Prescott Arizona, Housing Market

Dottore · 05:59 PM

I sat through lunch today with someone who tried to interest me in a portfolio of single family houses in Prescott, Arizona. All of these were distressed Fanny May properties, all were approximately 2000 square feet in size and all were priced around $150K. All looked like nice homes in nice subdivisions.

All of these homes were available for a tiny amount down (some as low as three percent) with pre-approved financing.

Those are just silly-low numbers for this part of the world, and I just thought I would ask the Arizona guys here if they could even remotely be correct. I'm not really interested in this kind of residential investment play, and would of course do some serious due diligence before getting involved—but is $150K for a 2000 square foot home really the growing rate in Prescott? If so I imagine that the resale market must be dead as roadkill at those prices. Is there any sort of rental market in Prescott?

Any input much appreciated.

Zeke · 07-06-2009, 04:48 PM

Zillow does not support that info. More like 300K +

Eric Coffey · 07-06-2009, 05:09 PM

That sounds pretty low for Prescott proper, even for distressed properties. If you are talking directly with an asset manager, you may be able to get a deal on smaller bulk REO purchases. Generally, the folks buying REO at $.40 on the dollar are buying several $MM worth at a time though.

Another thing to keep in mind: There is distressed, and there is DISTRESSED. They may be properties flagged as severe fix-ups. Like no appliances, HVAC, cabinets, etc. and/or substantial tile/drywall/carpet replacement required.

Also, there is Prescott and then there is Prescott Valley (the latter being more affordable/less desirable, generally speaking). Of course it would depend on property location within each area respectively as well.

Here is a quick snapshot of currently available homes in Prescott, and Prescott Valley (3+ bedroom, 2k-3k sqft., `00 or newer):

Prescott

Prescott Valley

Dottore · 07-07-2009, 02:43 PM

Thanks Eric. Yes these properties are part of a large portfolio of such properties bought by a couple of guys who claim to know this market well. My guess is there are almost 500 properties in the portfolio—mostly in Arizona.

Anyway, I made a few calls yesterday and decided to step back from the whole affair. All too messy for my tastes. Although if you're in the area—I'm guessing there must be some good money to be made from these kinds of properties.