Real Estate Investing 101

Real Estate Investing In Downtown & Along the Light Rail In Phoenix

We are well known for our involvement in the downtown region of Phoenix. At a meeting we attended last night, some very interesting data was shared that will be of interest to the real estate investment community. We wrote a summary of the meeting on our downtown Phoenix blog site, Urban Life, if you want to take a read. Below is the information we thought was especially interesting from an investment standpoint.

Downtown Phoenix has seem many improvements during the past decade with new sports complexes, entertainment venues, restaurants, the Metro light rail system, new convention facilities, hotels and is now home to the downtown Phoenix campus of Arizona State University where several new colleges have opened including:

UofA/ASU College of Medicine
Barrett, The Honors College
Honors - Barrett, The Honors College
Walter Cronkite School of Journalism and Mass Communication
College of Nursing & Healthcare Innovation
School of Community Resources & Development 
School of Criminology and Criminal Justice
School of Public Affairs
School of Social Work
Teacher Education & Leadership, College of
University College
School of Letters & Sciences

The addition of the ASU campus is adding a lot of new people to the downtown mix. Below are some current and projected figures that sparked by interest.

• Approximately 5400 students attend classes downtown.
• The number of students is expected to rise to the 20,000 range by 2015.
  •  This may be an optimistic number and even a figure of 15000 is impressive.
• 1300 faculty and staff currently work downtown.
• Extrapolating future faculty and staff numbers based on a 1/5 staff/student ratio suggests an additional 2000 people working at the downtown campus. 
• Upon completion, the Taylor Street Dorms will house 1250 students leaving a large number of students looking for off campus housing. 
• Students play a large role in the staffing of many downtown businesses suggesting many will need accommodations in the area. 
• The Metro Light Rail system is making the downtown region much more pedestrian based.

The above figures surely suggest a rising need for rental housing as the ASU downtown campus grows. Many students will seek housing that does not require a car since the area is pedestrian oriented and the light rail system provides easy access to local businesses, markets, entertainment, Sky Harbor airport and the main ASU campus in Tempe.

Our belief is that rental housing located near the ASU downtown campus or in close proximity to the light rail system will have consistent demand over time. Since housing prices are historically very low, significant opportunity exists for residential real estate investors to purchase properties that will perform well into the future.

On the cautionary side, we believe the area may be 1-2 year away from being an optimum/profitable rental market and one must remember that college students are notoriously hard on properties. (Look for a future post regarding lease and management strategies when renting in a college town.) 

In conclusion, we feel the downtown region offers many opportunities to the real estate investor. Since the downtown region is developing a social personality and great pride, it is suggested future landlords participate in regional activities and gain a understanding of trends and issues in the area.

Ron and I would be happy to answer any questions you may have about this region of Phoenix and give you a tour.

Ron Urban & Gene Urban
The Urban Team at Realty Executives
www.urbanteamaz.com
www.UrbanLIfeBlog.com
602-234-5777

OOPS... A look at strange, funny and sometimes weird landlord-tenant stories. Volume 2

Another group of bazaar, funny, and often strange stories from Andy Hull. Dr. Evictor.  Thanks to Andy for letting us share these on Real Estate Investing 101.

BELIEVE IT OR NOT:

In one case the tenant was claiming that he should not have to pay his rent because there was a hole in his door which was letting the bugs in.  The tenant had even gone so far as to highlight the move-in inspection report to show that this was pre-existing.  However, what the tenant had highlighted was the security peephole in the door.

 

There was an incident at a property where two tenants were so drunk that they had lost the keys to their apartment.  They lived on the third floor, so they went out to a Cox Cable truck and stole the extension ladder off the truck.   They then went to the second floor and both tried to climb the ladder at the same time up to their third floor patio.  The ladder gave way, and they both fell and were seriously injured.  The residents requested that they be let out of their lease because they could not get up to the third floor due to their injuries.

Hope we brought a laugh to your day.

Ron Urban & Gene Urban
The Urban Team
602-234-5777

OOPS... A look at strange, funny and sometimes weird landlord-tenant stories

Andy Hull is the go-to-guy for many landlords in the Great Phoenix market. His knowledge of landlord tenant law, eviction processes and other investment property law is LEGENDARY. Plus he is a very nice man. 

Speaking of nice, he is graciously allowing us to reprint some of the interesting stories from the life of a landlord/tenant attorney. We'll be making this a weekly event here on Real Estate Investing 101.

BELIEVE IT OR NOT....

First, one of our tenants received the form packet repair list from one of the local tenants associations.  The tenant listed the stove as one of the areas that the landlord should repair.  The tenant then, of course, subsequently moved out early claiming the landlord failed to make repairs.  The issue of the stove came up and the manager’s comment was, “I had a hard time locating the alleged defective pilot light on the electric stove”. 

In another situation, the tenants appeared in court and claimed that they could not pay their rent because they had to go to their mother’s funeral.  The Judge indicated that he wasn’t sure what the tenant was “on” but that this had been the fourth time this tenant had appeared in front of this Judge being evicted from four different apartment complexes.  Each time the tenant came to court, it was the same story, their mother had passed away and they had to back East and used their rent money on the travel expenses.  The Judge commented and wondered if the tenant had any other mothers who hadn’t passed away yet besides the four that he know about.

 

Stay tuned to more of the bizarre and unusual here at Real Estate Investing 101.

 

Ron Urban & Gene Urban
The Urban Team
602-234-5777

Investment Property Insurance... options and thoughts

We asked Kimberly Adams, an insurance specialist with Liberty Mutual to provide advise and thoughts on the subject of insurance for investment properties and owners of such. Below are her observations.

We will be posting additional articles on the subject of insurance for real estate investors and their properties.

The Importance of Landlord’s Insurance

As a real estate investor, or more specifically a landlord with the tenant-occupied property, you have to whether you are protected from or wide open to the biggest risks of owning a property you do not live it. To keep it simple, the biggest concerns of a landlord are: the structure, your liability, and potential loss of rent as a result of a circumstance that has rendered the house unlivable.

Sure, you may not live there, but someone and their loved do. Is the property covered for losses caused by fire only, or do you have a broader amount of perils insured against? (i.e., vandalism, wind, hail, accidental overflow of water, and so.) Based on the cost of the policy, you may have selected a basic policy not realizing that other than a fire, all other losses are your out of pocket expense. In Arizona, there are 3 types of Landlord, or Dwelling policies – basic, broad, and special. Take the time to know which you have.

Your next biggest concern is…what if my tenant sues me? Your responsibility is to know that your property is in the utmost safe & sound conditions structurally, electrically, and environmentally. Why? Should for any reason a situation arise due to substandard property maintenance or even a fraudulent claim, you could find yourself in an overwhelming lawsuit, costing you all value in this investment, and possibly more. Your liability coverage is intended to protect you and your assets from large verdicts or settlements due to accidents, and/or malicious tenants.

You can never have enough liability protection when it comes to investment homes! After all, you don’t have to be a millionaire to be sued for a million dollars. Selecting the maximum limits or taking an Umbrella policy is wise, if not imperative.

It is also suggested that Renter’s Insurance be mandatory in your lease agreements. This requirement simply adds a layer of liability protection and insures your tenant's possessions are protected.

What happens if the property becomes unlivable due to one of the perils/losses named on my policy? Can you afford to pay that mortgage without incoming rents? Loss of Rent coverage buffers you from the burden of lost rental income for the duration of time required to restore the property back to livable conditions. Typically, Loss of Rent coverage is 10% of the dwelling/replacement cost coverage of the structure. If your property is insured for $100,000, you have $10,000 for Loss of Rent. Know confidently what your situation would look like in the event of the worst-case scenario.

Ultimately, know with certainty that you can sustain the great unknown. Don’t bog yourself in the infinite “what ifs”, but be sophisticated enough to understand what coverage & partnership you truly have in your Dwelling Insurance package.

__________________________________________________________________

Kimberly Adams is a licensed Sales Representative with Liberty Mutual Group, in Arizona. Liberty Mutual is the nation’s eighth-largest provider of personal lines of insurance products. The company sells full lines of coverage for automobile, homeowners, valuable possessions and personal liability insurance. Call (480) 205-1783 or email for current coverage analysis and rate information.

Search & Buy Real Estate Investment Properties, Homes in Phoenix 85021

This post explores the 85021 zip code in north central Phoenix. 85021 is geographically bounded by Peoria Ave (N), Glendale Ave (S), Central Ave (E) and I-17 (W). 

The basic demographics of the area are: 38,000 residents, median household income of $43,000, median age of 31 years, and approximately 55% of the people rent verses own. 

85021 is a true mixed bag of real estate. The Royal Palms neighborhood, north of Northern and bounded by 7th & 15th avenues, is home to some significantly nice homes. Areas like Why Worry Estates sports million dollar properties. However, jump a bit to the west or south and 85021 is home to lots of apartments and much more affordable housing. As we noted above, over 50% of the residents rent and are younger than average.

The area is popular for a number of reasons:

• It's pretty darn easy to get around from here. Downtown is minutes away and access to both the 51 and I-17 freeways is just minutes.
• Sunnyslope High School is among the best rated in the country...yes I said country.
• Homes are a bit older and have more character.
• More of a neighborhood feel with lots of locally owned businesses and restaurants.
• Easy freeway access to a variety of job opportunities.

Investors need to factor in the abundance of apartments in the area as apartments tend to offer lower rents. A search of the Phoenix crime stats is advised when considering any investment purchase. There are lots of condos and townhomes in this area. Be aware that the condo/TH rental market is pretty soft as of this writing (see above for posting date).  Do your homework on rental rates when considering a purchase in 85021. 

At the end of this post is a real estate search engine/tool specifically designed to show homes, condos, land and multi-family properties for sale in the 85021 zip code. The initial view shows the 20 least expensive properties and users may explore all price levels currently available. The data is real time showing you the current inventory, included bank owned, at the time you view this post.

The search tool is map-based, and allows registered users to save searches and receive email updates when new properties come on market. If you would like to personally view any of the properties, we'd be happy to arrange an appointment. Just give us a call (602-234-5777) or send an email request.

Check the "search by zip code" category for information on additional area zip codes.

Best to you,

Ron Urban & Gene Urban
The Urban Team at Realty Executives
www.urbanteamaz.com
602-234-5777

Search For Residential Investment Properties in Phoenix 85028

This post explores the 85028 zip code in north Phoenix. 85022 is geographically north of the Phoenix Mountain Preserve along the 51 freeway.

The basic demographics of the area are: 25,000 residents, median household income of $89,000, median age of 42 years, and approximately 14% of the people rent verses own. 

85028 is considered a desirable area and generally attracts a higher income demographic. The average age and income is higher than surrounding areas to the north and west. Many homes in the area are above average. Some homes have fine mountain views; There are horse properties in 85028; Ralph Haver built homes in the area and you'll find many custom homes and unique subdivisions.

The area is popular for a number of reasons:

• Hiking, biking, walking in the Phoenix Mountain Preserve is very popular.
• Highly rated Paradise Valley school system serves the area.
• Easy freeway access to downtown Phoenix, Phoenix International Airport, Desert Ridge, Paradise Valley and Scottsdale.
• Fine shopping and restaurants are nearby. 

We consider this area a niche rental market and requires good skills/knowledge to be successful. Rents are generally higher than areas to the north and west. If considering this area for a rental home do the math carefully and review CAP rate calculations.

At the end of this post is a real estate search engine/tool specifically designed to show homes, condos, land and multi-family properties for sale in the 85028 zip code. The initial view shows the 20 least expensive properties and users may explore all price levels currently available. The data is real time showing you the current inventory, included bank owned, at the time you view this post.

The search tool is map-based, and allows registered users to save searches and receive email updates when new properties come on market. If you would like to personally view any of the properties, we'd be happy to arrange an appointment. Just give us a call (602-234-5777) or send an email request.

Check the "search by zip code" category for information on additional area zip codes.

Best to you,

Ron Urban & Gene Urban
The Urban Team at Realty Executives
www.urbanteamaz.com
602-234-5777

Search For Residential Investment Properties in Phoenix 85032

This post explores the 85032 zip code in north Phoenix. 85032 is geographically south of the intersection of the 55 and 101 freeways.  Click on the zip code map to see a bigger picture of the area.

The basic demographics of the area are: 69,000 residents, median household income of $50,000, median age of 32 years, 63% are families, and approximately 38% of the people rent verses own.  This is based primarily on 2007 data so the number of renters could be higher.

85032 is an interesting part of Phoenix sporting a variety of properties. Long-time developer John F Long built an amazing number of homes in the area. Mostly small 2-3 bedroom properties with decent size lots.

As always we recommend good due diligence including exploring crime stats, rental rates and such.

The area is popular for a number of reasons:

•  Housing is relatively inexpensive
• Highly rated PV school system serves the area
• Easy freeway access to Scottsdale, downtown Phoenix, and the NW Valley, Desert Ridge and other great shopping/restaurants. 
• Major employers in the area include Amercan Express, Desert Ridge, Scottsdale Airpark, and resorts including The Westin Kierland and JW Marriott. 

At the end of this post is a real estate search engine/tool specifically designed to show homes, condos, land and multi-family properties for sale in the 85032 zip code. The initial view shows the 20 least expensive properties and users may explore all price levels currently available. The data is real time showing you the current inventory, included bank owned, at the time you view this post.

The search tool is map-based, and allows registered users to save searches and receive email updates when new properties come on market. If you would like to personally view any of the properties, we'd be happy to arrange an appointment. Just give us a call (602-234-5777) or send an email request.

Check the "search by zip code" category for information on additional area zip codes.

Best to you,

Ron Urban & Gene Urban
The Urban Team at Realty Executives
www.urbanteamaz.com
602-234-5777

Search For Residential Investment Properties in Phoenix 85022

This post explores the 85022 zip code in north Phoenix. 85022 is geographically located in and around the Lookout Mountain Preserve. Click on the zip code map to see a bigger picture of the area.

The basic demographics of the area are: 52,000 residents, median household income of $51,000, median age of 36 years, 60% are married, and approximately 39% of the people rent verses own.  This is based primarily on 2007 data so the number of renters could be higher.

85027 is an interesting real estate mix. The prestigious Moon Valley, Lookout Mountain and Pointe neighborhoods offer million dollar properties, views and golf amenities while just over the hill you'll find mobile homes, apartments and multi-unit properties.

Moon Valley  residents are predominantly professionals with many doctors and attorneys calling this place home. Lookout Mountain is popular for its fine views and significant homes. The Pointe Resort offers fine amenities and continues to be a strong destination for corporate travel and meetings.

Besides the Pointe Resort, there isn't a dominant employer in the area. However, easy access to the 101 and 51 freeways allows residents many options with a downtown Phoenix job commute not uncommon. 

If you are thinking about buying investment property in this area a fair amount of due diligence is advised. Niche marketing in Moon Valley,, Lookout Mountain or the Pointe Resort is possible but not necessarily easy. Due to the diversity of this area, a check into crime stats and a through understanding of the area is advised.

At the end of this post is a real estate search engine/tool specifically designed to show homes, condos, land and multi-family properties for sale in the 85022 zip code. The initial view shows the 20 least expensive properties and users may explore all price levels currently available. The data is real time showing you the current inventory, included bank owned, at the time you view this post.

The search tool is map-based, allows registered users to save searches and receive email updates when new properties come on market. If you would like to personally view any of the properties, we'd be happy to arrange an appointment. Just give us a call (602-234-5777) or send an email request.

Check the "search by zip code" category for information on additional area zip codes.

Best to you,

Ron Urban & Gene Urban
The Urban Team at Realty Executives
www.urbanteamaz.com
602-234-5777

Search For Residential Investment Properties in Phoenix 85027

This post explores the 85027 zip code in North Phoenix. 85027 is geographically located in and around the intersection of the 101 and I-17 freeways.

The basic demographics of the area are: 37,000 residents, median household income of $51,000, median age of 31 years, 65% are families, and approximately 30% of the people rent verses own.  This is based primarily on 2007 data so the number of renters could be higher.

85027 is well located with easy access to 2 freeways and relatively quick commute times to many large employers, shopping, dining, and activities.

Several major employers are in the area including: Honeywell, Deer Valley Airport, American Express, PetsMart (headquarters), USAA and Cox Communications.

At the end of this post is a real estate search engine/tool specifically designed to show homes, condos, land and multi-family properties for sale in the 85027 zip code. The initial view shows the 20 least expensive properties and users may explore all price levels currently available. The data is real time showing you the current inventory, included bank owned, at the time you view this post.

The search tool is map-based, allows registered users to save searches and receive email updates when new properties come on market. If you would like to personally view any of the properties, we'd be happy to arrange an appointment. Just give us a call (602-234-5777) or send an email request.

Check the "search by zip code" category for information on additional area zip codes.

Best to you,

Ron Urban & Gene Urban
The Urban Team at Realty Executives
www.urbanteamaz.com
602-234-5777

Where to Buy Residential Investment Property In Greater Phoenix Area Now.

Naturally, some of the questions people ask us are, where should they should buy a rental home in the Phoenix area, what kind of home and what rental rates are doing best. The answers are a moving target. The rental market is not static... it moves, shakes, rumbles and is always changing.

We turned to a variety of experts, professional property managers,  to get answers based on today's market conditions. These people work in the trenches and generally have their finger on the pulse of the rental market. We asked the same series of questions and below is what we heard.

Keri Banker, Impero Property Management 
email: info@impero-property.com

Q.    Where do you feel the best area to find qualified tenants today?
A.    Finding tenants is tough in this market. Many have credit blemishes. However, the west valley seems to be performing the best right now. Avondale, Litchfield Park, Goodyear are all renting well. A few months ago the East Valley was going well, however its gotten pretty quiet lately. We don't work in the north Phoenix area so we can't really comment on that market.

Q.    What rental price points are doing best?
A.    The $800.00-$995.00 range for single family homes are doing best. We recommend keeping rents under the $1000.00 number in the most of the West Valley.

Q.    What kind of property do you recommend buying.
A.    Definitely single family homes, the condo & multi-family market is pretty flat. Why live in a condo when you can get a home for the same price? Both 3 and 4 bedroom homes are renting well if the price is right.

Jennifer Ridenour, Realty Executives Center Pointe
email: Jenniferiannellaj@realtyexecutives.com

Q.    Where do you feel the best area to find qualified tenants today?
A.    My business is now based in the Central and North Central Phoenix area although I've worked in many parts of the Valley. I like N. Phoenix properties along the 101 from Tatum all the way into Glendale. I find tenants in the areas north of Shea to the 101 and from Tatum to 7th Avenue tend to be longer term than tenants in the west valley. I stay away from Anthem as people are finding the commute time, especially with accidents on I-17, to be too much.

Q.    What rental price points are doing best?
A.    The $950.00 - $1150.00 rental rates are the easiest to find qualified tenant. I have to add that finding qualified tenants is not that easy right now. Most have credit issues.

Q.    What kind of property do you recommend buying.
A.    Single Family Homes only. The condo market is not good right now.

Tom Steinheiser, Metropolitan
email: thomas@metrowb.com

Q.    Where do you feel the best area to find qualified tenants today?
A.    We see the SW Valley as the prime area. Purchase prices are commensurate with lease rates. Tollison, Buckeye, Goodyear, Litchfield Park and Laveen are all doing well. We're staying away from the far East Valley at this time. We see that market turning around slowly in the future. The N. Phoenix and Scottsdale markets are not as competitive lease wise. However, there are niche markets in those areas that do work.

Q.    What rental price points are doing best?
A.    We're finding the $900.00 to $1200.00 range to be rent-able We're able to lease most homes in about 30 days if they are priced right and landlords are keeping the deposits reasonable. We do expect a slight decrease in rent rates in the next 6 months but nothing dramatic.

Q.    What kind of property do you recommend buying?
A.    Single family homes are best. We recommend 4 bedroom properties if the price is right. There are a glut of condos on the market right now so unless your in a niche market, I'd stay away from them. Just make sure you buy right so you are well positioned for the market.

Susan Napier, Realty Executives Peoria
email: susannapier19@yahoo.com

Q.    Where do you feel the best area to find qualified tenants today?
A.    I work in the West Valley primarily so that is my expertise. I recommend homes located on the north side of I-10. I find Peoria and Avondale homes do better because the schools are more attractive. Westwind and Fletcher Heights subdivisions have a lot of appeal as well.

Q.    What rental price points are doing best?
A.    4 bedroom homes in the $1100.00 - $1300.00 range are pretty easy to lease.

Q.    What kind of property do you recommend buying?
A.    First, I recommend people new to residential investing become well educated about the business and the market. I prefer 4 bedroom homes and tell people to stay away from older houses due to high long term maintenance costs. The same is true for multi-family properties as they tend to be older. Look for homes in well established neighborhoods with quality schools. A lot of parents care what schools their children attend.

Kimberly Hunter, Realty Executives Tempe
email: khunter357@cox.net

Q.    Where do you feel the best area to find qualified tenants today?
A.    I work in the east valley, Tempe and Scottsdale areas. Tempe is always strong because of ASU. The city does have a 3 non-related tenant policy so bigger homes are not good college rentals. South Scottsdale is often better for student renters. Queen Creek offers the largest homes for the least amount.

Q.    What rental price points are doing best?
A.    $1200.00 seems to be the high mark at this time. Student rental rates are different. Sometimes you can get a little higher rates.

Q.    What kind of property do you recommend buying?
A.    Single Family Homes are all that's renting, even in Tempe these day.

Q.    Can you tell us more about renting to people in the college area?
A.    Most students want a nice place and will pay a little extra. Make sure and put the parents on the lease as a responsible party in case of rent or damage issues.

A Few Thoughts From Us:

First we want to thank everyone who contributed to this post. We are fortunate to have their talents added to the mix.  As you can see, most agree the West Valley is where it's at these day. This is in large part due to the amazing prices we've seen in the last 6 months. CAP rates are high, and a lots of displaced families looking for somewhere to live.

Finding tenants with good credit scores can be tough. Some suggest putting more emphasis on employment history, current income and a clean background check and less on recent credit problems. That will be your call though.

The Central Phoenix market and Scottsdale did not come up in most of the conversations due to the price point at which homes can be bought and leased. The math is pretty clear... buy a home in Avondale for $85,000 and rent it for $950.00 or buy a house near Tatum & 101 for $190,000 and rent it for $1200.00. However, vacancy rates and turnover need to be taken into consideration. Some said the turnover in the west valley is high so each year you have to do some cleanups and you may be vacant for a month or more.

One other consideration is the long term appreciation of the property and long term rental rates. The questions are; Will a more expensive home in a desirable Phoenix or Scottsdale neighborhood see more appreciation over time than one in, say, Avondale? Will the rents rise faster in these areas over time as well? We feel a long-term comparative analysis is advised and should be put of the equation. 

Another consideration is niche marketing. Some feel there is value in finding an under exposed niche and working it. Examples include: golf course homes, corporate relocation, luxury homes or homes that target a specific large employer. An investor with good marketing skills may find a niche approach both exciting and rewarding verses battling it out in a less defined market. It just gets more exciting by the minute doesn't it?

We hope this information is of value to you. As always, we are here to answer your questions, do reasearch and generally be of service.

Ron Urban & Gene Urban
The Urban Team at Realty Executives
www.urbanteamaz.com
602-234-5777
email: gene@urbanteamaz.com