I had an investor put Phoenix rental homes to the FannieMae/FredddieMac test — cash-flow positive with one hand tied behind your back — and our properties passed with flying colors.
Rental homes in metropolitan Phoenix are so cheap, by now, that many investors are simply paying cash to buy them. But suppose you need to qualify for a loan?
Fannie and Freddie will want a 25% down-payment, which is not a bad idea in any case. But the loan underwriter will probably also want documentation that the home will still be cash-flow positive even at 75% of the prevailing market rent.
And guess what? Phoenix qualifies with flying colors.
Just to demonstrate this fact, I looked at seven homes in Coldwater Springs, a golf-course community in suburban Avondale, AZ. This is a premium subdivision, both for rental homes and for resale homes.
Click through to the web site I built for these homes. Nothing is concealed and everything is revealed. These homes are lender-owned, and each of them needs work, but none of them needs much. Figure from $1,000 to $5,000 to bring them into turn-key condition. Another benefit to visiting that site is that you will see the kind of work-product I deliver to out-of-town investors.
A rental property in Coldwater Springs should rent for $950 to $1150, depending on the size of the home. And the community is so avidly sought by homeowners, a former rental should sell at a premium price to owner-occupants on the way out.
You can click here for a cost break-down on a typical Coldwater Springs rental. No smoke and mirrors, no blue-sky assumptions, just the straight dope.
And take note: These homes represent the high end of Phoenix-area lender-owned homes. You can spend a lot less than this for homes in other neighborhoods. They’ll rent for less, but their overall financial performance could be as good or even better.
This is a perfect storm for rental home investors in greater Phoenix: Premium homes going for fire-sale prices at historic low interest rates. I represented tenants for two years and investors since then. I understand what tenants like and what they hate. I can help you find premium rentals that will stay rented to premium tenants and will command premium prices on resale.
But no opportunity is perfect. It may be quite a while before the Phoenix real estate market recovers. But these homes should easily self-amortize while you wait for positive appreciation to resume. Email me or pick up the phone and dial 602-740-7531 to discuss how to proceed. (Outside of Arizona? Dial 1-800-508-5430.)
I’ve been doing this for a long time, and I can handle as much of the process as you need by remote-control. I have relationships with everyone from property managers to handymen, and my investors have been very successful at keeping their properties rented. I’d love to talk about how I can help you achieve similar results.
