Greg Swann and I write on the well-known industry site, Bloodhound Blog. I talked about why investors should “Go Local” when analyzing investment real estate, here on Mortgages Unzipped. Here’s a peek into a conversation Greg and I had about real estate investing in Phoenix:
Investors take notice! Phoenix home prices led the nation in declines:
The Case-Shiller indexes compare the sale prices of the same homes each year to determine price trends and are considered one of the most accurate home price gauges.
The hardest hit of all 20 cities on a year-over-year basis was Phoenix, where prices plummeted 30.7% during the past 12 months. Las Vegas prices plunged 30.6% and Miami sank 28.1%.
Phoenix real estate broker, Greg Swann of Bloodhound Realty, assembled a list of 100 homes listed for less than $100,000. Greg reports that not EVERY home on the list is tenant-ready but that there are gems hidden among the heap of lender-owned properties:
Click on this link for a PDF file of listings for 100 potential rental homes selling — right now — for $100,000 or less. These are lender-owned homes, so they’re going to be fixers. And some of them will need so much work they’re not worth bothering with. But some of them will need next to nothing — $5,000 or less in repairs — and they will be cash-flow positive from the very first tenant.
For the most part these are not Cadillac homes, but they still have a lot going for them: 1,400sf and above, stucco and tile, built 1995 or later, with back yards and garages. These homes can attract decent rents — $800 and above in most cases — and many of them will be appealing to owner-occupants on resale.
I sell a lot of rental homes, and the homes I sell stay rented. A list like this might produce ten workable rentals. But they’ll be choice rentals, attracting premium tenants and selling at a premium price when you’re ready to move on.
Investment properties make good sense when leveraged to the point where the rental income covers all costs. Most mortgage lenders require 25% down for the best rates. On a $100,000 property, that means that an investor will need some $30-35,000 for down payment, closing costs, and repairs to make the home tenant-ready. A $75,000 loan will most likely have a PITI payment of about $600.
Check Greg’s list out and contact him to run the numbers. The big question you need to ask him is “Can the property command at least six hundred bucks a month in rent?”
I think you’ll be blown away by his answer.
Last 5 posts in Costs and Fees
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- Categories: Costs and Fees, Mortgage Types
