Phoenix Cashflow Properties

“BUYING OPPORTUNITY OF A LIFETIME”

During the first half of the previous decade, easy credit and speculative excitement worked to make houses increasingly expensive in Phoenix, Arizona. But the subsequent crash in home prices–the real estate crisis tipped thousands into foreclosure–has helped restore affordability to this once inflated market. In fact, there hasn’t been a better time to buy real estate in Phoenix since the market crisis in the late 1980s. For many would-be home buyers, this historic boom and bust have been a blessing in disguise.

Because of our strong dollar, Canadians have a winning hand and can profit even more from the current market downturn; however, the window of opportunity may not last long as many of the compelling factors are already beginning to fade. In fact, recent data has shown that there has been a lot of competition and prices have inched up. In the last 6 months, the listing inventory for the Metro Phoenix area has dropped 37% and the sales are up 55%. As well, foreclosures are slowly decreasing. There are still many undervalued properties available on the market, but the buying opportunity is here, and the time to act is now.

Top 5 Reasons Why Canadians Should Buy Now:

Phoenix, AZ is on Sale! Home prices are at a huge discount compared to peak levels. The average sales price for a single family home in Phoenix is $114,038 or a 59% decrease over last year at $281,306. (Primarily due to over supply of homes, tight lending, economic recession and high rate of foreclosures) In some cases, it is even possible to purchase a property for less than its replacement cost. More importantly, this drop in price has helped make housing affordable again. From the fourth quarter of 2005 to the third quarter of 2009, the price-to-income ratio –a key measure of housing affordability– was cut in half. It now stands at just 1.52, notably lower than its 1.74 average for the 15 years before 2003.

Strong Canadian dollar: The Canadian dollar has significantly appreciated versus the U.S. dollar in the past 12 months (up 25%) and is now trading at close to par. This means that in relative terms, a house in Phoenix that cost you $300,000 Canadian in early 2009 would only cost you $240,000 Canadian today! And this doesn’t factor in the price drop in housing from the other factors highlighted above. Now is a great time to consider converting over funds while the Canadian dollar is strong.

Positive Cashflow: Yes, the numbers make sense in Phoenix. An average home that costs around $100,000 rents for approximately $1,000/mo. Can you say “Cashflow?” In other words, it is possible to achieve capitalization rates of 7% and above. Yes it is an amazing market to invest in to build or diversify your real estate portfolio.

Long-term Capital Appreciation: It is known that real estate markets are local in nature and that prices tend to go up in cities that attract new residents. Phoenix has had one of the largest population migrations in the U.S. since the year 2000 and substantial growth is projected to continue for the next several decades. In fact, nearly 100,000 new residents move to Phoenix, Arizona every year! With the retiring “Baby Boomer” generation, which represents about 1/3 of the country’s population, Phoenix will likely become more and more popular in the years to come as it is among the most desired locations for Americans to migrate to upon retirement.

Low Cost of Living and Beautiful Weather: There are two main reasons attracting people to Phoenix: affordability and weather. A couple of distinct advantages Arizona has over the Florida and California markets are lower average prices, and the big one, much lower taxes. Arizona has by far the lowest tax rate on the purchase, carry, and sale of real estate assets. Additionally, Florida has extremely high homeowners insurance rates when compared to Arizona. With one of the lowest costs of living compared to other major cities, and all of the amenities one would expect in a modern metro area, Phoenix Arizona is an excellent location for business and residents to make home. As far as the weather is concerned, Phoenix Arizona averages over 300 days of sunshine per year and attracts a large snowbird contingent as well. In a recent survey of U.S. cities, Phoenix Arizona ranked 5th highest in overall resident happiness!

Are we at the bottom yet and when will the market turn around?

No one knows this with certainty. The most important point is not to be paralyzed with indecision waiting for some magical event to happen before you buy or you will miss the boat of opportunity.

There is no way to know for sure when absolute bottom is reached nor is it important. As long as you get on the ride NEAR the bottom. We may be in that phase right now. It seems like 2009 saw the low end of the market begin to turn around and a loose bottom seems to have been reached for properties in certain parts of The Valley. Supply is now rapidly declining at the low end of the market. So take advantage NOW, while the real estate market is floundering near the bottom and don’t get caught up in the elusive game of trying to time the market bottom exactly right because it is, well, impossible!

How do I invest in the Phoenix market?

Many Canadians are apprehensive about investing in a market they don’t understand, in a city thousands of miles away. This is not a problem. WE BRING THE DEALS TO YOU.

How does this work?

Our goal is to provide investors with investment properties that have dropped more in value than the market average and which have the greatest potential increase in value when the real estate market rebounds. We literally view hundreds of properties before we acquire the homes that we feel would provide the best return on investment.

There are 2 ways you can get involved with us:

1) Buy a cashflow positive turnkey property:

We would first find a good property in a good neighbourhood at below market value. We would then arrange to have all the major renovations, appliances and clean up completed. The property would then be rented and managed. There is no money required from your part until we have the property ready and rented by a qualified tenant.

2) Invest in a mortgage on a Phoenix property at 8-10% interest ROI.