Buying Property In Phoenix - Where?! (Mesa, Glendale: real estate, renters, hotel)

[CanadianInvestor]

Hello All,

I am a Canadian Real Estate Agent/Investor who is looking to buy property in Phoenix (or area). I have been looking for a while and have a few specific areas in mind. Most of the affordable properties I have been looking at are nearly NEW properties in South Phoenix.

The areas with the homes I am most interested in are:

Estrella
Laveen
South Mountain

Are these areas considered safe and desirable areas in which to live. I will not be living in any of my properties as I live and work in Canada, I simply plan on renting them out. In your opinions, which of these areas is the best and which is worst. Please help me out! I need honest feedback from ordinary Phoenix residents, not from professionals who all have differing opinions.

Thanks!

[whodiman]

This is a copy and paste off someone's else's blog as I don't think I am allowed to post his website on this forum (or am I?)

"There is a lot of competition for the most desirable rentals, e.g., 4 bed room homes in areas with good school districts in the $1600 to $2000 a month range, in Mesa, Gilbert, Chandler, Peoria, Scottsdale just to name a few areas.

Buckeye, Queen Creek, El Mirage, Tolleson and Laveen are among the toughest rentals these days. They rent but they require additional incentives and extensive marketing.

Surprise, Glendale, Avondale and Goodyear North of I-10 and Litchfield Park are holding steady. They have had a 5% increase in rent since January 2011 and are still going for more and less the same. However, going forward, one must think of an exit strategy since so many investors have bought in these areas.

What we are noticing is rentals in the $1200 to $1400 range are getting tougher to rent. It seems to be high for low to average income renters and not good enough for the folks with higher income.

With all that has been going on in the financial market these days, so many investors close to retirement have been self managing their own IRAs, buying rental properties in Phoenix Metro driving prices up through the roof in some areas.

Phoenix is spread 60 miles across from east to west and 20 miles from north to south with hundreds of new and old subdivisions in between. One must be very careful where and what to buy to get the best return on his/her investment. "


Laveen and south mountain seem a little tougher to rent out. When you say Estrella do you mean Estrella mountain range? It's way the hell out there. You will be driving in the middle of nowhere and all of a sudden this area pops up. Mind you it seems like a few areas in Phoenix are like this. Btw, where in Alberta are you from?

[TiredOfyycCold]

When you say the properties you have "been looking at"... do you mean in person or on-line?

There is a big difference between driving around a neighborhood and seeing a "nice new" house on-line. Your best bet for making an informed decision is to take the feedback from some of the regulars here (as you are doing) but also spending some time in the Phoenix metro-area to figure out which neighborhoods you would be comfortable owning property in.

Also need to consider what market you are looking at... Vacation rentals or full-time resident rentals. From what I see, most areas wouldn't appeal to both segments (with Scottsdale being an exception).

I, for one, wouldn't go near Laveen or South Mountain.... but that's just the opinion of a fellow Canadian who recently purchased in North Phoenix/Glendale after spending A LOT of time driving around the city.

Hopefully Zippyman and Captain Bill will chime in - they both have solid experience in the income property arena and offer very sensible advice.

Good Luck!

[Captain Bill]

You stated you don't want to hear from professionals, so you can ignore my comment if you wish. I won't be offended, but I feel you need to hear opinions from several sources.

There are people here that live in Estrella and they can give you a lot of information on that area. It's a nice area, but in my opinion, it isn't a target area for rental investment property.

Laveen is spotty area, with some good and some bad areas.

South Mountain has a reputation for gangs. Just Google South Mountain gangs and you'll get some reading material.

The rental return is greater in these type areas because you can buy at a pretty low price per sf. However, the question to ask, is what is going to be the appreciation rate.

Much depends on your investment model. Are you looking for maximum rental income, or a reasonable rental return with a major goal of value appreciation in 10 years or so.

There are some areas in South Mountain that appear to be a little better. However, I won't invest in either of those areas because it doesn't fit my model. But I would not attempt to persuade anyone else from investing there. Everyone's investment model is different.

I own rental properties in the east valley of Gilbert and Mesa. These are areas where the property values will keep up with the Metro average because I'm not buying in declining areas.

The rents in this area are in the ballpark of $0.75/sf. A management company will run around 8-10% of the gross rent plus a fee for placing a tenant.

These may not be areas for you, because you have the flexibility of buying anywhere in the Metro area and have a property manager manage the property.

I choose them because (1) I'm looking for future price appreciation in addition to rent return. (2) Since I manage my own properties I only buy property that is within a maximum 30 minute drive from my office. Also, I work with several foreign investors buying multiple properties, but I only work with those that want property within my working area. That way I can give much better service.

Good luck to you in your investing.

[CanadianInvestor]

Good to know. Thanks! At the time being, I have never been to Phoenix. I fully intend on spending some time there before I purchase so I am able to get a feel for the certain areas.

@whodiman - The property I was looking at in Estrella was in an area below W Lower Buckeye. Not Estrella Mountain Village. Also, I am from Lethbridge. About 2 hours SE of Calgary.

@Tiredofyyccold - I am planning on full-time resident rentals. I just think it would be easier. Perhaps I am wrong??

[CanadianInvestor]

Thanks, CaptainBill.

I don't think I worded it right in the opening statement. I am always open to hearing comments from everyone. I am a Real Estate Agent myself, so I always like to hear advice from local professionals as well.

Do you think I would have a problem renting out properties in Laveen or Estrella (I think I am turned off of South Mountain)? I am looking to cash flow each month, but my goal is to hold onto these properties until the market has gone up and then sell them, whether that is in 5 years or 20 years. For Re-sale purposes would Laveen or Estrella be ok?

I do have interest in the East Valley as it seems to be an area where many investors go. That is with the exception of Scottsdale as it is to expensive for me. Ideally I would like to find newer Single-Family homes under $100 that would rent for $1000/month +. Which areas of the valley would be best for this?

[khuntrevor]

CI, you may be the type of person, who is falling into a trap on your purchase. A lot of folks don't realize that some much newer neighborhoods can be real ghetto even though they appear to be--much newer neighborhoods. You really don't see that in the Eastern US, as most people associate ghetto with older properties. The new ghetto phenomenons are especially prevalent on the South side of I-10.
South Mountain area is a prime example of this. I'm not a big fan of any of the developer communities--most are just too far out, and require you to put 20K miles on your car per year.
Find some nice, established neighborhoods in Phoenix. In a good school district, it will always be an easy rental. I'd be looking between the 7s--7th ave. and 7th st., near Glendale. A 100K home will be near the bottom, but I think it's doable.

http://www.realtor.com/realestateand...4_M24174-47396
best public schools in the City. Doesn't have the newness you want--but it has the central location, most established neighborhood, and high, consistent rent-ability.

[Home Addict]

We are also from out-of-town looking for an investment property. We did visit Phoenix metro and drove around, and visited the following areas. We had limited time, but saw enough to gauge the various neighborhoods.

West Valley:
Goodyear - north of I-10 (nice)

East Valley:
Gilbert - Power Ranch/SanTan Ranch (nice)
Chandler - Ocotillo (very nice, but out of our price range)
Ahwatukee - between 24th and 48th (nice, but older homes)

Phoenix Metro:
Drove from I-10 exit N 35th ave headed north, up to Bethany Homes. Could not bring ourselves to exit the car. Drove straight to I-17 and right back to our hotel!

[Jkgourmet]

khuntrevor, this is an investor who will be an absentee investor. He clearly stated he was looking at NEW properties - and since he isn't around to do the repairs like you do on your properties, I seriously doubt that a house built in1949 is what he is looking for.

I'd agree - stay away from South Mountain. I'd agree with nearly everything Captain Bill stated - with the possible exception of that I'm seeing rent per square foot closer to .65 rather than .75, depending on the area and neighborhood.

[Kimballette]

Originally Posted by Home Addict

Phoenix Metro:
Drove from I-10 exit N 35th ave headed north, up to Bethany Homes. Could not bring ourselves to exit the car. Drove straight to I-17 and right back to our hotel!

It's too bad you didn't have more time, as the Phoenix metro area has a lot of very nice properties. You did not drive anywhere near them, however...