Archive for the 'Phoenix Real Estate' Category

Why should every financed home buyer commit right now? Because interest rates can’t stay this low forever.

It’s a simple as this chart, 30 Year Conventional and FHA mortgage rates over the past year:

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What goes down will come back up – perhaps costing you tens of thousands of dollars on your loan qualification amount.

Ready to commit? Cathleen and Maddie have time available for a few motivated buyers: 602-740-7531.

There are always good reasons for waiting. The inevitable turning of the mortgage interest rate tide is a strong goad to act now. If you miss out on this opportunity, you might not see another one like it for a long time.

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What is the sound of one shoe dropping?

I’ll answer a cliché with a cliché: It’s never over until the fat lady signs – but then it is.

Everything that makes homes seem so affordable right now is a reflection of our insanely low interest rates. Every bump in those rates will cut the amount of house you can afford to buy – or commit more of your income to housing and less to the rest of your life.

If you’ve been thinking about making your move – tick tock.

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Moving up? Moving on? This may be the perfect time to make your move.

Why is right now the strategically perfect moment to move up?

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Because the mortgage interest-rate trend illustrated in that chart won’t last forever. There are other good reasons to make your move now, if moving’s on your mind, but these rates make a $200,000 home cheaper than the rent on half that much house.

There’s this, too: When rates turn upward, that will put a damper on already wilted demand, so we may be at the de facto top of this market swing. Prices have been stalled, as best, over the last year.

Washington does want to re-inflate the housing bubble. That’s the reasoning behind all the everything-old-is-new-again exotic loan products, including 3% FHA-beaters from Fannie and Freddie.

But at the same time, both mortgage-interest-deductibility and residential capital-gains deferment are political footballs always in play.

As matters of abstract economics, all of this is destructive, market machinations devised to churn the residential real estate market to no productive benefit.

But as matters of personal financial strategy, events like these provide a useful guide of when and how to act.

Ergo: If you plan to move up in the near future, the future is now:

1. If you have a house to sell, low interest rates increase your buyer pool. It’s a buyer’s market, so you’re going to sell for what you can get, but qualified buyers are out there for turn-key-livable homes,

2. Whatever mortgage you qualify for, you qualify for a lot of house. To be a seller in a buyer’s market is no fun. To be a buyer is a delight. The house you’re looking for is the one that can be home to you for a long time, if necessary. Your payment will be very low. You’re looking for a home that will make you love that loan payment just that much more.

3. Manage your cash. Low-down loans are bad for the economy, long-term, but they may be very good for you. You don’t want more house than you can afford, but you may want the house that will be perfect for you after a few years of concentrated rehab. In this golden moment, you have options about where to put your money, with Uncle Sam practically begging you to put your accumulated equity into other investments.

My take? Let’s dance. We list strong, to get our houses under contract quickly and for top dollar. We work with great lenders who can get you the most money for you money. And we can get you moved into the home you know you’ll be needing for your family in the years ahead.

There may not be another move-up moment this perfect anytime soon. Call me at 602-740-7531 and let’s get busy today.

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It’s beginning to look a lot like… home-buying bargain season…?

The holidays mean different things to different people, but they mean something special to well-prepared home-buyers:

When holly is in the air, it’s a great time to pick off bargains from motivated sellers.

It’s easy to understand why: All the other buyers are tied up with their holiday preprations. Inventories have been rising for more than a year, and some sellers need to make a deal NOW.

Who?

• Folks who want to account for their proceeds on this year’s taxes, not next year’s.

• New home builders who want their spec homes closed out on this year’s books.

• People who are sick of waiting and want to get on to the next chapter in their lives.

A well-crafted aggressive offer can make all the difference in a market like this one. Little things to take away the seller’s fears can make a huge difference.

As with everything in real estate, strategy matters. Give us a call – 602-740-7531 – and let’s talk about getting you moved.

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If you bought a house in Metropolitan Phoenix within the past few years, you may be able to sell it at a profit.

Hard to believe, isn’t it? You can actually sell a home in Greater Phoenix and make money on the deal.

How can this be so? The long answer is long and boring, but the short answer yields a comprehensive truth in only two words: Market volatility.

We were a slow leak on the way down, until all of a sudden we were a fast leak. And then, just as suddenly, the market surged upward, gaining back a lot of lost price-pressure very quickly.

The result? If you bought a house in Phoenix or its suburbs within the past two or three years, it could be possible for you to sell that home and actually pocket some cash on the deal.

How much money could you scrape off the table?

Phoenix real estate: Sell your Phoenix homeIt could be a lot, actually. We’re getting ready to list a property where we expect the sellers to more than double their 20% down-payment in less than 15 months, total, since they closed on the home.

Your mileage will vary, of course, but you only need to beat your original purchase price by 7% or so to put yourself in the black — and home values are up more than 30% over the past year.

Okay, so you might be able to sell at a profit. Why would you do it? And why now?

The why is your question to answer: To move up to a better home, to move down to a house you can own free-and-clear, to move on to another part of the country, to get your money out of housing and put it into a business — your reasons are your own.

But why now? Because supplies of homes are very low, demand is insanely high — and because neither of these circumstances can last forever.

It could be that we’re back on the appreciation track for the foreseeable future, in which case holding out for higher prices makes sense.

But it also could be that the recent upsurge in prices is the eye of the hurricane, and continued foreclosures combined with other bad economic news could push home values down yet again.

I don’t know which will happen — but I know that no one else knows either.

But if you have a reason to sell your Phoenix-area home, we can make it sell quickly and for top dollar right now. If you want to explore your possibilities — and calculate your potential profits — drop me a line.

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Got equity? To sell your Metropolitan Phoenix home, marketing matters.

Phoenix real estate: Sell your Phoenix homeWith the recent surge in home prices, for the first time in years it matters how you market your home for sale in Greater Phoenix.

Lender-owned homes are sold like a grab-bag of garbage, take it or leave it. And while short-sellers might want to do a better job of marketing, typically they just don’t have the cash needed to do the job properly.

But now many homeowners in Phoenix, Scottsdale, Paradise Valley and the suburbs of Metropolitan Phoenix have equity in their homes. They have a chance to make some money when they put their homes up for sale.

And that little fact makes all the difference…

Why would you want to mount a serious marketing effort to sell your home? To sell it faster, for more money, with less hassle and to a better-qualified buyer.

Marketing always matters, but when the seller has equity on the closing table, a good marketing effort can pay off at $10 to $1 — or better.

We wrote the book on selling homes in Phoenix, a comprehensive, deeply detailed guide on what works and what doesn’t. If you’re thinking about selling, let’s talk about why marketing your home for sale can make all the difference.

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Don’t you love reading all that good news about the the Phoenix real estate market’s recovery? Guess what? You’re being lied to — as always.

This is what’s really happening: FannieMae and FreddieMac are holding foreclosed houses off the market, in anticipation of “selling” them to campaign donors.

Meanwhile, the town is being picked clean, with prices being bid up by buyers convinced that houses are going out of style — a story we’ve heard before, yes?

As an example, my BargainBot search, which is shared with hundreds of investors all over the world, is at less than 5% of it’s peak. A search I use to select premium rental homes produces one listing this morning, where it stood at 45 homes in April of 2011.

If Fannie and Freddie “sell” the homes they own to politically-connected “investors,” the rental market in Phoenix will be slaughtered.

And if they release the homes they have been hoarding into the MLS, Phoenix will hit a third bottom before the market can finally recover.

You can call the news media idiots or you can call them liars. But any news from any official source about Phoenix real estate is dangerously misleading.

Meanwhile, if you need to sell, your house will go for top-dollar at blinding speed.

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It’s hot and dry and gorgeous in the desert.

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The photo is from a house Cathy closed on Wednesday, a get-away-from-it-all mini-mansion way out in the desert. That’s what they call a street, when you get that far out. You can measure how clean the air is by the definition of my shadow, maybe sixty feet away. On the way home, we saw a yearling coyote on Dear Valley Road.

Our annual late summer “monsoon” is being pushed out of the Valley of the Sun by very hot, dry weather rolling in from the Mohave Desert. Within the next couple of weeks, we will shift back to the dry heat that makes Phoenix so perfect all winter long.

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This would seem to be the ideal time to remind people that there are places in this country where there is no snow on the ground…

…with Phoenix being the most beautiful and the most affordable, of course.

If you’re snowed in, stuck at home with nothing to do but surf the internet, the movie linked below will show you a better way of living…

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Here’s wishing you a Merry Christmas and health, wealth and happiness for the New Year!

Christmas is family and friends and lots and lots of food. It’s gifts and the spirit of giving and glad tidings of great joy. But Christmas is also the time of year when we think about the year just ending and the new year about to unfold. We are very lucky to be able to work with people we respect and admire, to be a part of life-changing events in the lives of those people. Never doubt our gratitude. We couldn’t run our business without you, of course. But our lives would be less joyous without the real estate roller-coaster we get to ride with you. Here’s wishing you every good thing a well-lived life can provide!

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When it comes to real estate, the news is mostly noise.

The Arizona Republic has taken to calling a bottom to the Phoenix real estate market about three times a month.

Like this: A certain subset of high-end homes are selling for more than expected, so the sour market must be over. New home builders are making brass-band noises by press release, so the drought must be ending. The number of homes listed as Sale Pending is rising, so happy days must be here again.

All of this is false, alas. We track the broader market, month-by-month, and allowing for silly tax-credit tricks, the long-term trend of the Phoenix real estate market has been downward since December of 2005.

Here’s the big picture, minus the hype:

Those are bread-and-butter suburban tract homes, so your mileage may vary — slightly. But with the exception of niche products — high-demand Scottsdale condominiums and some age-restricted housing — that’s a pretty clear picture of the real estate market as a whole in the Valley of the Sun.

Here are the past 13 months under a microscope:

I’ve been saying for years that no one should overpay in this market, but you can see for yourself that tax credits make people do foolish things. But what’s most interesting to me is that the gap between listed price and sold price is growing.

In other words, this market likes hard bargainers.

The bottom line? It’s a great time to be a buyer or an investor, it’s a lousy time to be a seller, and we are a long, long way from living in a healthy real estate market.

You can track our numbers as we record them here: The BloodhoundRealty.com Market Basket of Homes.

Better yet, you can see what you can get for your money — or for your house — by giving us a call or making a showing or listing appointment. Drop me an email or phone me at 602-740-7531 and let’s figure out how to take best advantage of this real estate market — as it really is.

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Practical examples of how we cherry-pick profitable rental home investments in the near-suburbs of Phoenix.

Phoenix handyman Mark Deermer and I took a look at five relatively inexpensive homes in Surprise, a northwest suburb of Phoenix, that could work well as rentals properties.

Our findings — with photos, links to MLS listings and projected financials — are linked here: Rental home investment possibilities in Surprise, Arizona.

Here is one of the properties we saw, as an example of the kinds of things we’re taking into account:

17410 West Lisbon Lane, Surprise, AZ 85388

17410 West Lisbon Lane, Surprise, AZ 85388

List price: $79,900. 3 bedrooms, 2.5 baths. 1,578 square feet. Courtesy of: RE/MAX Professionals. Google map. Schools: Elementary, Junior High, High School. Property tax record. MLS listing. Nearby homes for sale.

Estimated repair costs: $7515.

Estimated rent: $850.

Initial offer: $75,000.

I don’t hate offering less than that, but getting an offer accepted on a lender-owned home is always a game of double-think. The longer a property has languished — which usually means the worse its condition — the more flexible the bank will be on price.

Handyman Mark Deermer is touring these houses with me. His repair estimates take into account everything we see — stipulating that unseen problems may turn up when we do the home and wood inspections. But his estimate is the cost to turn any candidate home into a turn-key rental — a home you will be proud to own and your tenants will be proud to maintain.

When I project rents, I’m working from recent closed leases in the MLS for that size and style of home in that subdivision. I deliberately understate the numbers, because I want any variation to come as a happy surprise.

Also, I am hand-selecting the properties we look at. I eliminate a lot of towns and subdivisions because the tenant pool is not as deep as I want. I rarely even consider a home with a poor western exposure, since this will increase the air conditioning costs for the tenant — which will induce the tenant to rent someone else’s house instead. I tend to favor easy access to schools and shopping. And even when we visit a house that meets all these criteria, I may eliminate it if I don’t like the floorplan — or just the feel of the home.

This is the lay of the land: Phoenix has always been a soft rental market, but the homes I pick tend to rent quickly to premium tenants, they tend to stay rented, they tend to suffer little vacancy between tenants, and they should sell quickly and at a premium price to owner-occupants on the way out.

We’re doing everything we can to maximize the profit potential of the homes we sell. If you click through to this weblog post and follow its links, you can find out a lot more about Bloodhound Realty’s rental property investment philosophy. But the bottom line is the bottom line: You’re investing in rental homes to make money. We’re cherry-picking (and cherry-polishing!) just the right houses to make sure you do.

There are 30,000 Realtors in Metropolitan Phoenix. Why should you work with us when you’re ready to invest your heard-earned dollars? Because we’ve thought this problem through, and we’ve arrived at what we think is an optimal solution to maximize your profits and minimize your headaches. Prices are low, interest rates are low, and, if you get just the right house and serve it up just right to the marketplace, there is money to be made in suburban Phoenix. Drop me an email or phone me at 602-740-7531 and let’s talk about making some of that money for you and your family.

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Arizona unemployment rate falls; 19,500 jobs added

From the Arizona Republic:

Arizona’s job picture brightened considerably with an increase of 19,500 jobs in April, the largest number of new hires in the month of April since 2005, the Arizona Department of Commerce reported Thursday.

The state’s unemployment rate fell to 9.5 percent in April from 9.6 percent in March and remained below the national rate of 9.9 percent.

The overall number of non-farm jobs was still below the level a year earlier, but by only 1.6 percent. The over-the-year job losses have been shrinking steadily since August.

Many of the new hires were at leisure and hospitality businesses — which include hotels, resorts, restaurants and bars — and at retailers, temporary-service agencies and the U.S. Census Bureau, said Rick Van Sickle, a department analyst.

For the second month in a row, the leisure and hospitality sector had the highest gains. It added 5,000 jobs in April.

“There’s an indicator of some confidence,” Van Sickle said. “It looks like people are starting to spend discretionary money, at least last month.”

Unfortunately, hospitality businesses are the most vulnerable to travel boycotts announced by cities and groups objecting to Arizona’s new immigration law that takes effect July 29.

The law makes it a state crime to be in the country illegally. It states that an officer engaged in a lawful stop, detention or arrest shall, when practicable, ask about a person’s legal status when reasonable suspicion exists that the person is in the U.S. illegally.

Van Sickle said the department would not be able to accurately track the effects of the law because the job data it collects is not that detailed and the number of hospitality workers typically falls as hot weather approaches.

“There’s boycotts. There’s buycotts (efforts to get people to buy Arizona products to protest boycotts). There’s counter boycotts. There’s hot weather coming. There’s all those factors that are going to come into play,” he said.

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A more active kind of real estate investment: Fixing and flipping distressed homes for fun and profit.

Handyman Mark Deermer and I have been planning for this for a while: We’re going to ride the Phoenix real estate market back up by fixing and flipping some of the (many, many) distressed homes we work with. We’ve fixed up quite a few homes for buy-and-hold investors, and this is the logical next step in our praxis.

As with buying rental homes, it’s a matter of property selection before anything else. The right home, in turn-key condition, will sell at a substantial premium over its distress-sale price. By buying the right MLS-listed and court-house-steps properties, we can net out significant returns after all expenses.

Buying right is everything, of course. If we overpay on the way in, we’ll have trouble extricating ourselves on the way out. We’re doing this now because the market in Greater Phoenix has reached a point where the math works fairly consistently. Houses that will flip profitably are still not common, but we’re to the point where they’re one among hundreds, rather than one among thousands.

The second step in the process is handling the refurbishing wisely and well — and quickly. Our goal is to get our properties back on the market within four days of taking possession of them. And we won’t be doing wish-and-a-promise fix-ups. Every house we do will have all new interior paint, all new flooring, all new window treatments and all new kitchen appliances. We want to give our buyers that model-home feeling — because they’ll pay more for homes that are white-glove clean and move-in ready.

And the third step is marketing, a process we get better at with every passing day. The homes we’ll be flipping will be completely refurbished, but they will also be staged for sale, with the kind of tasteful decorator touches that make people feel at home. We’ll build a marketing web site for each home, showing off what we’ve done with before and after pictures, and documenting the remodeling — both to defend the sales price and to assist the appraiser in seeing our justification for the sales price.

We’ll be pricing aggressively to the market, as well, thus to turn the money over more quickly. Our goal is to go from sold to sold in two months or less — with each investor’s money turning over six or more times a year.

Do you have stars in your eyes? The profit per home will not be huge. But because the money is turning over so rapidly, the annualized return-on-investment could be very substantial.

Why am I writing this? Because we need money to make this work. I’m going to be the marketing partner in the partnerships we’re putting together. Mark is going to be the work partner. What we need are finance partners.

The kind of houses we’re going to be working with are going to require around $100,000 in capital each. That will pay the acquisition costs plus the cost of refurbishing the home. Everything else — closing costs and unpaid liens — can be paid out of the resale proceeds at Close of Escrow. But each Limited Liability Corporation we put together is going to want $100,000 in seed capital. This can come from one or more finance partners, and the seed capital will be restored to the LLC after each house is sold, before any profits are disbursed.

Here’s the way to figure this: Even if the investor’s ROI is only 5% per flip, if we can turn that money over six times in a year, that’s a 30% annualized return. That’s good money by anyone’s standards — and the returns only stand to improve when the Phoenix real estate market finally gets back to an upward trajectory.

But what about down markets? God help us, it could happen. But this is why we’re working to sell the properties so quickly — and at aggressive prices — to get our money in and out before we can lose too much to declining values.

I’m not blowing smoke up anyone’s nose. We’ve been working on this problem for a year-and-a-half, all to make the numbers work. I’ll be documenting out projects here, so you can see what we’re up to.

Meanwhile, if you want to get in on this opportunity, speak up. We’re going to put together up to twenty of these partnerships, flipping as many as ten homes a month. This is a lot more aggressive than buy-and-hold investing — and a lot more risky, of course. But we’re offering the potential for truly astounding annualized returns. If you want to get involved in real estate on the supply side, here’s your chance.

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For rental home investors in metropolitan Phoenix, the perfect storm is almost upon us.

I have a lot of investor clients, folks who want to buy rental homes in greater Phoenix — to buy and hold them as long-term investments. Early last fall and again late this spring I have advised many of them to sit tight, to wait the market out.

What are we waiting for?

The final lapsing of the first-time home-buyers’ tax credit. We can be quietly delighted for all the nice folks who were able to get into houses because of the tax credit. But it remains that those sweet people were driving up home prices, making it difficult for investors to latch onto better-quality rental homes.

All that changes this week. The tax credit lapses on April 30th, so we should start to see a significant increase in available properties. Still better, it will be easier to negotiate deals with sellers, and prices should be more attractive.

The first round of the tax credit, last summer and fall, had a much more profound impact on the real estate market. For the kind of stucco and tile suburban homes I like to buy for investors, prices last fall looked like this:

September 2009: +3.15%
October 2009: +2.14%
November 2009: +2.22%
December 2009: -8.03%

That’s a $10,371 drop in average sales prices from November to December. Demand from first-timers has been lighter in this second installment of the tax-credit, but inventories of the homes I’m most interested in for investors have declined by 20% from the start of the year. More significantly, it’s the choice homes that are being cherry-picked, the ones that need the least work to make them rent-ready.

All of which means that we are on the cusp of a perfect storm for real estate investors: Good homes at very attractive prices. Money is still every cheap, if you need a mortgage, and rents are holding firm. There is no appreciation in sight, of course, but positive cash flow is easy from the first tenant.

I’ve written a guide about how out-of-state investors can make good money investing in Phoenix-area rental homes. If you want to discuss this in detail, you can phone me – Greg Swann – at 602-740-7531 or shoot me an email.

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