Thursday, August 23, 2012

Straight talk! Should I buy or should I sell?

Straight talk! Should I buy or should I sell?

BY:  Payam Raouf
President/Designated Broker
Arizona Property Managements & Investments
(888) 777 6664 ext 114

It has been a while since I have given you my opinion on the market condition in Phoenix Metropolitan Area. I think it is time to have another straight talk with our investors. I don’t have a crystal ball to predict the future and I don’t claim to be right 100% of the time but if you look back at my posts through the past three years and read my predictions, you will see they have been right on the dot most of the time.

Here we go. It is time to sell if you have bought an undesirable property in Phoenix metro between mid 2009 to mid 2011. Had you followed our recommendations, you should be fine to exit at the next opportunity. Had you not and bought into the hype, let’s help you find a strategy to exit now and reinvest it into something else.

As we went through different phases, we recommended our investors to buy with a clear exit strategy in mind. It is useless now to go over that again as we have already gone through those phases. I will try to be more specific as to where we are going from here later on.

We have had a considerable spike in the market, somewhere between 15 to 30 percent in the past two months. It is time to sit down and do some hard core math. Is it a keeper or is it time to part with it?

Do I own a unique piece of real estate? It is a very difficult question to answer when you live thousands of miles away and in most cases bought in without even looking at all your options. The only consideration was, it was cheap to pass on. Most often cheap cost more in the long run. It may be time to get an expert’s opinion.

You have now owned it for some time and should have a really good idea what it has cost you. Should you take some money off the table here and reinvest it in something else with a better outlook or could you afford to keep up with it?

To give you more specifics, there will be a link to MY EMAIL below this post. Don’t be afraid to drop me a couple lines. Give me the address of the property you own and let my team go to work for you. It won’t cost you a dime. I review their findings and give you my opinion to help you make an informed decision. 

Part two:
If you bought a property in mid 2007 to mid 2009, you are most likely upside down but not by much specially after the recent price increase in the market. The bad news is, the rents haven’t caught up with the prices and even when they do, they won’t by much. You still have to cough up the difference between the rental proceeds and your monthly mortgage. Have you considered talking to your financial adviser or an attorney to see if you benefit by short selling it? If the answer is yes, why wait? We have investors who would make you a reasonable offer that is acceptable by most financial institutions. Please let us know if that is the case by FILLING OUT THIS FORM and we even help you with the entire short sale process.

Part three:
This is for you speculator investors! If you bought a property at the top of the market, from late 2004 to mid 2007, you are in it for the long haul, think 5 to 7 more years before you can break even. It is a tough call as many of you cannot afford to short sale it. The best you can do is to keep your carrying costs manageable. Our property management division understands how important it is to keep your expenses under control. We are proactive.  To compare our services and fees please click here and FILL OUT THIS FORM and one of our area managers will show you the savings.

There are a few other groups that we have not mentioned here such as the folks who bought homes for their retirement or the calculated investors with specific plan of action.

Who should be buying in this market you may wonder? Let’s first see who is doing most of the buying these days. I break them up into three groups. Believe it or not the tenants who sold their homes through a short sale process a few years ago are now qualifying to buy again. Last month 9 of our tenants with similar circumstances bough their own homes. The dilemma is, in most cases they need to come up with a larger down payment to qualify since they have to compete with their number one competitor, institutional investors with deep pockets.

Did I mention institutional investors? Oh yeah. Almost every cash offer we get on our listings these days are over the asking price with the proof of funds attached in excess of 3,000,000 and I have seen as high as $30,000,000. They are selective. For the right property, they pay as much as it takes especially one with a good tenant in place.

Did you know banks are now getting into rental business as well? They haven’t come up with the most attractive program yet but they will in time. Anything is better than nothing.

In addition to properties we manage on behalf of several banks and financial institutions, We were recently interviewed by a large hedge fund that purchased 2500 homes directly from Fannie Mae to rent out.

In the case of banks, financial institutions and hedge funds, they fix up the homes and rent it back to the tenants or the owners already in place with lower or no deposits. They have deep pockets to pay for major repairs when it is needed and can afford to keep up with the demand of today’s tenants. The other thing is, they most likely sell it back to the tenants sometimes down the road.

The number of homes for rent both on MLS and property management sites is increasing by the day. It is taking longer to rent them out to qualified tenants especially when they are asked to pay larger deposits. 

In addition to tenant’s moving out of rentals buying their own homes, more homes are being purchased by investment groups to be rented out. The question now is, are there still opportunities out there that make sense to average investors?

You bet they are and plenty of them if you ask me. I will be doing my investors injustice if I lay them all out here. Just a quick hint, remember, location, location, location and a 3 year exit strategy! Contact me and I can show you how.

We take pride in what we do, selective when it comes to picking our players and loyal to those who have confidence in our team. Whether you have been holding off for the right opportunity, or want to improve your position or simply exit the market, please email me at with your information and your request. It will be answered promptly to help you make an informed decision.

With Pleasure,
Payam Raouf
President/Designated Broker
Arizona Property Managements & Investments

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