patrick.net

Bitcoin says

Looking to buy a SFH as a rental. Which areas do you recommend and why?

Not trying to be a dick, but hard to recommend locations without a price point. You could get a SFH as a vacation rental in Desert Mountain/Scottsdale and rent it out for $1k+ a night and make $100k/yr. Or you could buy closer to downtown Phoenix and net $15k/yr on a $300-400k property. Or get into edgy areas that you could buy in cheaper. Are you looking for families? College aged kids just out of mom's basement?

You're not going to get good advice without more details on your plan. This is coming from someone with a RE background and I know 5 or so people that own out there in homes from $300k to $15M. I admittedly don't know the rental market, but that is easy enough to research, which I'm not doing. Bed/bath/price point is a good jumping off point if you want advice. From there target demo for renters. Close to a university? Popular corporate spot for easy commuting? More rural? Gated? Retirement community (if allowed). There are so many options in the Phoenix area that it's hard to give definitive advice without more details. Housing is very diverse there.

Thanks Wookie,

price point: 350-500k per SFH. 3-4B/3B. Want to start with one and put 25-30% down.
If it works out well with the first one in Phoenix I'll add another SFH and accumulate over time.

Renter: probably blue-collar family or retirees. Ideally long term renters.

I am thinking of potentially buying into an early phase of a new development. I dont want to deal with repairs etc. With new construction you have mess-ups as well but you have at least the builders warranty. Since I live in Socal I am also looking for a rental property mgt company.

I dont know Phoenix (been there only twice). I am looking for an area that is easy to rent, safe, with good schools and jobs. Rather a bit rural instead of downtown.

The people I know out there are family and friends and all are primary occupants/owners of their homes. My uncle owns 2 of his kids houses out there, so I'll look up their addresses as they likely are in good areas with good schools, but not over the top expensive. They may send their kids to private, but he wouldn't put them up in a ghetto. This is my uncle that has the $15M property in Desert Mountain.

I haven't looked at Phoenix prices in a while, but you can't really go wrong in Scottsdale, basically Northeast of Phoenix. Given the golf scene there, Cave Creek is legit if you can find a newer home, but it will likely be pricey. But you might be able to find something about $500k but would be tough. Anthem is another community I know well. Far north of Phoenix proper, but traffic isn't awful and about 35-40 minutes from downtown. Has all your classic suburban amenities.

My grandma lived in the Sun City West area (Del Webb Community) but the non-senior surrounding homes seemed decent. No clue about schools given it was my Grandma and no kids. Classic suburban area though. Again not sure of prices.

Also remember my background. Ghettos don't phase me, and Phoenix might have some opportunities is some hipster type neighborhoods I'm not aware of. You'd be hard pressed to go wrong in Phoenix as far as crime and awful schools. I'm sure they exist. The worst area in Phoenix I stopped in off I-17 was a joke compared to parts of Chicago I frequented for work.

All this said I've been out there about 20 times. Not an expert and the place has massively changed over my lifetime. I'm generally visiting the rich area because of my uncle. If you can get into Scottsdale under $500k, you'll do well long term unless it has structural issues. Even then it might be worth it.

Scottsdale is the priciest area in the valley, not really any bad neighborhoods there, but you'll pay for it. We spent a year in Glendale, west side of the valley. Close to the ASU campus in Glendale, nice area. Kind of a mix, some large lots out there with horses, but still a suburb for sure, and neighborhoods gravitated between upper-middle and lower-middle class with even a few miles. My daughter went to school in the northwest corner(Peoria), definitely a nicer area, less populated, newer homes.

Buckeye is one of the fastest growing towns in the US, kind of on the way in from San Diego, very rural. On the Southeast side I think Gilbert looked nice, but were only down there once. A lot of tech in Chandler, similar to Scottsdale, so I'd expect some nice neighborhoods there as well.

NuttBoxer says

Buckeye is one of the fastest growing towns in the US, kind of on the way in from San Diego, very rural.

Thanks Wookie and NuttBoxer.
I have two weeks off and gonna take a trip to Phoenix to check out some neighborhoods. The west side is def. on the list (Buckeye, Surprise, etc.).

Bitcoin says

NuttBoxer says

Buckeye is one of the fastest growing towns in the US, kind of on the way in from San Diego, very rural.

Thanks Wookie and NuttBoxer.
I have two weeks off and gonna take a trip to Phoenix to check out some neighborhoods. The west side is def. on the list (Buckeye, Surprise, etc.).

Definitely get boots on the ground. Phoenix area is rather expansive, though you can cover a lot of ground in a day.

Also, don't rule out vacation rental properties. Midwesterners plan golf trips annually during our cold months. Baseball spring training. You've got 6-8 months of solid vacation rental revenue in the right spot. More hassle, but you might net more long term with a good management company. Something to look into. I'm not experienced in that realm, though I think just passing through has a Hawaii vacation rental that could give some guidance on that.

Long term renters are the easy route, but if you screen wrong you could be looking at months with no rent. Laws generally are much more forgiving for short term/vacation rentals on the owner side. Plus you can charge your monthly nut for a one week rental.

Also even if looking for long term rental or vacation rental, pay money to get good photos of the place. Don't let a management company or broker tell you otherwise. Get photos of any amenities if it's a subdivision community. Take pictures of parks, local stores, etc. There's a high probability you'll be renting to people from out of state. Sell them on the location and sell them that you're a good landlord that understands they may be coming from outside the state. It's all a write off against income anyway, so don't go skimpy on marketing.

WookieMan says

Definitely get boots on the ground. Phoenix area is rather expansive, though you can cover a lot of ground in a day.

Also, don't rule out vacation rental properties.

Phoenix was a great experience. Visited Sedona and spent a lot of time in Cave Creek and North Scottsdale and also the west valley. I love Cave Creek......beautiful, unique, perfect for a vacation home.

I am going a different route for now: Bought a new construction in the south-west valley of phoenix, pretty central but has a rural feel to it and mountain views. I will rent it out long term. This gets me the foot in the door to phoenix. I'm planning to invest more there. A nice unique looking vacation home in cave creek would be cool. Just like Wookie said, you get a solid, high income for most of the year. Lots of Canadians rent 3-4month at a time and return every year.

Love that there is barely any traffic in the phoenix area, those loops really help. Nothing like the shithole LA.
People are super friendly.....more conservatives....less taxes.....lower prices.....tons of growth.

Hopefully not too many leftists Californians buy up the place and change it to another California. Many people, realtors and new construction reps told me that last year was insane in terms of CA investor money inflow. Many new builders dont even take investors anymore for residential RE. The new home buyer in phoenix really struggles to compete. Similar to other states, however, CA is only 5 hours away....good and bad for Phoenix i guess...

Super happy though that I found an investment property in the phoenix area :)

Curious, what kinda price did you pay, and what are expected rents?

I kinda want to buy a house to rent as well, using a low down payment to maximize my leverage.

just over 400k, less then $100 for HOA. rents probably are somewhere in the ballpark of 2200-2500 but I will know when i start renting it out once its built.
I am putting 25% down, maybe more. This is a long term play for me. If you want to put down just 5-10% and be cashflow positive.....maybe you could have gotten that deal before covid in the Phoenix area. Prices have exploded there just like everywhere else. Obviously, for a savvy investor that searches hard for a deal or someone who can fix up a place themselves it might be different. With short term rentals you can probably make more if you manage it yourself (see Wookie's post)

I needed to diversify more in RE and want to take advantage of high inflation. Early phase in a new development.
This wont be another job for me. I will have a property manager and there wont be any issues with repairs since its brand new. The builder will take care of it.
I am speculating the phoenix market still has legs and that high inflation will continue for a while.
I wont really make money with this rental. Its more about building equity long term. There arent many good opportunities CA today....HOA/Taxes are more than double here compared to Phoenix.....so for me the deal makes sense....again....building long term equity/diversification is the priority for me.

Buying at what could be the top of the market, with the possibility of never ending eviction moratoriums. Bold move considering the direction of interest rates.

From the few times I've gone through Arizona, I can say this:

Seligman is a speed trap whose primary industry appears to be traffic fines to travelers passing through. Everyone I've talked to had gotten a speeding ticket in or near Seligman. IDK about the greater area but the business loop there was as sketch and ghetto looking, with the same cast of overnight characters I'd see on the streets at night in the lower class suburbs of LA. Ran a tough mudder race out there a few years ago, was beautiful scenery to drive through while minding the speedometer near fricking Seligman.

Bitcoin says

I will have a property manager and there wont be any issues with repairs since its brand new. The builder will take care of it.

Better double check that builders warranty pal. I've been buying new houses over the past decade and can assure you lots of the stuff builders put in new houses fall apart after a few years and in my case things like AC were not covered. I did get a fully rebuilt brand new roof on a 3 year old house though.

Booger says

Buying at what could be the top of the market, with the possibility of never ending eviction moratoriums. Bold move considering the direction of interest rates.

top of the market eh? like 2016, 2017, 2018 .....2020....AH yeah, 2020....when I bought a new construction in 2020 everyone and their mom told me I will lose my shirt.....crash, crash, crash....fast forward to 2022 and I gained 350k in equity for just that one house.


2022 is the top..for real this time, right?

just_passing_through says

Better double check that builders warranty pal. I've been buying new houses over the past decade and can assure you lots of the stuff builders put in new houses fall apart after a few years and in my case things like AC were not covered.

So far I am good in my new construction but its only been roughly 2 years. The builder fixed everything that needed to be fixed for me and my neighbors. Will see what happens in the next few years.


Which builder did you purchase from?
My house in phoenix is lennar. any experience with lennar?

WookieMan says

Bitcoin says

Looking to buy a SFH as a rental. Which areas do you recommend and why?

Not trying to be a dick, but hard to recommend locations without a price point. You could get a SFH as a vacation rental in Desert Mountain/Scottsdale and rent it out for $1k+ a night and make $100k/yr. Or you could buy closer to downtown Phoenix and net $15k/yr on a $300-400k property. Or get into edgy areas that you could buy in cheaper. Are you looking for families? College aged kids just out of mom's basement?

You're not going to get good advice without more details on your plan. This is coming from someone with a RE background and I know 5 or so people that own out there in homes from $300k to $15M. I admittedly don't know the rental market, but that is easy enough to research, which I'm not doing. Bed/bath/price point is a good jumping off point if you want advice. From there target demo for renters. Close to a universit...

Hi Wookie, I know very little about real estate. I use the R/V ratio has a metric to see if the property is expensive. I also follow the 18.6 year real estate/credit cycle. Phil Anderson wrote a good (hard read though) and his website has more info if you're interested. I just wanted to get any input as I'm trying to buy a home to live in North Texas. I can put the 20% down but a hack is to only put 5% or less since with inflation we'll be paying it with cheaper dollars can invest the 15%. If I want to buy a vacation home in Arkansas it's better to get the first time home buyer loan first ( the property I plan to live) correct? I guess any interesting hacks you know of? Tips to negioate with the lenders or any books? Cheers!

just_passing_through says

Better double check that builders warranty pal. I've been buying new houses over the past decade and can assure you lots of the stuff builders put in new houses fall apart after a few years and in my case things like AC were not covered. I did get a fully rebuilt brand new roof on a 3 year old house though.

I thought that everyone here knew that "builder's grade" was crap

Bitcoin says

The builder fixed everything that needed to be fixed for me and my neighbors.

I would consider that to be the exception rather than the rule.

Bitcoin says

Which builder did you purchase from?

DR Horton and Pulte.

Bitcoin says

Booger says

Buying at what could be the top of the market, with the possibility of never ending eviction moratoriums. Bold move considering the direction of interest rates.

top of the market eh? like 2016, 2017, 2018 .....2020....AH yeah, 2020....when I bought a new construction in 2020 everyone and their mom told me I will lose my shirt.....crash, crash, crash....fast forward to 2022 and I gained 350k in equity for just that one house.


2022 is the top..for real this time, right?

As long as housing is a racket protected by the Fed, unfettered illegal immigration, and big players cornering everyone there is only one way, up. The fat years may be over, but timing a crash of a protected racket is almost impossible. Burry sniffed out the hidden mass defaults 2007, until we see something like that it's not time yet. Expect moderate growth in the coming years only though, maybe even declines in cities while bigger gains on the country side.

mell says

Burry sniffed out the hidden mass defaults 2007, until we see something like that it's not time yet. Expect moderate growth in the coming years only though, maybe even declines in cities while bigger gains on the country side.

If we've learned anything from public indoctrination(some say education), it's that not seeing the big picture always leads to reactionary living. The impact of doubling the inflation of the past hundred years in last 10 is showing. There's no way this economy lasts another year. Yes, you can play in dishonest economics, and realize a profit, but if you don't get out of the system, and start investing in honest earnings at some point, you will lose everything in the end. And it's this dishonesty, and widespread ambivalence that has led to the past two years.

You want more of the same, keep playing their game. You want a better future for your kids, and yourself, start cutting ties with their system, and start dealing with people who share your morals.

NuttBoxer says

mell says

Burry sniffed out the hidden mass defaults 2007, until we see something like that it's not time yet. Expect moderate growth in the coming years only though, maybe even declines in cities while bigger gains on the country side.

If we've learned anything from public indoctrination(some say education), it's that not seeing the big picture always leads to reactionary living. The impact of doubling the inflation of the past hundred years in last 10 is showing. There's no way this economy lasts another year. Yes, you can play in dishonest economics, and realize a profit, but if you don't get out of the system, and start investing in honest earnings at some point, you will lose everything in the end. And it's this dishonesty, and widespread ambivalence that has led to the past two years.

You want more of the same, keep playing their game. You want a better future for your kids, an...

It can last much longer than another year, otherwise I agree with most of your statements. Most nations practice deficit spending and debt may get canceled out against each other, prolonging the cycle

mell says

It can last much longer than another year

Exactly. Nobody knows. Those that call for a crash have no clue either, they just call a crash each year and eventually they will be right. Meanwhile the bulls made money for over a decade.

just_passing_through says

DR Horton and Pulte

Dr Horton, I havent been impressed by their model homes. The last builder I purchased from builds 1M+ homes here in Socal. I have nothing but good things to say about them.

https://calwestliving.com/?source=patrick.net

Will see how that Lennar home in Phoenix turns out......I am excited about my Phoenix investment. Will be there for spring training (Padres) and check on the development.

Booger says

Bitcoin says

The builder fixed everything that needed to be fixed for me and my neighbors.

I would consider that to be the exception rather than the rule.

Have you ever bought a new construction in your life?

My guess is interest rates wont get hiked too far up for long.

Some of the supply chain issues that are causing part of the inflation will start to moderate soon, although I doubt fully. I think there's other inflationary factors that will remain past that point though. I think the fed will err on the side of letting inflation run a bit on the hot side opposed to hiking too much.

But I'm mostly guessing.

Bitcoin says

Have you ever bought a new construction in your life?

Nope. I prefer to learn from other people's mistakes.

Bitcoin says

Dr Horton, I havent been impressed by their model homes.

Agreed, Horton isn't the best, Pulte is great though and I still have builders grade problems. All of them cash flow about 2x better than what you bought though.

mell says

Bitcoin says

Booger says

Buying at what could be the top of the market, with the possibility of never ending eviction moratoriums. Bold move considering the direction of interest rates.

top of the market eh? like 2016, 2017, 2018 .....2020....AH yeah, 2020....when I bought a new construction in 2020 everyone and their mom told me I will lose my shirt.....crash, crash, crash....fast forward to 2022 and I gained 350k in equity for just that one house.


2022 is the top..for real this time, right?

As long as housing is a racket protected by the Fed, unfettered illegal immigration, and big players cornering everyone there is only one way, up. The fat years may be over, but timing a crash of a protected racket is almost impossible. Burry sniffed out the hidden mass defaults 2007, until we see somethi...

If you look at the 18.6 credit cycle up until 2026/2027 and once it goes down it will take 3 years about to reach the bottom. Currently the Half Cycle Low is the end of 2022/early 2023. I'm planing to buy as assets will continue to rise otherwise I'd have to wait until 2030 in which I will most likely buy investment property.

10 Reasons Why You Should NEVER Move to Phoenix, Arizona
https://www.youtube.com/watch?v=M0oYeSDnjys&source=patrick.net

And there are more videos like that.

Now I live in Baltimore City, which also sucks (except for different reasons). But at least it's cheap to live. I paid ~$34,500 for my house in 2003. You can overlook a LOT of the shithole stuff if a place is cheap. At least parts of Baltimore are still relatively cheap and if you keep to yourself and don't do drugs it's safe enough.

How is AZ / Phoenix for landlord rights?

Is it one of those places where a loser can stay in your rental rent free for over a yr before you can evict, like in CA?

just_passing_through says

Dr Horton, I havent been impressed by their model homes.

Agreed, Horton isn't the best

yeah, its on the same level as KB Homes and other crap. Buying from a quality builder is important.

In terms of ROI. I have enough in crypto and stocks and want to invest long term. RE in booming markets like Phoenix dont seem like a bad idea. Will see. I'll made a shit ton in crypto....e.g. buying ADA at 10cents which is now trading over $1.2 :)

Booger says

Bitcoin says

Have you ever bought a new construction in your life?

Nope.

I figured :) Usually you get one of those posters that hasnt had the experience but wants to chime in.
One day you will be in the position to buy a brand new house....its nice....and if something breaks or you find cosmetic issues you just call the builder :)

zzyzzx says

10 Reasons Why You Should NEVER Move to Phoenix, Arizona
https://www.youtube.com/watch?v=M0oYeSDnjys&source=patrick.net

ROFL
His first reason is cost of living. bawaha
First of all, HOA & Taxes are less than half compared to SoCal. Home insurance and utilities in AZ are less expensive as well.
Then he talks about higher rents....fantastic....music to my ears as an investor.

His next reason is traffic. bawahaha
You can hardly call this traffic.....compared to LA or other areas in CA, the "traffic" in Phoenix is a joke.
Its super easy to get around in Phoenix even during rush hour and those loops really help.

His next reason is the weather and the lack of seasons. yeah it gets hot....but to say they will run out of water....give me a break. And maybe not everyone wants to shuffle snow during winter?!

Dont waste your time with this video.

just_passing_through says

Bitcoin says

In terms of ROI. I have enough in crypto and stocks and want to invest long term.

But this isn't crypto and stocks. Just be careful and be sure to stash some rent money off to the side to pay for things when they come up and you'll be fine. SFH rental properties are definitely not get rich quick schemes but can be a big help to diversify and offer some protection during high inflation.

I did the same thing you did after making piles of cash in markets. It's a good idea. I'm more confident with riskier investments because I know I won't, 'lose it all', now and housing being so illiquid I can't get drunk some night and fuck it all up in a dumb trade.

You've made a good choice if you plan to hold it for a long time.

FJB says

SFH rental properties are definitely not get rich quick schemes but can be a big help to diversify and offer some protection during high inflation.

I did the same thing you did after making piles of cash in markets. It's a good idea. I'm more confident with riskier investments because I know I won't, 'lose it all', now and housing being so illiquid I can't get drunk some night and fuck it all up in a dumb trade.

Thanks man, you nailed it here.....I dont care if I buy the top in RE. For me its about diversifying into an inflation hedge with a long term strategy (25+ years).
People who bought RE in 2005 and held until now are doing well. Surely, there were people back then who made fun of them from the sidelines for buying the top. Time in the market beats timing the market.

New House Construction Problems That Buyers Should Be Aware Of

https://www.youtube.com/watch?v=J6uERM1S1jE&source=patrick.net

zzyzzx says

New House Construction Problems That Buyers Should Be Aware Of

https://www.youtube.com/watch?v=J6uERM1S1jE&source=patrick.net

The guys says 7:35: "I wish they would stop increasing the price so much, they need to chill."

Great advice and video! What an expert!

Go back to your moms basement and watch more youtube. In the meantime millennials with money (me) will buy new homes and rent them out :)

My rental has appreciated by ~50k by now and is about to be completed (builder's closing date is in May) which is about a 10% appreciation in 4-5month.

I'm building.... more out of need than want. Three pre-teen boys that will all be 6' plus ain't gonna work in our current house long term. Locked up 2 lots, friend bought the neighboring lot and won't build. So we essentially will have 1 to 1-1/2 acres as we're close friends. City sewer and water. Might buy another lot with another friend and essentially take the entire block.

Interesting new chapter in life. I'm tempted to get back into real estate, without the license this time. No handcuffs. I can't and won't work 40 hours per week. Ever. Looking at picking up a few investment properties in town where I'm at. I hate dealing with people (landlord) but it might be worth it. IL property taxes freak me the fuck out is the only issue. I'm guessing $12k/yr for the new build. Not a McMansion, but 2,200 SF ranch with full finished basement. Separate 2 car garage (4 total) with office/granny space if needed. Costs should be $400-500k. I'm going to do a lot of the work and have the ability to actively be there daily.

My next year or so is fucked. So if I go MIA here I'm either working on it or dead.

WookieMan says

Looking at picking up a few investment properties in town where I'm at

Congrats on the lot and building plans!
I am also looking to pick up more rentals, however, rates have gone through the roof and prices are still climbing.....i am going to be patient, wait for a cool down and maybe even a YoY stagnation of prices. Cant see a signficant reduction in prices with inventory that low.

With 2024 being an election year I bet on much lower interest rates by then. So 2023 might be the time to buy another rental for me and then refi later.