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Real Estate Investors – Where to Look in Phoenix

Real Estate Investors – Where to Look in Phoenix

As previously discussed, if you’re looking for a 10 percent net rent to sales price ratio, the Phoenix real estate market is not the right place for you.

If you’re looking for a 10 percent gross rent to sales price ratio, we’re at least back into the realm of possibility though the opportunities are limited.

If you’re content with an 8 percent gross rent to sales price ratio, we can have a relatively specific discussion.

Now … putting it graphically. My advice is take the specific numbers with a grain of salt (though Trulia’s sales data usually is good) and focus on the pretty colors to get an idea of what is priced where around the Valley:

(For a better – and interactive – view of the heat map, click here and Trulia’s page will open in a new window.)

Now, taking these numbers with an entire box of kosher salt given the morass that is HotPads, take a look at median rent rates around the Valley:

You can play with the HotPads heat map through this link but I’m telling you now, the so-called median rents in the legend are ludicrously low. Again, focus on the colors and the patterns which do indicate an accurate trend, not the incorrect specifics.

And despite the colors above, since they end at such a low level, rents in Scottsdale are a damn sight higher than they are in Surprise … but they aren’t so much higher that it makes sense jumping into the bright red price points on the Trulia heat map and spending twice as much money for rents less than twice as high. Make sense?

One of the ongoing debates, at least behind the scenes here, is how Phoenix rates as an investment location. I remain fairly bullish but only if you know what you’re buying and only if you have proper expectations. If you expect another 2005, forget it. If you expect amazing rents, forget it. If you expect deals well below market value, forget it.

As for those magical numbers above … 10 percent net rent-to-sale price or 10 percent gross rent-to-sale price … there are other parts of the country where these take place and where the potential for appreciation is as great or greater than it is here.

I’ve been sending information to investors with multiple properties here, not because there’s any particular need to sell here in Phoenix if they’re happy with things, but to make sure their properties are doing what they want the properties to do. For me, it seems retirement and comfortable residual income should be the goal … but that’s just me.

Want more information about that, or about what opportunities truly exist here in Phoenix? Call me at 602-502-9693 or send me a note through the contact form.

Comments

  • The best place for accurate information is from your agent.  Trulia, Zillow, Hotpads are using trailing information and some of it is way off.

    May I suggest iMapp as a tool to help with your investor clients? Up-to-date sales data linked to the MLS including a one-click CMA (rough numbers, but very tweakable).

    No heat maps, but rock-solid data.

  • That’s what I usually use, Robert. In this case I just wanted to illustrate a point, so to speak.