Is Phoenix RE a good investment? (bank owned, appointed, short sales)

[autism360]

The way investors have been attacking the Phoenix real estate market I can say that presently Phoenix is a great place to invest for the following reasons

1.location(close to California,Vegas,Nevada which are all top tourist areas)
2.weather 320+ sunny days
3. no natural disasters
4.solar(with 1 break through in solar we could produce electricity for the who country)
5.current real estate prices (very low compared to build cost)
6. great roads(some of the best in the country)
7. historical high relocation area(over the last 10 years has been 1 of the fastest growing states in the country)
8.world class international airport
9. lots of land to fuel future growth
10.low cost of living (no economy destroying unions,plenty of food store competition, low cost housing insurance(no natural disasters)
11.some of the best golf courses in the world
12.diversity( I have seen an abundance of people from other countries which means they are able to assimilate and find the things they need to maintain their cultural identities
13 Topography(wide variations to accommodate different lifestyles )
14. many new hospitals moving here
15. many growing businesses moving here (Paypal,Ebay,Amazon) who have already considered the previous reasons mentioned in this post

[mjd2k]

Originally Posted by autism360

The way investors have been attacking the Phoenix real estate market I can say that presently Phoenix is a great place to invest for the following reasons

1.location(close to California,Vegas,Nevada which are all top tourist areas)
2.weather 320+ sunny days
3. no natural disasters
4.solar(with 1 break through in solar we could produce electricity for the who country)
5.current real estate prices (very low compared to build cost)
6. great roads(some of the best in the country)
7. historical high relocation area(over the last 10 years has been 1 of the fastest growing states in the country)
8.world class international airport
9. lots of land to fuel future growth
10.low cost of living (no economy destroying unions,plenty of food store competition, low cost housing insurance(no natural disasters)
11.some of the best golf courses in the world
12.diversity( I have seen an abundance of people from other countries which means they are able to assimilate and find the things they need to maintain their cultural identities
13 Topography(wide variations to accommodate different lifestyles )
14. many new hospitals moving here
15. many growing businesses moving here (Paypal,Ebay,Amazon) who have already considered the previous reasons mentioned in this post

I'm sold on its a great place to live, but if I invest $150k in a rental, is it a secure investment, can I make money, how long before I see a return, what kind of return can I receive and would I be better off in the stock market or even gic's.

I have never had much luck getting decent long term income from rentals. Only money I ever saw was from appreciation. I'm putting $25k into a place now. Thats several years profits. Fortunately, its appreciated enough that the $25k is a serious wound but it won't kill me. Maybe I'm just a crappy landlord and don't max out my rental revenue. When I have these big hits, I take out an interest only LOC on the equity. Pay it off if I can but otherwise consider it a sunk investment.

I'm just starting to crunch a few numbers. I have a place in the west valley but I think a better investment is out east, with the intel plant coming up.

[Howard Roark]

A good investment compared to what? Turnip farms?

[mjd2k]

Originally Posted by Howard Roark

A good investment compared to what? Turnip farms?

I asked if it was a good investment compared to stock markets or even gic's. Guess you missed that?

Are there better investments with a degree of security? Starting to think Phoenix RE is pretty secure if you buy now. I don't mean rush out and buy now, but over the next few months at least.

[Howard Roark]

No investment has a security. Not even my government "securities." Doesn't common sense tell you that since the Phoenix Real Estate bubble happened several years after the dot com stock bubble, the stock market may well have abdorbed the excesses of its bubble features sooner than real estate? Banks are still sitting on Phoenix shadow inventory in hopes to have the air escape unnoticed.

Jeremy Siegal touts stocks for the long run. The average gain on the Dow since 1926 accounting for inflation is about 7% over inflation. It's on google. The Vanguard 500 index dained an annual 10.26 percent since it's inception in August 1976. case Shiller shows the average American house appreciates in value 1% ocher the inflation rate.

I don't know the long term stat on Phoenix, but I am not so sure what makes Phoenix more special than Tampa or Denver.

Now you tell ME if you think Phoenix RE is a good investment compared to stock markets. My 20 years experience in investing says NO!

[Johnhw2]

Without a jobs paid by dollars other than tourism and retirement, I doubt it is a good place to invest long term. Tourism is a down business due to the financial crash, for those who have good jobs they can travel but I believe they will spend less on fluff like travel given the disaster recently experienced. Retirement is also impacted severely by the financial crash. Fewer have the wealth or pension income to retire and home equity isnt back nor coming back soon. A strong economy is based upon good paying jobs... manufacturing jobs pay best. Water is typically needed for manufacturing and I dont see that happening in Arizona.

[Captain Bill]

Originally Posted by autism360

The way investors have been attacking the Phoenix real estate market I can say that presently Phoenix is a great place to invest for the following reasons

1.location(close to California,Vegas,Nevada which are all top tourist areas)
2.weather 320+ sunny days
3. no natural disasters
4.solar(with 1 break through in solar we could produce electricity for the who country)
5.current real estate prices (very low compared to build cost)
6. great roads(some of the best in the country)
7. historical high relocation area(over the last 10 years has been 1 of the fastest growing states in the country)
8.world class international airport
9. lots of land to fuel future growth
10.low cost of living (no economy destroying unions,plenty of food store competition, low cost housing insurance(no natural disasters)
11.some of the best golf courses in the world
12.diversity( I have seen an abundance of people from other countries which means they are able to assimilate and find the things they need to maintain their cultural identities
13 Topography(wide variations to accommodate different lifestyles )
14. many new hospitals moving here
15. many growing businesses moving here (Paypal,Ebay,Amazon) who have already considered the previous reasons mentioned in this post

You've listed very good reasons why real estate is a good investment in the Phoenix area.

However, real estate investing requires knowledge of the market, how to deal with tenants, or how to choose a management company. Plus the finances of the individual. Does the individual have the extra money to invest? Does s/he have the ability to take the risks involved?

One must be able to analyze the property to determine how much it is going to cost to purchase, to make habitable, the proper rent, the vacancy factor and all the operating expenses plus reserve for depreciation.

Something people don't consider is that an exit strategy should be developed prior to any purchase. What is the holding time goal, etc?

Each individual has to determine if they want to enter a real estate investment, and if they have the knowledge, or are willing to take the time to learn.

[Captain Bill]

[quote=Howard Roark;24085556]

No investment has a security. Not even my government "securities." Doesn't common sense tell you that since the Phoenix Real Estate bubble happened several years after the dot com stock bubble, the stock market may well have abdorbed the excesses of its bubble features sooner than real estate?

Perhaps you didn't understand the op's question: Is Phoenix RE a good investment? There was no request to compare it to stocks or turnip farms.

Banks are still sitting on Phoenix shadow inventory in hopes to have the air escape unnoticed.

If you're going to make statements like that you really need to have information to support it. Please show us proof of the shadow inventory in Phoenix.

[Howard Roark]

Reread post #4: "I asked if it was a good investment compared to stock markets..." I was responding to that post. As for shadow inventory in Phoenix I get the info from Ben Jones' Housing Bubble Blog.

[Captain Bill]

Originally Posted by Howard Roark

Reread post #4: "I asked if it was a good investment compared to stock markets..." I was responding to that post. As for shadow inventory in Phoenix I get the info from Ben Jones' Housing Bubble Blog.

Here is a snippet showing the current data on the Phoenix Shadow Inventory as reported by Mike Orr of the Cromford Report on April 28, 2012:

Only 1 working day left in April as far as foreclosures are concerned. We can see that the number of new notices of trustee sale will be almost exactly the same as in March. Since March had 1 extra working day this actually represents a slight (but not significant) increase in the rate of notices.

However trustee deeds are still falling and April's total will be the lowest since December 2007 and 62% below April 2011. This supports the view that lenders increasingly favor short sales as the means to resolve loan delinquencies and REOs are an endangered species. This is bad news for buyers at trustee sales as their supply is starting to dry up.

The sustained rate of notices (although still well down from the peaks of 2009 and 2010) suggests that lenders are quickly eating into the delinquent loan backlog and we would therefore expect LPS to report a fall in the number of delinquent loans in Arizona that are not yet in foreclosure over the next several months.

In their report for February LPS reported 6.6% of Arizona first position home loans were 30 days or more late but had not entered foreclosure, down from 12.4% in February 2010. A normal percentage would be around 4.5%.

When it has fallen from 6.6% to 4.5% the "shadow inventory" flood mythology can be officially declared dead.

Since we already know the pool of lender owned homes is small and pending foreclosures are dramatically down from the levels of 2009. anyone who still thinks the mythical shadow inventory is going to resolve the current supply shortage is going to be very disappointed.

And a little more current statistics:

6,838...... Total bank owned inventory of homes as of April 27, 2012 from the county recorders office. That is down from 19,000 in May 2011.

1,070.... Active REO's all types
241.......Active HUD homes all types
130.......AWC REO's
1,629.....Pending REO's
542.......Pending HUD homes
_______

3,612......Total REO's in Active, AWC or Pending Status
1,554......REO's less than 2 months after trustee sale (It takes about 2 months to get an REO listed, so we can say those are in progress)

3612 plus 1554 = 5,156 REO's accounted for.

Total REO inventory 6,838 minus 5,156 = 1,682 REO's that the banks have held back in the Phoenix.

There is no place else for the shadow inventory to hide. Anything more than that is pure unsupported speculation.

The list of REO's is direct from the county recorder that shows each property when the bank takes it back, and when it is sold. That list is updated daily.

No one has any data that can dispute these facts.