Buying an Investment Property in Arizona

There are 13 different species of rattlesnakes in Arizona, more than any other state.  You may be surprised to learn that the rattlesnake is the only kind of snake that doesn’t lay eggs.  The mother actually gives live birth.  What may surprise you even more is that I, an almost-Arizona native, didn’t know this until about two weeks ago.  I had to attend reading appreciation day at my daughters’ elementary school to learn this interesting fact.

Children’s author Conrad Storad was there and he read his book, Rattlesnake Rules, to the kids.  In this rhythmic, non-fiction tale he explains how all rattlesnakes have rules to live by – just like people.  It was fascinating information.

I moved to Arizona in 1977 at the age of 5.  And with the exception of a one-year stint in Denver, have lived here for most of my life.  I’ve been hunting, fishing, water skiing, hiking, camping and just plain screwing around in the desert for as long as I can remember.  And you want to know the funny part?  The only rattlesnake I’ve ever come across was at the Phoenix Zoo.

That’s why I find it amusing when out of state folks visit here and expect to see a dry, harsh desert landscape with tumbleweeds rolling by.  Arizona is actually a very diverse state.  Our elevation ranges from about sea level all the way up to 11,000 feet.  I once water skied and snow skied in the same weekend.

So when I quit my corporate job 10 years ago and decided to get into real estate investing it made sense to set up shop right here in my own backyard.  Who wouldn’t want to live in a state that has sunshine 300 days a year? 

Okay, I’ll admit the summers are a little intense.  If you’ve never been here just trying sticking your head in an oven set at 180 degrees.  That’s what it feels like.   Luckily, it doesn’t last long.  And it’s a short two-hour drive from my home in Gilbert up to Flagstaff where the temperatures are about 25 degrees cooler.

Historically speaking, there has never been a better time to buy an investment property in Arizona then right now.  I know, I know – this probably sounds like typical real estate investor propaganda to you right?  The truth is I have nothing to gain by sharing this.  I just hate to see people miss out on all the opportunities in the marketplace.  We fix and flip, buy and hold and offer seller financing to borrowers with shaky credit.  Since last July we’ve sold more than 40 properties.  How can that be with all the bad news about real estate these days?

There is demand for our fix and flip properties because of all the distress in the market.  Most of the homes for sale these days are in poor condition.  Buyers don’t have the imagination or the checkbook to fix them up.

What about buy and hold, or rental properties?  There is enormous demand for single family homes in middle class neighborhoods because so many homeowners have been foreclosed on.  These people need a place to live and renting is their only option because of their damaged credit.

And what about my favorite exit strategy, seller financing?  This is like a hybrid fix and flip – buy and hold business model.  We make money from the buyer’s down payment.  We also cash flow when the buyer makes the interest payment every month.  Best of all, we get a lump sum profit check when the buyer refinances the note, usually within 3-5 years, because we bought the house at such a steep discount from the auction. 

There is tremendous demand for this service because so many people have walked away from their homes.  I have a list with over a dozen buyers right now that are waiting for us to find them a home.  We have several performing notes now and you can bet the investors we partner with are pleased with the returns.

Over the next three weeks I’ll go into detail with each of these exit strategies and how they work in the Phoenix market:

  1. Fix and flipping.
  2. Buy and Holding.
  3. Seller financing.

But, unlike most real estate professionals you’ll meet I’m going to share our successes AND failures with you.  If you plan on buying investment property in Arizona soon, or anywhere else for that matter, my hope is that this information will prevent you from getting snake bit.

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