Phoenix Real Estate questions

[motion]

Priorities, its all about priorities.

[v9ff]

Landlord laws are in our favor outside of California.

[Joeaksa]

Land in the Casa Grande area is going out of sight. Man I work for has made millions by buying plain ground there and waiting a year or three then being bought out.

Eventually Phoenix will grow SouthEast to CG, and Tucson will come NorthWest, so the land will appreciate...

Joe

[motion]

Was out in Phoenix this past weekend... I'm moving forward on 3 new homes in Litchfield Park. (2) 5 bedroom, 2.5 baths and a 3/2. Lots of new homes for rent in the various tracts, but they are renting, after a 1-2 month delay.

I belive the numbers will work for my scenario:

5 Bedroom/ 2.5 Bath
Purchase price = $159,000
Down payment = 20%
Monthly PITA = $1,238 (15 year fixed)
Management cost = $59/mo

Estimated rent = $1,400

I'm sure I'll have one vacant month per year, so I'll have to factor that in. Also, initial concrete and rear yard landscaping will be around $5,000.

Any holes in my logic???

[DonDavis]

Sounds like a good plan. I like it. I especially like the 20% down, 15 year fixed. Very Smart!!

Is the landscaping 5k for 1 house or all 3? Depends on how large the yard is and how extensive but sounds a bit up there for 1 home. There are so many ways to go with that so what are you getting done?

[Moneyguy1]

Sorry if I missed it, but adding to the positive end of cash flow is allowed depreciation and maintenance deductions. Another thing..Check with your friendly(?) local assessor. The tax rate for rental property, at least in Pima County, is higher than the rate for owner occupied. When you get your tax bill, it warns you to contact your assessor if the property is to change from one classification to another.

"This property is classified as owner occupied residential (legal class 3). If this property is being used as a rental unit, the owner must notify the County assessor of the rental use. Failure to do so may result in a civil penalty". A neighbor got caught recently. Was not happy. Never read the fine print.

All things considered, owning rental property takes a certain mindset. There is little or no leeway for error, and being "nice" is not the way to make money. Certain kinds of tenants are to be avoided, and an exhaustive background must be carried out. Who was the poster a while back with an attorney as a tenant that was giving him fits?

The primary benefit comes in a market of increasing property values, and I am not so sure that trend will continue indefinitely. Decreasing property values are already hitting some areas of the Northeast, and that could, depending on national economics, spread in future years. Currently, I would not live in Phoenix; (did for awhile, around 44th and Camelback which 12 years ago was almost on the "fringes") it is growing a bit too fast and water may become an issue. Also, according to the World Almanac, (if memory serves) of every eight people who relocate to Phoenix, five ultimately leave again. Hope you aren't renting to one of the five who disappears in the middle of the night.

Here in Tucson, where the local economy is still quite strong, the average rental property (3br,2bath) sells for about 125k and rents for about $850. Some of the rentals are seasonal, to the "snowbirds", and remain vacant during the hot months. I am not certain if this is the case in Phoenix as well.

Please do a complete analysis, both financial and of your own willingness to put up with the inevitable hassles.. It is your money, and whether you can take the crap that comes with being a landlord is a very individual decision.

Cheers!!

[Bruce Huling]

IMHO, Goodyear is positioning itself to be the west side scottsdale. Goodyear has expanded grealy in the last 3-4 years, with all signs indicating that it is turning into a high rent west side community. Today prices are very reasonable for the valley, and with the expansion of business on the west side, not everyone wants to drive across town to live. Other considerations- Luke area force base, PIR, and some core businesses locating there would indicate that it may have potential. I would lok at Verrano (just west of Goodyear) which is having a grand opening this weekend. It is a masterplaned monster community like several others here in the state whcih all have had significant upside if you got in early and hold. My .02.
ps: I live south and west of Goodyear.

[motion]

Bruce, thanks for the info... any idea who the builder is for Verrano?

[Bruce Huling]

Verrado construction is well under way
Verrado, Buckeye’s first major development, came a long way in 2003.
In April, the planned community hired Mary Kurth as its town manager and broke ground Sept. 10 on its first school, Verrado Middle School in the Litchfield Elementary District.
Verrado Way, the $10.8 million Interstate 10 interchange, was finished in August, along with a golf course.
As the first phase of the 14,000-unit development nears completion, Verrado finally will open its model homes’ doors for the public Jan. 24 at its grand opening.

[Bruce Huling]

http://www.internest.com/pultephoenix/pultephoenix12932.asp