Apartment Investor » Phoenix Market Views

Bank Repossessions Drop To A 44-Month Low

Farlon — Thu, 15 Dec 2011 13:45:00 +0000

Foreclosure activity continues to concentrate over just a few states.

According to foreclosure-tracker RealtyTrac, November’s foreclosure filings fell 3 percent as compared to October, and 14 percent from November 2010.

“Foreclosure filing” is a catch-all term for the various “action steps” throughout the foreclosure process. The grouping comprises default notices, scheduled home auctions, and bank repossessions.

As in most months, though, foreclosure activity remains concentrated by state. More than half of last month’s bank repossessions can be traced to just 6 states.

California : 14.8% of all bank repossessions
Florida : 12.7% of all bank repossessions
Texas : 7.0% of all bank repossessions
Georgia : 6.9% of all bank repossessions
Arizona : 6.7% of all bank repossessions | Phoenix REO’s For Sale
Michigan : 6.3% of all bank repossessions

Meanwhile, with just 5 repossessions, South Dakota topped the list of states with the fewest bank repossessions in November. The Mount Rushmore State accounted for just 0.009% of REO nationwide in a month in which bank repossessions dropped to a 44-month low point across the United States.

The drop in REO is coming at a tough time for today’s Phoenix home buyers. Distressed properties are in high demand — mostly because they sell at steep discounts.

According to the National Association of REALTORS®, distressed homes accounted for 28 percent of all home sales in October. As fewer bank-owned homes become available, though, there will be fewer “deals” to be had.

Especially as the broader housing market continues to signal its recovery.

If you plan to buy a bank-owned foreclosed property, do your research first. As supplies drop, the price for foreclosed homes throughout Arizona relative to non-distressed homes may rise, rendering REO properties less of a relative “value”.

Before you write a contract, therefore, talk with a licensed real estate agent. There’s plenty of foreclosure data available online but, when it’s time to buy, you should have an experienced agent on your side.

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Recent Small Multifamily Sales In Greater Phoenix

Farlon — Mon, 27 Jun 2011 15:42:51 +0000

There is not doubt about the active small multifamily market in Greater Phoenix. Investors are out there looking for a limited amount of properties.

Inventory of 2-4 unit apartments is about half that of last year and investor activity is up.

As of this post there are 142 active 2-4 unit apartment for sale in Maricopa County ranging from a triplex for $24,600 to an overpriced fourplex at $375,000 which has been on the market forever.

In the last 30 days.

51 properties sold.

Top 5 Multifamily Sales

4352 N. 36th St. 4 units at $215,000
2109 W. Colter Ave. 4 Units at $189,000
4356 N. 36th St. 4 Units at $184,000
401 W. 5th St in Tempe. 4 Units at $177,000
1146 E. 2nd in Mesa. 4 Units at $165,000

30 properties are AWC – mostly short sales.

62 properties are Pending – indicating that the next 30-45 days will have high sold numbers.

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A Look At The Small Multifamily Market In Metro Phoenix

Farlon — Wed, 09 Dec 2009 20:47:44 +0000

(Graph by: PhoenixMarketTrends)

We’re currently revamping Arizona Apartment Investor into a new design, actually it’s been in the works for a while: until it’s completed shortly some updates will be located at PhoenixMarketTrends.com, like the most current look at the triplex and fourplex market in Greater Phoenix. I chose only triplexes and fourplexes because I happen to like this size, it’s easy to buy and sell: it can be done so via a residential loan like FHA, VA or conventional, these are purchased by investors and owner occupant/investors and they are a good gauge of the small multifamily market.

Please continue reading here.

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From High Returns to Moving Neighbors to a Lack of Properties.

Farlon — Sun, 29 Nov 2009 17:36:39 +0000

The Phoenix real estate market seems, to many, to be a bargain basement store where the owners of the store have no sense or are giving things away. It’s not. And, that is what cover in the article, 15% Return Cash on Cash On Phoenix Real Estate. High returns are possible, but not with little or no input from the investors. It is as it always was, the more astute investors get the better deals, which most educators don’t teach you.

The article, The Greater Phoenix Population Is Moving, Most Of It Down The Street, To The Home Next Door. covers how the population of Greater Phoenix is moving but simple within the same neighborhood from one house which is being sold short or going into foreclosure to another often one purchased by an investor.

There has always been some interest from people who want to combine the need for shelter and investment with purchasing a fourplex. In the article, Where Are The Triplexes and Fourplexes More Suitable For Owner Occupants in Phoenix, I gripe a little bit and explain whey the choices for owner occupants are so limited.

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The Current and Coming Window of Opportunity for Multifamily Investors.

Farlon — Wed, 22 Apr 2009 14:37:55 +0000

Investors in small multifamily properties, 2-4 units, have a window of opportunity now and for at lease another 6-12 months. Prices are very attractive and there are many options where cash flow can be substantial.

What is difficult is financing. You need that 20-25% down plus healthy reserves and very solid credit, plus not more then 3 other leveraged properties.

The larger properties 5+ units and especially mid sized and larger properties with commercial financing will have that window open up in the coming year as loans come due and are unlikely to be renewed.

At the same time it will be difficult to finance these properties, though cash buyers will be in a very good position to buy well positioned properties.

The commercial real estate market is in the early stages of its own “mother of all bear markets” as it does not have the same political constituency as the housing market. The securitized lending done for most commercial transactions is in the deep freeze and it will be years before banks have the capacity (capital) to refinance many of the notes coming due in the next 24 months. Retail centers are the hardest hit as job losses cut consumer spending and rents have begun to plunge taking property values down below recent purchase prices. With high leverage that was normal a few years ago most owners will soon have no equity and non-recourse loans will allow them to walk away. Unlike residential lenders commercial lenders are not prepared to take back shopping centers, office buildings and land and will soon need to hire many out of work bankers to help manage and liquidate the properties. (Early Warning Wire )

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Welcome To 2009: A pivotal year.

Farlon — Thu, 01 Jan 2009 06:05:59 +0000

It’s a new year, 2009.

I truly believe that all of us have it good in this time in this place. We all go through our own individual lives with the good and the bad but, as a society, as as beings we have never had it so good.

A hundred years ago the simplest things today were luxuries, communication was scarce and knowledge was limited and medicine still in it’s infancy: literacy was lower, life expectancy was shorter and so on. Not long ago what the most of us have now only the wealthy had, if that.

Each year the world gets better, people have more opportunities and – I believe – more consciousness. It is really up to us, individually to realize our dreams: there is very little in the way. So welcome to the best year yet! Make it your best year!

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December Greater Phoenix Small Multifamily Sales Update

Farlon — Tue, 16 Dec 2008 22:24:59 +0000

Sales of small multifamily properties are on the rise especially over last year. 23 sales may not seem like much but it’s 65% higher then last year. Still the prices are down significantly. This is mostly due to the abundance of foreclosed and pre-foreclosure properties that have sold or are for sale.

The first chart shows total volume in dollars and the average per property. More units but for lower prices. This is not good for motivated sellers but it’s really good for buyers who can buy properties with strong cash flow. I have seen properties in good areas with a 14 Cap rate in good areas. A client calls such areas the "arm pit of a neighborhood" and these are often good buys: weak properties in a strong neighborhood, that is.

The chart below shows inventory levels, new listing and sales of 2-4 unit properties in Maricopa County. This is further broken down in the second chart below.

Despite the increased sales inventory, while down, sill is high. There was an inventory of 597 properties: 104 were new to the market. Each month we add some 100 properties to the market, 4-5 times the sales. So where are these properties going? Some are sold but many are removed from the market, some are recycled – changed agents – and others go into foreclosure. It’s not pretty out there but it’s beautiful for buyers in a strong financial position, those with access to financing and/or cash. Some of these would make great owner occupied properties allowing one to live nearly for free.

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Multifamily Investment Sales Update | September 2008

Farlon — Thu, 16 Oct 2008 14:21:57 +0000

24 multifamily properties sold in September in Greater Phoenix. This is data from the ARMLS. It does not include large properties: it’s mostly 2-10 unit properties. The graph dispalys 20 becasue there were a few last minute closes after the graph was generated. The previous numbers are correct.

Of the 24 sales, 5 were normal: that means sales directly with the owner. 2 sales were short sales and the rest 17 were lender owned or REO sales. Prices started at $20,000 per unit and went up to $73,750 per unit and that was for a pretty attractive property thouh in not the best area.

There is no doubt that we are in the new "cash flow economy" where investors don’t count on appreciation for any investment gains, but cash flow and it’s the cash flow that is truly builds financial freedom.

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Getting ready for the Phoenix Light Rail.

Farlon — Sun, 15 Jun 2008 19:15:41 +0000

The opening of the first section of the Greater Phoenix light rail is just around the corner, Dec. 27th 2008 to be exact. Just a few years ago this areas was a wasteland of offices and and suburbanites who disappeared at the sun went down to their distant sleeper communities. It’s quite different now. The Phoenix downtown, midtown and uptown areas have a bigger and steadily increasing resident population.

(Photo: Artur Ciesielski, CCIM)

I think this will be a turning point for Phoenix. I don’t really know what it will mean for the entire city but it’s bound to have affect for those in the vicinity and even people who won’t use it or care about it; because of residual effects of how others, visitors and businesses view the valley as a whole.
For me the view is improving and the city is maturing.

Real estate investors should have their eye on the opportunities that the light rail presents. With it, there will be additional appreciation and cause for redeveloping a lot of the land, including large and small lots within walking distance to the rail.
It’s not too late. In fact, the slow down should spur investors to take advantage of the depressed prices. There is data out there showing the benefits a light rails system has to real estate owners.

In Dallas, Portland, San Diego and other cities where light rail projects have been completed there have been increased in values greater then properties not served by the rail. The possibilities are there, even for single family homes or small apartments.

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