Wow, what a loaded question! I’ve been studying this analysis for years. I’ve heard it’s a great market to buy in. Why is that? And is it true? I believe it is a yes and no answer in today's market. Values a noticeably going down in Phoenix, mostly because of three factors. 1. Almost all homes being sold today seem to be foreclosures, which, makes the bottom of the market questionable. 2. Lenders are running scared. They seem to be cutting only the programs clients need or want. Refinancing income properties in Phoenix is next to impossible. 3. A lot of investors money have gone into the oil market.
That still doesn’t clarify property values in Phoenix. I got tired of waiting to see a positive change, looked for investments elsewhere. After talking to many landlords in Phoenix, the general consensus is that cash flow is almost always even or negative. I personally have 7rentals in Phoenix that cash flow a little over a $1,000 a month that is on a $600,000 investment.
In 2006, I started buying in Midwest. I now have over $3,000 a month cash flow on $150,000. So what is the difference in the properties from state to state? Basically…. the price! The cost of homes there is unbelievable! In some cases they are 5-7 times less. Buying 2 homes in Ohio for $38,000! Is that to good to be true or what?
Those are great prices, but how do I know the future value? Well, we have to look back to Phoenix for that. In Phoenix, appraisals and sales price hardly ever match up. I had a listing in North Scottsdale that was appraised at over $500,000. I couldn’t even get $416,000 out of it. It is now in a short sale at $300,000. Why the difference? It’s very easy to explain….. EVERYONE IS LOOKING FOR A GREAT DEAL! Obviously, the current Phoenix market is not a great gage.
I tested the same situation in Kokomo, Indiana, where I bought a duplex for $18,000. I waited 90 days, and it appraised for $40,000 Based on that appraisal, I got a credit line for $15,000. Wow, that is an extra $12,000 I can invest. (80% of the value I can borrow).
This tells me that value is buying a less expensive investment property and using the equity to buy more.
Brett Young, Valley Realty http://www.rooftopprofitmax.com/
That still doesn’t clarify property values in Phoenix. I got tired of waiting to see a positive change, looked for investments elsewhere. After talking to many landlords in Phoenix, the general consensus is that cash flow is almost always even or negative. I personally have 7rentals in Phoenix that cash flow a little over a $1,000 a month that is on a $600,000 investment.
In 2006, I started buying in Midwest. I now have over $3,000 a month cash flow on $150,000. So what is the difference in the properties from state to state? Basically…. the price! The cost of homes there is unbelievable! In some cases they are 5-7 times less. Buying 2 homes in Ohio for $38,000! Is that to good to be true or what?
Those are great prices, but how do I know the future value? Well, we have to look back to Phoenix for that. In Phoenix, appraisals and sales price hardly ever match up. I had a listing in North Scottsdale that was appraised at over $500,000. I couldn’t even get $416,000 out of it. It is now in a short sale at $300,000. Why the difference? It’s very easy to explain….. EVERYONE IS LOOKING FOR A GREAT DEAL! Obviously, the current Phoenix market is not a great gage.
I tested the same situation in Kokomo, Indiana, where I bought a duplex for $18,000. I waited 90 days, and it appraised for $40,000 Based on that appraisal, I got a credit line for $15,000. Wow, that is an extra $12,000 I can invest. (80% of the value I can borrow).
This tells me that value is buying a less expensive investment property and using the equity to buy more.
Brett Young, Valley Realty http://www.rooftopprofitmax.com/
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