Market Conditions in Phoenix>Question Details

T Jay, Home Buyer in Phoenix, AZ

Looking into buying an investment property in Phoenix, AZ; I was wondering how is the rental market there

Asked by T Jay, Phoenix, AZ Fri Oct 21, 2011

I am a foreigner looking into buying an investment property in Phoenix, AZ; I was wondering how is the rental market there, is it better to to buy a house or condo, my goals are continuous rental income and having good tenants, budget around $80,000.

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Investor X’s answer
Investment properties:
Here are good rental investments. Location, price, rent income is key. All properties below are built 2000 and up. I won’t get into detail. But these properties are the best.

MLS # 4617498…. $82K. 3 bed/3.5 baths. 1,608 sq ft huge giant townhouse. Excellent location. Can get $1,150 a month rent no prob

MLS# 4614488…. $59K. 3/2..1,450 sq ft... Cheap home.. Home. Can get $900 rental income

MLS# 4660045….$67K.. 3 bedroom, 2 bathroom, 1 partial bath, 1,449 square feet. Can get $1,100 no prob with this place.

Good luck out there

Investor Mike
Gilbert, AZ
1 vote Thank Flag Link Fri Oct 28, 2011
BEST ANSWER
I concur with the first answer. The challenge as I see it is that your budget of $80K would suggest that you look at homes under $75K so that you have the money for closing costs, painting and new carpet often needed for the average home.

Keep in mind that hot water heaters here in AZ have a life of about 8-10 yrs and A/C units 10-15 yrs. Tile roofs have a live of 25yrs, while compost roof may last 10 yrs. So, consider that in your budget.

You will want to check out the crime statistics to compare neighborhood. http://azrealestate-azhousesforsale.com/az-home-buyer-resour…

As you look at different areas around the city, those cities that are closer to high employment/jobs have more prospective tenants and a stronger rental market.

In Arizona you will need to have a local representative to comply with various state and city laws. For more information see: http://azrealestate-azhousesforsale.com/az-investor-resource…

Your realtor should be able to guide you to a good property management company to help with this issues.

Loren Hoboy
623-688-0044
LHOBOY@ReadyRealEstateAZ.com
0 votes Thank Flag Link Fri Oct 21, 2011
Hello Mr. Jay,

For long-term appreciation you be better off by purchasing a single family residence. While we can't predict the future appreciation of a property, historically single family homes do better than condos or town homes.

I will be happy to show you what is available for sale, and can set you up to receive the same information available to the Realtosr as property become available in the marketplace.

Please feel free to contact me: milly@millycasas.com, phone 480-466-0264.

Best regards,

Milly Casas
RE Broker -AZ & CA, CDPE
0 votes Thank Flag Link Fri Oct 28, 2011
Hi T Jay,

The rental market here is Phoenix is good and is projected to get better within another year, according to CNN. Here is an article about the Phoenix rental market:

http://money.cnn.com/galleries/2011/real_estate/1107/gallery…

I would suggest purchasing a single family home instead of a condo since the SFR will appreciate more than a condo. You will pay more for a SFR than a condo since the purchase included land. With a condo you are just purchasing air space and access to the common grounds that all owner share. If you were to purchase a condo, I would recommend on with amenities like a exercise room, community center, pool, spa, etc. since this will attract the better tenants. I hope this helps and if you need any help with your search I would love to help you out. Just let me know...

Sincerely,

P.S. Follow me on Facebook.com at: http://www.facebook.com/scottsdaleproperties

Sean Heideman, Realtor
E-Certified, SFR Certified
Zip Realty
2929 North 44th Street, Suite 320
Phoenix, AZ 85018

Office: 800-225-5947
Cell: 480-213-5251
Fax: 602-288-5533
E-mail: sean.heideman@ziprealty.com

My Profile: http://www.ziprealty.com/agent/sheideman
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0 votes Thank Flag Link Fri Oct 21, 2011
T Jay,

Rental market here in AZ is doing well and actually getting better. With lots of distressed homes on market, ex-homeowners are becoming renters. This has caused a shortage in rental inventory in the valley. So over time based on conditions, rents should be moving upward based on supply and demand.
I would recommend staying away from condos due to association and failing HOA's. It is not easy finding a SFR in that price range that doesn't need repairs. I would recommend looking at some multi families in that range that will give you a great return also. You have options and becoming a landlord in this market is a great decision.
Best of luck.
Web Reference: http://brianrocca.com
0 votes Thank Flag Link Fri Oct 21, 2011
Hi T Jay,

I do agree that houses are usually a better investment. Generally, better rents, stability and appreciation. Condos can be good for straight cash flow.

Right now, the amount of inventory is low making this a sellers market. In your price range, it will be a bit of a challenge to get something decent. There is a huge number of buyers looking for the same thing. We are seeing well priced foreclosures getting 10 to 20 offers within the first day or two. Don't want to discourage you, but be aware it may take some time and patience.

As a foreign investor, be sure to do your homework. There are various tax consequences that you need to be aware of. When selecting an agent and property manager, be sure they have knowledge or experience working with foreign investors. I have included a blog link below about Canadians buying in Arizona. (Can apply to anyone outside of the U.S.) I am a Canadian who is now a permanent resident in Arizona and I am also and investor. Feel free to contact me with any questions you may have.
0 votes Thank Flag Link Fri Oct 21, 2011
You have ask some very good questions and I will try to provide you some answers that make sense.

First of all I like long term rentals at this point in the Valley's Real Estate cycle. How long term is often a question that is difficult to answer. Most so called experts in the field seem to be on a 5-7 year hold time with an expectation of a very nice return from appreciation at that point. Holding longer than that should not offer any significant downside with the possible exception that your appreciation may soften somewhat after the 7 years or so. Ideally you could have them paid off in 15 years with some cash flow as we move along.

20% down offers good rates on investment properties, 25% even better rates.

Rental Rates: The sweet spot is between $1095 and $1255 per month. The market absorbed 2774 units in September.

I tend to like the newer homes as mechanically they should be sound for 10-15 years and the demand is a little higher.

Not a big fan of Condo's due to the high monthly association fees incurred and tenants tend to compare them to apartments. Condo's can be fine for some 2nd home buyers that really want an easy lock and leave situation.

Just my 2 cents on a few topics
Web Reference: http://www.McVinua.com
0 votes Thank Flag Link Fri Oct 21, 2011
The demand for rental properties is pretty good. Updated rentals in older neighborhoods are very attractive for tenants and rent quickly. Condo or single family - either one is fine and could be producing good ROI. Due diligence is important when making the decision.

Steffy Hristova, SFR, MBA, Realtor
HomeSmart
Tel:480-966-9353
Web Reference: http://www.talktosteffy.com
0 votes Thank Flag Link Fri Oct 21, 2011
Hello Mr. Jay;

The rental market in the Phoenix corridor is pretty healthy at the present time. One of my listing that recently sold for $40,000 the home was rented for $950.00 by the new buyer. The agent representing the buyer asked me how many more properties did I have in the price range of $40-80K as his client had already purchased 41 homes and his goal was to have 75 by year end. The return on investment is much better than if you were to deposit the same funds in the stock market or savings.

My recommendation is to buy a single family residence for the reasons mentioned by my colleague. Good tenants is a function of a stringent up front screening (credit, employment (present-past). security deposit; etc).

I am very active RE broker and would love to help you find your next investment property in Phoenix.

Milly Casas

Milly Sells AZ

e-mail: Milly@millycasas.com
0 votes Thank Flag Link Fri Oct 21, 2011
Hi T Jay,
I always recommended single family over condo for renting. I think they are better value and the exit strategy is better. I also believe that you have a better chance at retaining a long term tenant. The downsides to a single family is that you personally have to maintain the exterior of the home versus the association managing the grounds and pool. The rental market is doing very well and I think that you will do well if you make careful decisions and buy the correct type of property in the right location. Good Luck !
0 votes Thank Flag Link Fri Oct 21, 2011
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