How is the real estate market in Arizona?
Payam Raouf
Owner/Associate Broker
Arizona Property Management and Investments
Offices in: Glendale, Sun City and Mesa
It is getting pretty tough out there to find and get the right property these days. Good inventory is pretty limited and not much is coming on the market either. If you find something you like and it makes sense, go ahead and buy it.
The only issue I have been running across in the past three weeks is that the rents do not support the increase in home prices. They eventually will but for right now, you might have to settle for less than our rent formula. (monthly rent equals or greater than 1% of purchasing price). For example: If the purchase price was $140,000, rent should have been $1400 or more per month. But rents have only gone up by 5% since January - $1250 is more like it - so, your net cash flow will be off by 1%, instead of receving 8%, you are looking at 7%. However; I am expecting it to go back up when we renew their leases next year.
Inflation is running at 10% or more. Adjusted to inflation in 5, 7 or 10 years when you are ready to sell your property, paying a few thousand more now is not going to matter much for the right property.
Here is couple suggestions:
Stay away from old old homes unless they have been well maintained. Skip the price ranges of $140,000 to $165,000. They mostly won't pencil out for a decent cash flow. Look at the demographics and income. Don't buy a $150,000 home where most rents are at $1200 to $1300. It takes longer to rent them if you want more.
Consider putting an offer on a short sale.If you do, make sure they don't have too many loans on it, the less the better. The agent or the short sale negotiator knows what he/she is doing. It is a plus If the present owner is willing to rent back.
Buy at trustee sales only if you have seen the house, talked to the current owner and ran a title report on it. Too many people have got burnt on those. It is a huge plus if the current owners are still living in them and you can talk to them yourself. Better yet, they might want to rent it from you too.
Wait for the right opportunity. Don't buy into the frenzy. There is no hurry. Buy as if YOU want to live in it. If it doesn't feel right, pass. The chances are, you will find a better one. This market might go up and down here and now but it is going to be where it is for a while given $10,000 up or down.
Stay away from 4 plaxes. Too much headache for too little cash flow no matter how much you buy it for. Trust me on that.
If you need any advice on how much rent to rent your house, fill out this "Contact Form" and we will give you an estimate.
If you are not working with a realtor and want me to help you buy an investment property, that is my speciality, fill out this "Contact Form" and let me know when a good time ( Arizona Time) to contact you is.
WASHINGTON (AP) -- Investors drove up U.S. home sales last month, plunking down cash to grab cheap homes at risk of foreclosure. But purchases made by first-time homebuyers, who are crucial to a housing recovery, fell.
Sales of previously occupied homes rose in March to a seasonally adjusted annual rate of 5.1 million, the National Association of Realtors said Wednesday. That's up 3.7 percent from 4.92 million in February. The pace is far below the 6 million homes a year that economists say represents a healthy market.
Foreclosures or short sales, when the lender agrees to accept less than is owed on the mortgage, rose to 40 percent of all purchases. And deals paid for entirely in cash accounted for 35 percent of all sales. The Realtors group says that's the biggest percentage since they have been tracking all-cash sales.
Many of those purchases are being made by investors, who are targeting cheap properties in areas hit hardest by foreclosures: Phoenix, Las Vegas and Tampa. The trade group's data only accounts for individual investors and does not include homes sold in bulk at auction or on courthouse steps. So many of the foreclosure sales are likely being picked up en masse by private equity firms.
Another sign of the investor activity is that sales of homes priced under $100,000 have risen 10 percent from a year ago. In that same period, sales of mid-priced homes, between $100,000 and $500,000, have fallen more than 14 percent.
Fewer first-time homebuyers, the types of people who set down roots and raise families, are entering the market. Sales among that group fell to 33 percent in March. A more healthy percentage of first-time buyers is 40 percent, according to the trade group.
The median sales price rose in March to $159,600, but it is still down 5.9 percent from a year ago.
Homes at risk of foreclosure usually sell at 20 percent discounts compared to their original listing prices. So when sales of distressed properties rise, prices fall. But Joshua Shapiro, chief U.S. economist with MFR Inc., said that "part of the market-clearing process is that distressed properties must be sold, so the fact that this is occurring is good."
For March, sales rose 8.2 percent in the South, 3.9 percent in the Northeast and 1 percent in the Midwest. Sales fell 0.8 percent in the West.
Sales of single-family homes rose 4 percent to an annual rate of 4.45 million units. Sales of condominiums rose 1.6 percent to a rate of 650,000 units.
