February 5, 2012

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Research Crime Statistics Around The Potential Phoenix Real Estate Investment.

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One of the most frequently asked questions by investors is about any area is about crime.  We, as agents, cannot give out our opinions about crime or crime rates, but we can show you how you can easily find out.

Crime statistics, while an imperfect measurement at best, nevertheless provide some indication of the level of criminal activity in an area.

A visit or phone call to other law enforcement agencies may be required and is one of the best ways to get detailed information.

The list of links below will provide you with many answers to your questions about the area, city and state crime statistics.  Overall Greater Phoenix has a crime rate below that of  other major cities and is below the national average, but the question of weather an area is safe should bethoroughly investigated to your personal measures of safety and comfort.

While crime is important it’s only one consideration amongst a multitude of measures to consider: jobs, demographics, schools, stores, local culture are amongst the few.  All these will affect what types of clients you will attract.

Another good way, besides speaking with the neighborhood Police is to be in the neighborhood at different times of the day and night and observe what is happening.  Talk to other residents and get their opinions.

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Filed Under: Investing in multifamily Tagged With: , , , ,

Investing In Small Multifamily Cannot Be Done Well Long Distance Unless…

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If you’re thinking or buying a duplex, triplex or fourplex in Greater Phoenix and you are out of state and you want to manage it long distance: stop now and forget about it, because your chances of success are very low.

It’s different with a single family home, but even this you need someone to run your business if you are not here.

A single family home investment is a business but a multifamily is more so.  With multifamily you get a better cash flow but in return you do more management.  You cannot give up the management to lower cost.  This is like trying to let your retail store run itself.

Many of the small multifamily properties out there being sold as REOs are that way because out of state buyers came in to buy the property, milk it and then push it off to the next buyer.  That seems to be the modus operandi of many investors, even ones that are local.

That is why you rarely see prime small multifamily properties: they have been neglected with deferred maintenance and a build up of issues from bad management.

There is no reason for this sort of behavior:  there is a market for buyers who want well run premium properties and for tenants who will pay a premium to live in a well cared for small multifamily property.  Not everyone wants to live in a rat maze.

If I sound a bid irritate, I’m: I am disappointed.  These properties, the tenants and neighborhoods deserve better.  These can be very lucrative and good properties to own and you can have prime tenants in them that will care and respect your property and your business.

It’s not going to happen if you are not here to run it.  it’s not going to happen if you pick a management company for their low price.  If you are not willing to run the business then hire really good people who will put in the effort to manage your business for you and pay them well.

The effort that it takes to turn around a mismanaged multifamily property is extraordinary: extraordinary in money, time, aggravation, but in reward, as well, if done right.

I have seen so many properties out there over the years that just make me sick.  I like multifamily, especially small multifamily because it can be an amazing path of financial stability and possibly financial freedom especially in this once in a lifetime opportunity market as we have now to buy properties in very good locations.

Rarely does a property come on the market that is a ready to run business.  Some of the well run properties will not be sold while the bad stuff seems to float on the open market.  This time savvy investor can truly pick up properties, put some effort and money into them and do really well: I mean really well:  I’m talking about positive after all expenses cash flows of $1,000.00 on a fourplex for $120,000.

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Where Are Your Tenants? Is This Where Your Property Is?

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Investing in real estate is a business and as with any business you would carefully do research on where you customers are and how to reach them.  It’s no different in real estate.

Certain parts of the valley tend to be better for investment then others.  No matter how inexpensive some property may be if there is no rental market it’s not a good investment period.  You can hope to leave that property vacant and maybe it will go up in price but that is not a sound investment strategy, though, many people did that.

So where are the renters?  They are where most people want to live: near jobs, good transportation, schools, shopping and some entertainment: these are popular places where homes don’t sit vacant, where they don’t deteriorate nor are decimated by un-use (home that just sit around, not used tend to deteriorate).

Where to invest?  This is a more difficult question.  Rental rates don’t increase proportionately to prices.  A 1,500sf home in Avaondale can lease for $1,000 and cost $125,000 but a $350,000 Central Phoenix will only lease for $1,800 on average.

There is more to consider, of course.  What are you going for, appreciation, cash flow or a combination.  What ever I say now is subject to change based on market conditions.

Homes in Avondale, parts of Goodyear, Litchefield Park, Surprise are well priced, still and the rental markets are fairly good.  These are areas where you can purchase income homes and rent then out for near a 1% per month return in gross rents: $100,000 leased for $1,000 per month is 1%.  That’s a good goal to have.

You won’t get this in Central Phoenix but it does not mean it’s not a good investment.  We’ll selected properties will provide a good return for many other reason then simple rent cash flow: these could be the reuse of land for better purposes, an increasing population or even a changing population.

If you buy a home for $50,000 in rural Phoenix, it can be large, newer and fairly nice.  There are places like Buckeye or Queen Creek or Arizona City where inexpensive homes are abound.  There is a reason they are this low in price.  They could be good purchases if you live there, but tread carefully if you’re investing for rentals in those areas

Filed Under: Investing in multifamily, Phoenix 4plexes, Rental Trends
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