It’s a short sale, but that makes it eminently doable for cash investors.
Good shape overall. Needs carpet, paint, landscaping.
For more details, click here.
Category: Real Estate Investing (page 2 of 4)
I look at homes in the Phoenix area for investors several times a week. Here are four I saw yesterday:
- 10716 West Granada Road, Avondale, AZ 85392
- 12575 West Cheery Lynn Road, Avondale, AZ 85392
- 12575 West Fairmount Avenue, Avondale, AZ 85392
- 12521 West Lincoln Street, Avondale, AZ 85323
The home on Granada is sweet. I don’t love lakefront lots for rental homes, but this is truly a premium spot on the globe. The house could command a premium rent, and it should do well on resale. For what it’s worth, it would make an excellent residence.
The homes on Fairmount and on Lincoln are both excellent values at their list prices.
I’m shopping for premium value in potential rental homes in the Phoenix metropolitan area. If you would like to purchase one of these homes — or one like it — shoot me an email or give me a call at 602-740-7531.
I look at homes in the Phoenix area for investors several times a week. Here are four I liked today:
- 10356 West Granada Road, Avondale, AZ 85392
- 10805 West Alvarado Road, Avondale, AZ 85323
- 11633 West Jackson Street, Avondale, AZ 85323
- 12525 West Madison Street, Avondale, AZ 85323
I’m shopping for premium value in potential rental homes in the Phoenix metropolitan area. If you would like to purchase one of these homes — or one like it — shoot me an email or give me a call at 602-740-7531.
I’ve known for six months or more that there was a sweet spot on the horizon for investors and other highly-solvent buyers in the Phoenix real estate market. That event was delayed by the first-time home-buyer’s tax credit. Today’s news about declines in the number of pending purchase contracts is a symptom of the market returning to an unstimulated level of demand. I watched the dropoff reflected in today’s news as it happened last fall. Lenders cut off new applications for first-timers and, just like that, price pressure eased, available inventories started to rise and it came to be a lot easier to get a house under contract.
We’re all waiting for the other shoe — the shadow inventory — to drop, but the supply of the homes I want most for my investors has almost doubled since mid-October, from around 350 units then to just over 600 today.
Here’s even better news for buyers (not for banks): Prices are going down.
This is the Cliff’s Notes for the last four months, as reflected in the BloodhoundRealty.com Market Basket of Homes:
September: +3.15%
October: +2.14%
November: +2.22%
December: -8.03%
That’s a huge drop for December — giving back almost everything we’ve gained since April, 2009. But, interestingly enough, the ratio of sales price to list price was positive. In other words, there is still competition for listed homes, but list prices are dropping.
I don’t know how it is where you live, but this is the perfect storm for investors in Metropolitan Phoenix. The homes are in much better condition than they were this time last year, and the prices are at hovering just above the 2009 low.
Are we at the bottom? Feels like it — but we’re going to be here for a while. Positive cash flow is easy, but cash flow is all there is right now. If you’re not a buy-and-hold investor, Phoenix is not for you. I’m sure that’s true in most rental markets.
But if you’re thinking of buying a rental home anywhere in Greater Phoenix, reflect on this: This could be the coldest winter in 25 years. Whether they can afford to or not, people in the snowy states are going to move. When they do, they’re going to need a place to live.
Give me a call at 602-740-7531 and let’s talk about how you can ride the Phoenix real estate thunderbird as it rises anew from the ashes and soars its way back into the cloudless skies.
I represented tenants for my first two years as a real estate licensee. I walked into — and walked right out of — hundreds of homes that were amazingly inappropriate candidates for tenancy.
Horrible locations, with no access to jobs, schools, shopping, entertainment, transportation.
Still worse, horrible homes, dingy, run-down testaments to the perils of deferred maintenance.
And still worse, many of these homes would be filthy — stained carpets, smudged walls, debris everywhere. In many cases, the carpets had not even been vacuumed, and often the back yards were shoulder-high jungles of weeds.
Would you want to live in a place like that?
Why would you expect that a tenant would?
Here’s a better question: What kind of tenant, do you suppose, would settle for a rental home like that?
Landlords can be penny-wise and pound-foolish. They will buy a dump of a property because it’s cheap, convinced that their salvation will be low rents. But bad properties attract bad tenants — by repelling all of the good tenants.
The wrong rental property is the worst kind of real estate investment: It will rent slowly, with long vacancies between tenants. And the tenants the landlord will be forced by circumstance into accepting may be slow-pay, no-pay eviction candidates who may do damage or steal the appliances on the way out. And, of course, because the house is repellant, it will attract nothing but low-ball offers on resale.
But take heart. There is a better way of doing things.
First, what you want is the right location — a built-out suburb with its own job base, with schools and shopping and entertainment already in place. And don’t buy a dump. Nobody wants to live in a dump. The house you’re looking for should be appealing to tenants, but also to owner-occupants. Why? Because owner-occupants will pay more than investors when it’s time to sell.
But even then we’re not done. We’ve got the right house in the right location, but we also need to refurbish the home to turn-key condition. Why is that? Because tenants — especially premium tenants — have choices. We want for our home to be first on their list of candidates, when they go out shopping. That way, you will have your choice of top-quality applicants: Good jobs, good income, good credit, good payment histories, good real estate references.
A home like this will rent quickly, will stay rented, and — if you continue to maintain it in turn-key condition — will suffer little vacancy between tenants. Moreover, your tenants will treat your home as if it were their own, so your costs between tenants will be lower. And because we chose the property with resale value in mind, it should sell quickly and at a premium price, ideally to owner-occupants.
This is a sound business strategy. Your objective is to make money. This is the way to make money in the suburban-Phoenix rental housing market.
I’ve written a guide on how to make money by investing in rental homes in Metropolitan Phoenix. It covers these issues in more detail, with a video explaining my thoughts on home selection. There are also before and after photos of a real rental home, to illustrate what I think is necessary to make a property appealing to premium tenants.
If you want to discuss Phoenix-area rental home investment in more detail, you can phone me at 602-740-7531 or just shoot me an email.
Being a landlord is not easy, and very often it is decidedly not fun. But it is potentially very lucrative — if you go at it the right way.
A full-scale remodeling job on an older home consists of two steps: First rip out everything that needs to be replaced. Then install all the new stuff — fixtures, flooring, paint.
This house, 4830 West Cinnabar Avenue in Glendale, is halfway through that process — and, in consequence, it’s selling for half-price.
We all know what makes a good flip: Upside. This is a rock-solid block home in a stable west-side neighborhood. The floorplan is ingenious — but you’ll need to exercise your imagination to see it. But if you’re looking for a fix-and-flip — or a fix-and-rent — or a fix-and-move-in home, you’ve got good bones to start with — and a price to die for.
This home is offered at $84,995 — and turn-key homes in the neighborhood are selling for twice that. Call your agent to find out how to make this home your own. But don’t dally. The property is showing several times a day. This opportunity won’t last long.
Picture a charming home in a shady corner of Phoenix. Good bones, reliable block construction, mature landscaping. Now give it the best feature of all, for a real estate investor: A performing tenant already living in the property.
That’s what you’ll find at 2425 West Cheery Lynn Road in Phoenix.
The house itself is sweet, and the location could not be more perfect: Minutes from downtown Phoenix, seconds from the I-17 Freeway. But the presence of the tenant means that this home will be cash-flow positive from the day you buy it. No months of frustration waiting for a lease-up. No angry glares from your spouse as an alligator eats up your savings.
This home is offered at $109,995. Call your agent to find out how quickly you can add it to your investment portfolio.
This from my Arizona Republic real estate column (permanent link):
Here’s a situation that’s all too common in the Phoenix real estate market right now:
You make what you think is a good offer on a home, only to find out that you are one of several bidders. The home can be lender-owned, a short sale or just an ordinary owner-owned home. It’s probably priced pretty aggressively to the market, though. That’s why it attracted multiple offers.
Here’s what happens next: The listing agent sends out Multiple Counter Offer forms. The Multiple Counter Offer can specify some ideal offer, perhaps the best one received so far. Or the lister can simply ask buyers to make their best offer. Or the Multiple Counter Offer can specify different terms to each buyer.
How do you respond?
You don’t know what you’re competing against. And even if you have a fair idea of what the best offer might have been before the lister sent out the Multiple Counter Offer, you have no idea what you might have to beat by now.
But, guess what? It gets worse. Because you don’t even know for sure that there are other buyers, or, if there are, if they are willing to respond to the Multiple Counter Offer.
Do you understand? You could be involved in a brutal bidding war — bidding only against yourself!
What are your alternatives?
First, don’t get caught up in the fever of a silent auction. A property is worth what it’s worth in the current market. It does not gain in value just because people are competing for it. Your offer should reflect the market value of the home. If you lose out, go buy another. Houses are not in short supply.
And because houses are not in short supply, ask yourself why you’re in such a fierce competition to begin with. You might not be able to get the property that’s listed at a very low price but sells at a much higher price. But you may be the only bidder on the home that is priced to the market — and will end up selling for the market price.
This from my Arizona Republic real estate column (permanent link):
I work a lot with investors, and I’ve written in the past about the factors I think are important when buying a rental home in the Phoenix real estate market.
I want for the homes I choose to be in built-out neighborhoods in built-out communities with ready access to schools, churches, entertainment, shopping and transportation. More than anything else, I want for there to be plenty of good-paying jobs nearby.
But even taking account of all that, tenants seem to be getting thin on the ground. Is there a shortage of tenants? To the contrary. Folks who have just lost their homes to foreclosure need to rent for a couple of years to get back on their feet.
There’s no shortage of tenants, but we’re seeing a sudden surplus of landlords. Out of state investors are snapping up Valley tract homes at bargain prices and posting their “For Rent” signs in the front yard.
Are these homes necessarily good rental candidates? Probably not. Will they rent? At a low-enough price they will. And landlords are feeling price pressure for the first time in years, all across the Valley.
What is missing, as is so often the case in real estate, is intelligent marketing. There is a huge supply of tenants in Metropolitan Phoenix who would love to live in suburban single-family rental homes. Where are they? In apartments.
Any why are they in apartments? Because apartment communities market very intelligently to tenants. Can an ordinary landlord compete against a $99 move-in special? Probably not. But here is an offer for appealing to apartment renters that makes sense to me.
Instead of a 12-month lease at $900 a month, offer 24-months at $950 — with two months rent-free. You might go for the second and twenty-fourth months, but I think making both Decembers rent-free could be a killer proposition.
The tenant pays more per month, but less over the 24 months. The landlord gives up $700, but nets a faster lease-up on a longer lease. Everybody wins — and that’s the power of marketing applied to real estate.
Last Tuesday, while racing around doing real estate work and preparing for BloodhoundBlog Unchained, I was interviewed by the New York Times about the Phoenix real estate market.
I’ve been interviewed a zillion times before, and it’s cool and fun and it means absolutely nothing. I got picked because of this article, from my column in the Arizona Republic. I spoke to the reporter for 45 minutes on the phone, and about twelve of my words made it into the newspaper.
Okayfine. That’s the way it works. I’m just waxed fruit in these tableaux and I know it.
But here’s the cool part: Yesterday I got a call from a potential client about the article. Never happened before. Real estate investor from Canada looking to balance his risk by picking up some lender-owned homes in Phoenix.
As a marketing strategy, talking to reporters is probably less productive than handing out business cards in the supermarket parking lot, but serendipity is where you find it.
Here are three hard-boiled facts of life for real estate investors in Metropolitan Phoenix:
1. Despite the ridiculous hoopla in the newspapers, there is no shortage of foreclosed homes. FannieMae and FreddieMac imposed a four-month moratorium on new foreclosures, which resulted in the false perception of a shortage. The moratorium ended on April 1, and inventories are surging.
2. Hence, there is no sane reason for an investor to get mixed up in a bidding war for a particular property. If you can’t buy what you want right now, you’ll be able to get something better for less money a month from now. You don’t need to — and shouldn’t — buy the cheapest rental property out there, but there is no need to overpay for anything right now.
3. There is no viable tenant base in Queen Creek, Maricopa or Buckeye. Investors fixate on those towns because the homes are so cheap. They’re cheap for three reasons: They’re half vacant, they’re more than half lender-owned and — most importantly — there are no jobs to speak of in those towns. No jobs means no reason for tenants to live there, which means no rents for landlords.
Those three towns — Queen Creek, Maricopa and Buckeye — are the poster children of the real estate bust. Out-of-state investors got suckered into buying rental homes there in 2004 and 2005, which homes comprised much of the first wave of foreclosures in the Valley. Now a second wave of suckers are snapping up super-cheap homes in those remote locales, even though there must already be at least a dozen vacant rental homes for every marginally-qualified tenant.
Here’s the hard, cold truth, and it’s a lesson every landlord has to learn: Residences without residents have no value. The price you pay on the way in matters, yes. The price you collect on the way out matters, too. But what matters most is whether your rental home covers its own costs — ideally throwing off positive cash flow — while you own it.
Emphasize that: It doesn’t matter how cheaply you bought it, and it doesn’t matter what the theoretical Gross Rent Multiplier might be — if the home sits vacant for months on end.
So who is at fault when a Realtor helps an out-of-state investor buy the wrong rental property in the wrong town? Is it the Realtor, who should have put his foot down? Or is it the investor, who insisted upon buying the cheapest possible property, even though the cheapest homes have no commercial value right now?
My answer is that I don’t care. I don’t work with investors who can’t figure out which side of the bread has the butter on it. I sell rental homes in towns with a strong jobs base, abundant retail and entertainment, decent, nearby schools and adequate transportation services. In other words, I work in towns — and in specific neighborhoods — where tenants actually want to live, where rental homes stay rented, and where they sell for premium prices to owner-occupants on the way out.
Here’s the kick in the teeth: Even in these premium neighborhoods, lender-owned houses are still amazingly cheap. The homes I sell are cash-flow positive from the first tenant, and acquiring that first tenant is normally quick and painless.
Owning rental housing is a business — and not an easy business. The objective is to make money. If you want to find out more about how to make money on buying lender-owned homes and converting them to rental properties, assert yourself.
This from my Arizona Republic real estate column (permanent link):
I’m working with a lot of investors right now, which is fun for me. There are a great many challenged houses in the Valley, and it’s the investors, for the most part, who are digging in and restoring value to those homes.
There is another class of investors I don’t work with at all, and I’d like to highlight some of their bad habits, in the hope of convincing you to adopt better practices.
The number one bad habit of unsuccessful real estate investors is buying homes where there are no tenants. Yes, the houses are cheap in Buckeye, but that’s because there are no jobs in Buckeye. In ten years, the Valley’s western outpost will be a thriving rental community. Not now.
The number two bad habit? Buying way too much house. This 1,400 square foot house is selling for $75 a square foot. But we can get this 2,600 square foot house for only $30 a square foot! Even though the price seems very low, the house is too big for tenants, and too costly to maintain and keep cool.
Bad habit number three is buying the worst property available. No one wants to be treated like a second-class citizen. Bad homes send premium tenants to better homes.
The number four bad habit is over-charging for rent. If the market rent for a turn-key unit is $1,000, a bad landlord will offer his home dirty and unpainted — and then charge $1,100 a month. If he delivered the best-quality home at $950 a month, he would have the pick of the premium tenants. Instead, he’ll end up settling for the tenants no one else wants.
And that leads us to the fifth and most costly bad habit: Our investor chose the worst available model of a too-big house in a town without a tenant pool. The house is dirty and grungy, and he’s charging too much for it. Therefore, he will have no choice but to rent to tenants with bad credit, bad work records and bad real estate references.
Making money in the metropolitan Phoenix residential rental market is easier than it’s been in years. But losing money is easy, too, if you make the right mistakes.
I hear the request in the headline about twice a month. It’s a doable proposition, and it all really depends on price. Spend enough and you can have golf. Spend more and you can have gated golf. Spend way too much and you can have gated golf on the side of a mountain.
This house, in Ryland at Heritage Point in Tolleson, is the bargain-priced expression of that ideal. No gates, no golf, no mountains, but a nice-sized three-bedroom home with a pool in a near-in suburb of Phoenix.
For the record, I don’t love pools for rental homes. If you’re going to have one, then you simply must carry a liability rider while you’re housing tenants.
Beyond that, this house has a lot going for it. Bedroom number two has a closet, but it doubles as a den, a very practical configuration. The landscaping needs attention, but it was decent to begin with, so it should come back fairly easily. The pool was built by Paddock Pools, a reputable company.
We need appliances, along with flooring and paint, but the home is in pretty good shape overall.
The home is listed at $87,900, which is pretty aggressive. I might start at $80,000 and see who salutes. With $5,000 to whip it into shape, it could be rent-ready (or move-in-ready) for $85,000. It should be able to command $950 a month in rent, maybe even $1,000, very comfortably cash-flow positive.
And then, someday, you can lay on your back on your air mattress in your own backyard pool, watching the silent progress of the jets taking flight from Skyharbor Airport. There’s a beer or a margarita somewhere in this scene, but you’ll have to paddle over to the cool-deck to find it.
In the mean time, email me or phone me at 602-740-7531 and let’s go take a closer look at this property…
I’ll make it back to Coldwater Springs sometime soon, but, for now, this house is making me crazy. I’ve been following it for six months, and, despite a very sweet pricing history, it just won’t move.
What’s this property’s Achilles’ Heel? It’s missing its dishwasher, and I think the lack of a $600 item is sending buyers elsewhere.
If you can make a mental leap, you’re in for a nice bargain. The home faces south, and you’re just steps away from the Coldwater Springs Golf Course. There’s ample shopping nearby, and the public school is right in the middle of the subdivision. Kids can walk or ride their bikes to school without ever crossing a busy street.
As a starting bid, I like this home at $85,000. It has competition at $88,5000, but the recent low sale in the Lavendar floorplan was $105,000. The all time high for a Lavendar without a pool was $267,107.
You’re looking at around $5,000 after closing to whip it into shape — dishwasher, range, refrigerator, carpet, paint, landscaping and touch-ups.
How will it rent? It should go for $950 a month, comfortably, throwing off around $7,200 a year in before-tax cash-flow.
This is a smokin’ deal in an Avondale neighborhood that should be a pace-setter, once the real estate market starts to recover.
If you want to give it a closer look, email me or phone me at 602-740-7531.
Not home yet? Not to worry. We’ll talk about another great deal tomorrow.
These houses are making me crazy. The Phoenix real estate market is awash in incredible bargains. I’m going to start writing about them until they’re sold.
Here’s the way it is: Decent-quality homes are for sale for fire-sale prices. Interest rates are at all time lows. Whether you’re buying a home for your family or a rental home — perhaps to produce income now and serve as a retirement home later — opportunities abound.
Today’s bargain is actually four bargains, four homes in the same floor plan in the Ryland at Heritage Point subdivision in Tolleson, Arizona.
If you follow that link, you’ll find photos on eleven houses, but today we’re just going to talk about the four that are selling for the lowest prices.
The photos I’m showing you are “warts and all” pictures. These are lender-owned homes, and all of them will need some work before they are move-in- or rent-ready. But, as you’ll see, most of them won’t need much work, and we can help arrange for contractors and handymen to get these minor jobs done — quickly and economically.
So let’s take a look at our four houses. Tolleson is a near-in suburb of Phoenix, and Ryland at Heritage Point is the jewel in its crown. There is a community pool and ample green belts, some with playgrounds. There is great shopping nearby, and freeway access could not be easier. You’re in the heart of the West Valley warehouse zone, so there are lots of good-paying jobs in the immediate area. In short, this is a nice place to live and a profitable place to own rental homes.
8330 West Hughes Drive Tolleson AZ 85353
This house is in decent shape overall. Alas, the air conditioner compressor will probably need to be replaced. The most recent sale in these units is $55,000, so $50,000 would be a fair offer on this home. You should figure your net entry cost at around $60,000, although it could be less.
2612 South 84th Glen Tolleson AZ 85353
This house is better than it looks right now. The lister promises to do something about the front-yard landscaping, and the rest of the house is not in awful shape. The carpet needs to go, and the house faces east — which means the back of the house will get very hot on summer afternoons. I like it at $52,000 to start.
2620 South 84th Glen Tolleson AZ 85353
Not awful, but it faces east, and there is a lot of bad decorating to be undone. I like it at $50,000 as a starting offer.
8433 West Preston Lane Tolleson AZ 85353
I see this one as a reject, but you might see it as a challenge — and a bargain. The kitchen has been gutted, down to the walls and plumbing. The water heater is gone and the AC compressor is damaged. It’s going to take $15,000 – $20,000 to whip this house into shape, so I think $35,000 is a fair place to start negotiations.
Why not lower on all these? Because the list prices on these homes are already so low that you will have competition in bidding on them. But each one can be made turn-key livable for about $60,000, gross, and this exact floorplan in this subdivision has sold as high as $237,000 in the past. They’ll rent for around $850 a month, so they’ll be cash-flow positive from the first tenant.
These are smokin’ deals. If you want to jump, email me or phone me at 602-740-7531 and we’ll get cracking.
Are these homes not for you? Fear not. I have thousands more available. We’ll talk about another great deal tomorrow.