0 votes Thank Flag Link Fri Oct 8, 2010
Diane,
As I reread you inquiry, your title talks about triplexes, yet some of our answers are based on houses and not mufti-family. Rental rates depend on location. If you pay between $16,000 and $30,000 per door (auction or MLS) my experience says you will rent between $350 and $550. One fourplex I have available for sale has full occupancy (100-88%). When the rent was $550 50% occupancy, at $450 near %100 occupancy. This was in S. Phoenix. This was also true in Mesa. Quality and Location effects price. These are on the lower end. Go near ASU and expect much higher rentals and expect to pay higher purchase price to, yet get the same returns.

It is probably easier to get you answers with a phone conversion.
Loren Hoboy
623-239-6919
0 votes Thank Flag Link Fri Oct 8, 2010
According to a management company I work with, rental prices are down in apts and many are looking into housing. Rental housing in the 1100-1500 is flying off the shelves and I would guess if the house has fresh paint and clean carpets, that it will not ever be vacant. All of my investor Landlords are buying at the auctions and getting up to 30-35% discounts and having to spend a few bucks to clean them up. Some of the auctin homes already have tenants in them. I would not buy anything on the MLS as an investor in this market.

Jason Whaley, GRI,SFR,CDRS
RE/MAX Homes & Investments
480-254-6464-Cell/Text
Web Reference: http://www.SearchAZmls.com
0 votes Thank Flag Link Fri Oct 8, 2010
Our rental market is doing fine. When you price it right you should find a renter in 30 days or less.
0 votes Thank Flag Link Wed Oct 6, 2010
There is not shortage of renters. From my client's experience, many are people that have just experienced a short sale. We continue to expect more renters from the pool of short sale /foreclosure former home owners. In their minds, most are looking for their next house when they rent. On the other hand there is not a shortage of rental properties. Everyone that is upside down or bought a "vacation" house is trying to be a landlord.

The spaces that sit vacant are simply over priced for the market or need to be upgraded to attract tenants. The tenants in any price range can now pick from aged properties or remodeled. The days of "anything rents" is past. My advice is ask for a rental price you can settle for. Don't over price. Make sure your asking price is in mid-range for that local market and the property shows well. Be prepared to market extensively to get exposure.

In El Mirage I see MLS listings at $850 when the market is $750 for a 1100ft2 house. A vacancy for 30 days cost you $850. There is money to be made. You need to be smart and chose the right opportunities.

What rate of return (cash on cash) are you expecting in today's market?
0 votes Thank Flag Link Tue Sep 28, 2010
Thanks to Ted for fearlessly addressing the 800lb gorilla in the room and answering my question directly (and I suspect, correctly). Also, Roselyn (greetings :) makes a good point about prices being such that you can have a vacant unit and still afford the cost/mortgage with a multi-plex.

Redfin, the site I use here in CA, has a Q&A forum almost completely investor/buyer driven. So I was hoping for some additional insight from folks like myself :) Anyone?
0 votes Thank Flag Link Tue Sep 28, 2010
Diane

My last 4 investment clients all rented very fast, you have to determine the renter you want and target the correct property to purchase. A glut of super low priced and less demand for that market right now.

How much are you wanting to invest? Do you look at single family or typically stay in multi?

Doug McVinua
HomeSmart
0 votes Thank Flag Link Mon Sep 27, 2010
Hi Diane,

Looks like you're still thinking about investing in our market...Well, that is good news. The real estate market in the Phoenix area has changed drastically over the last couple years. Many people are losing their homes and a lot more are finding that it is actually cheaper to rent at this time than to own. I think one of the reasons why townhouses and apartment style residences are not doing so well is because families can now get into a single family house for a lot less than they probably could in times past. We are seeing a great deal of activily in the single family rental market and probably not as much in the townhouses/apartment style homes.

The benefit though with the apartment style/townhouses is that they are so much more affordable now and could be a great investment for the long term. For instance, there are triplexes and fourplexes selling for $60,000 or less in many areas of the Valley. For someone looking for a long term investment, even if only 2 of the units are occupied at a time, that should cover the mortgage and taxes. So for someone who wants to hold on to these properties for the long term, when the market does turn around, they will be so much better positioned to make a great return on their investment.

My suggestion to anyone looking to invest in real estate in the Phoenix area will be to think loooonnnnggg term! The benefits may not be apparent immediately, but history always repeats itself and our market WILL bounce back and some investors would not have done badly for themselves at all!

Well, hope this helps. Let me know if I may be of any further help. YOu can reach me directly at 480 797 9831 or toll free at 800 766 6343. Have a great night.

Roselyn Gyampoh
Coldwell Banker Residential Brokerage
Mesa, AZ
0 votes Thank Flag Link Mon Sep 27, 2010
The phoenix area actually has a shortage in rentals, so there may be some additional factors in the area you were looking in. Are the rents in line with the area you were looking in? If there are many rentals you would have to offer some incentive that is different then what others are offering. You need more information such as the last 24 months that may give you a bigger picture.
Web Reference: http://azrealtorhelp4u.com
0 votes Thank Flag Link Mon Sep 27, 2010
Dear Diane:

The reports are that Arizona is still expected to be a growing state, although slow with the present 10% unemployment. The largest factor? Still a glut of investor homes on the market that cannot be flipped at a profit, so currently there is an excess of rentals.

Areas within the central commute corridors and around ASU still rent well.

Triplexes may not be as desirable for a renter in this market when a private home can be rented for a similar rent.

Jeff Masich
Arizona Homes and Land
http://ArizonaHomesLand.com
HomeSmart Realty
Scottsdale
0 votes Thank Flag Link Mon Sep 27, 2010
Diane, it depends on what areas you're looking to invest in and what your objectives are. Certain areas rent faster than others and with a large % of the population looking for homes due to short sales and foreclosures, those people need a place to live. Most people that need to move out of a home are looking in the same area because their kids are going to a certain school or they work in the area or don't want to change their commute. ASU is a popular area to rent due to college kids attending schools.
0 votes Thank Flag Link Mon Sep 27, 2010
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