Arizona Real Estate Specialists

This is part III (the final section) of a series I wrote for publication regarding the Phoenix real estate investor market. I was asked the question: What are the best opportunities for real estate investment, why?

I responded that my clients are currently finding most success in these sectors:

Any area in which there is positive cash flow potential. Wherever an investor’s income exceeds expenses you’re going to have a viable market. It’s remarkable to me that so few pay attention to this detail. Of the many homes on the market today a minority have positive cashflow potential. I’m always on the lookout for these properties. Of course, I also advise the client to look for equity potential. Cash flow is good but you also want to be able to have a rise in equity over time. Some cash flow properties may offer minimal equity growth.

Homes near Arizona State University. Students need housing and the elderly also find amenities near colleges. If you look at the “days on market” and pricing at homes near major universities you’ll see that these areas have great potential- it simply requires due diligence to see which neighborhoods are better bets. Homes that are within "walking distance" are performing better than those that are within driving distance. The wild card in this is light rail. Some properties near light rail are beginning to "perform" as investment opportunities.

New Homes. Large builders quit simply have to sell sufficient quantities to satisfy their shareholders. The larger builders, those which are publicly traded, will tend to more aggressively price their homes. A drop in stock value of a few dollars could make for a dramatic devaluation of market worth so builder will do whatever they need to do to appear to be beating the odds… this includes discounting, incentives and allowing investors to purchase new homes. Whenever builders discount there are two opportunities: first time home buyers can enter the market. In some cases they’ll find that their mortgage is less than rent (even without factoring in the terrific tax advantages.) Investors, where allowed by builders, also discover an advantage … it’s sometimes possible to purchase new homes that rent for prices greater than their expenses. So… they have cashflow as well as a potential for an equity-build when the market corrects itself. Also- new homes come with warranties… there’s a lower likelihood of receiving that 3 a.m. phone call about the leaking pipes or other concerns.

Homes located closer to work. Arizona has become a commuter state. We weren’t that way before but it has become our new reality. People have become amenable to driving a greater distance if it meant they could get more-house-for-their-money. This is changing for many as higher gas prices and longer commute times become a part of the picture. I’m showing more homes in the heart of the valley than I was two months ago. In the well maintained urban areas I’m seeing that prices are beginning to rise and homes are selling more quickly. The competition has heated up and buyers are far less likely to make low offers. It’s too soon to know if this is a market correction or a short term trend but I’m guessing we’ll see more of this for the next few months.

Land- In my opinion, this is the biggest speculative area right now. For those who have cash and can afford to sit and wait there are some bargains out there. For those who need to borrow they’ll discover one thing: banks don’t quite know how to value land right now. They’re far more comfortable assessing the value of land with a building. Then they can compare the use against similar residential properties or business. Land without tenants, or a commercial purpose, are a wild card. I’ve seen appraisals come in with prices that are all over the map. Large scale investors have been buying up land as secretively as possible in the past year. Although there are many bargains out there as some cash strapped people are selling off property … land near fast growing cities, and highways (current and planned) are becoming harder to find at a low price.

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Looking for property in Arizona? Search the MLS at my site: www.AZvest.com

As many real estate investors have noticed, the housing market hit critical mass a few years ago... the access to easy money and a wild upswing in potential equity creation brought a great excitement to the market.

Speculators arrived- both seasoned and new. Fortunes were gained and lost.

Now the challenge is to look at the current market... to assess the traps and pitfalls while also looking for the diamonds in the rough.

I'm Chuck Willman, a real estate agent based in the Phoenix, Arizona metro area. This is what I do on a daily basis... look for opportunities.

A couple weeks ago a reporter asked me the following:

How have real estate values been changing in the Phoenix Market over the past two years, and are they expected to continue on this trend?

Here's Part II of a series I wrote for publication regarding the Phoenix real estate investor market.

It seems everyone discovered Arizona in 2004-2005.

• Californians cashed in on their homes and bought a place in Arizona for pennies on the dollar.

• Snowbirds, worried about the massive weather disturbances of the southeastern coastal cities began to eye the southwest as a safer destination.

• Students flocked to our universities- when it’s snowing outside and you’re seeing spectators watching football games in short sleeve shirts you begin to think ASU sounds like a good idea.

A Rising Popularity: We became very popular quite quickly. Our market suddenly had more potential buyers than sellers. Prices doubled and, in some areas, tripled very quickly. Homes that had sat on the market for weeks began to receive multiple offers. It caught most everyone, even the most optimistic investor, off guard. Easy money became available… there appeared to be no end in sight for the price rise. It seemed that anyone who had ever contemplated the possibility of making money on their home, or moving up put to a nicer house, placed their homes on the market.

Invasion of the Home Builders: Every large builder in the nation either flocked to the valley or increased the building pace. They had seen that the more specs they built- the more quickly their communities sold out. Many communities had waiting lists- buyers purchased homes via lottery… those whose numbers were drawn from a hat “won” the rights to purchase. So the builders did the logical thing- they built homes as fast as they could to satisfy the demand… a demand that was soon satiated. As a result, builder inventory is now greater than demand. Prices fell dramatically and buyers were greeted with extraordinary incentives. Some builders have left the market and some of the smaller builders have gone out of business. While there is much doom and gloom in the press about new home builders I’m seeing some light at the end of the tunnel. There are a few builders that are moving quite a bit of inventory. And it’s only plausible- they’re making their homes very easy to buy. I’ve even see a few builders begin to issue their first price increases.

Market Correction: When the correction hit, many of the less savvy investors who had over-extended themselves discovered that they couldn’t find renters to cover their expenses. We’re currently seeing the fall out of the investor scramble. We’ll continue to see this for the next year or more.

Phoenix Beginning to Rise: Homes in the far flung sections of the valley are going to continue to face pricing pressures. There is room for prices continue to fall. Meanwhile, existing homes in the heart of the valley… those closest to Phoenix are beginning to see better activity. I’m running up against multiple offers in these areas... in a way, it’s starting to feel a little bit like early 2004.

To a large extent the increased activity, by investor and traditional home buyer alike, is driven by these factors:

• Increased gas prices.

• The Fed’s recent hint that we may have seen the last of rate cuts for a while.

• The potential for rising interest rates- as a measure to curb inflation.

• Pent-up demand among the fence-sitters… those who’ve needed a home and can no longer wait for the best deal.

• Sellers accepting the new reality that they can’t hit a home run on their asking price… they’ve begun price thier homes closer to the going sales price of the neighborhood.

• Savvy investors are noticing the signs of the bottoming out of the market- they see that certain areas are rebounding and are beginning to purchase again.

"I wanna see stars." Steve said.

That was his answer to the question, "what's the most important thing you're looking for in your home search?"

His answer struck for a variety of reasons.

First, I recall seeing stars as a kid. I'd just seen the movie "Mary Poppins".

I took my mom's new umbrella to the roof.

Jumped off.

You can guess the rest.

The umbrella inverted and I sunk like a rock... landing flat-footed- then rolling... I discovered what it feels like to have the wind knocked out of you. Stars spun 'round my vista like furious fire-flies.

But this wasn't what Steve was talking about. Here's how he explained it:

"When I was young we lived in town. The main drag had a few high powered street lights. My bedroom always had a faint glow. Then we moved to the outskirts. Our first day in the new home was marred by one thing- it was summer and we had no electricity yet. So, we slept outdoors- under the stars. On that first night I couldn't sleep. I was caught up in the beauty of the universe and wondered about my place in it. Any time I'm dealing with a perplexing issue I like to re-create that night. I go outside. Flop myself down and look at the night sky. Soon enough my thoughts form themselves and I know how to tackle the situations before me. So... you can see my predicament. Sure- I can see the night sky. But with all this light pollution surrounding us I need to find that place away from the street lights. Can you find me a home that let's me see the stars?"

In an instant I knew what he was talking about.

As a 12 year old I had a paper route. I lived on a military base and many of my subscribers were pilots. I found if I delivered the papers before 4 a.m. the pilots would be able to read the paper before flight training. This act- the early delivery led to many tips- the bonus of good service.

If you've ever seen the sky at 3 a.m., the stars are piercing and the sky serene. As I peddled from one house ot the next I couldn't help but think about the universe and my place in it.

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Steve is not alone. There's a growing concern by citizens of the industrial nations of the world. There's a "dark sky movement" about... people are trying to fight the effects of light pollution. The abundance of light we humans desire has a consequence... from the practical to the poetic:

• Man-made light is a drain on energy reserves.

• City observatories (such as Griffith's Observatory in Los Angeles) are rendered useless for astronomy. (See comments section for further clarification.)
  

• The sense of wonder derived from seeing the stars is being lost on each generation.

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Phoenix is a major city.

Anyone driving into the valley may (depending on the route) see the light of the city an hour before arrival.

This does not mean the stars can not be seen.

Several new neighborhoods on the outskirts have light-reduction ordinances.

In these neighborhoods lighting is kept to a minimum.

Some don't like this... for them street lights mean less crime... higher safety.

I understand these concerns.

However- there is the flip side.

In such homes you can go out back.

Flop down on the cool ground.

Look up into the expanse of the night sky.

Let the day give way.

And experience the wonder of this world.

And your place in it.

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Chuck Willman is a real estate agent based in the Phoenix metro area. He can be found at NewHomesAZ.com.

 

I don’t know who first said it, but there’s a phrase thrown around town to describe Phoenix - It’s that “the business of Phoenix is growth.”

I'm Chuck Willman, a real estate agent based in the Phoenix metro area. Here's Part I of a series I wrote for publication regarding the Phoenix market.

Market Concerns: Whether you look at education, commerce or other market concerns- we all face the same dilemma… almost every economic, political or social decision has a growth component that has to be considered.

For local governmental leaders, one doesn’t want to be too optimistic and overbuild or too pessimistic and underfund. The wheels of government tend to move slowly in most places… these growing pains are most prevalent in the cities that have seen the most growth.

Growth brings challenges such as ensuring that our students have schools that will meet the needs of a growing populace. I’ve got to hand it to the local school districts- they’ve been remarkable in their ability to plan ahead.

Business I’m less concerned about. Adam Smith’s “invisible hand” is working very well here… there always seems to be smart business people who know how to take advantage of a good thing when they see it. I’m pleasantly surprised that- for as fast as Phoenix continues to grow, we still keep making those lists of “great places to start a business.”

Our job market is quite strong. In some sectors we’re down but we seem to have overcome the hurdle of being narrowly focused in business.

We’re far more well-rounded than we were before the last economic boom and are now less reliant on the traditional markets of tourism and construction. Bigger businesses have moved in, mom and pops are doing well and distance workers are finding that they don’t need to be in the big city to perform their jobs… this valley provides a safety net. Those who had to go elsewhere to find high tech or other specialized jobs are finding that they can ply their trade here.

What I’m most excited about is this… the “Pure Growth Factor” - the population influx that we’re still experiencing has a very positive long term effect on the area. Phoenix is now the fifth largest city in America. Though we have plenty of room to absorb more people geographically… at some point scarcity will exert a few realities on the market. We may not be paying New York, Los Angeles and Chicago prices for real estate right now… but at some point we will.

I guess the easiest way to say it is this: time heals even poor real estate buying decisions. Where there is little population growth you may not live long enough to realize profits from a poor real estate investing decision. Where there’s a continual population rush there’s bound to be appreciation- if not now… certainly in the coming years. In other words- even the inexperienced investor might see their bad investment correct itself just be allowing enough time to reach positive equity. I don’t encourage this thinking- but it’s nice to know there’s a potential safety net to help those who've found themselves in an upside down equity position.

Summarizing: for the long term investor it’s hard not to give Phoenix a very good look. If this population continues to grow (some experts say we’ll double in population within the next two decades… others say three) as is projected- that’s very good news for those who decide to own a piece of property here. There’s great upside to purchasing big city property at little city prices.

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Chuck Willman is the founding member of AZvest ... a collection of investment minded individuals with an interest in Arizona real estate.

As I pulled in the driveway this afternoon,

this was among the artwork

that graced the driveway.

Please indulge me for one moment.

This post has nothing to do with real estate...

... it's just a note to my dear friends.

Today marks a special occasion.

Twenty five years ago I became to the most fortunate man in the world.

...and here we are...

...six wonderful kids...

and one grandchild later.

Life could not be better.

I'm looking forward to the next 25... and the 25 after that... and, with technology, who knows?

The Sun Devils are playing for a shot at the National Championship!

Wait... which Sun Devils?

How about the team with the bats gloves and helmets... both of them

Arizona State University's Sun Devils Women's Softball Team is headed their third straight College World Series.

This was made possible by a post season in which they outscored their opponents 32-1.

ASU Men's Baseball team finished the season with a second straight Pac 10 Championship.

The Sun Devils will feel at home as Tempe will also host the regionals for the third time in four years.

For those unable to attend the games, ASU's official site has links to streaming media.

This is how I caught the games last year... live on my smart phone.

Go Sun Devils!

There's a new service that allows movers to set up the services for their destination.

It's a site called WhiteFence.

Sure... it has it's own self-promotion things going, but appears to offer one-stop convenience for those who are about to set sail for a new destination.

For those who are investigating a new area, it may be worth checking out

Among the services that they cover are:

• Home Phone
• Internet
• Television Services
• Utilities
• Bundled Services
• Change of Address
• Moving services.

They also have a "lower my bills" type of service which price-checks the services..

For those looking to relocate to Arizona- check out my site www.NewHomesAZ.com

I'm a real estate agent who helps buyers find a new or existing home- this is done at no cost.

The financial pages keep the daily count... profits earned and lost.

Tales of magnificent gains and catastrophic losses.

Time erases these inequities. After all, in the end- it's just money.

Debt- at its simplest is defined as "something owed".

At the approach of Memorial Day I'm having trouble with this definition.

Am I owed anything?

I have so much: a loving family. freedom. the privilege to choose my career. the right to say what I please. the power to select my leaders. the agency to disagree with them without censure. I have roads to drive on. Beautiful parks maintained to perfection. Access to information. I could go on.

And why do I have this?

Because enough people decided it was necessary.

So necessary that they were willing to stake their life on it.

I have the opposite of debt.

I have privilege.

And someone else has paid for it.

To all those who've chosen to serve their country.

I wish I could say something more profound than "thank you".

I owe everything to you... you've paid a debt you didn't owe anyone.

And I can never fully repay you- but please know I appreciate it.

More than words can express.

Welcome to your humble Abode. I mean Abōd®.

What it is: A home that is shipped in a box.

Components: Plexiglass Panels and corrugated metal.

Assembly: Four guys sharing a screwdriver and an awl. (Six packs sold separately.)

How do I get one?: Check out this website- myabod

Manufacturer's Slogan: “Every family deserves to live in a home designed by an architect.”

Architects have been challenged to find a way to build long lasting homes quickly, at a low cost. BSB Design rose to the challenge; the result is Abōd® homes. These modular designed homes literally arrive in a box. They can be assembled in a variety of ways by those who need little skill. The result is a low cost home built to withstand two to three decades of use. It's the ultimate low-income starter home for the third world.

Check out their gallery.

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If you'd like to find your next abode in Arizona see Chuck Willman of NewHomesAZ.com.

 

Having been an occasional reader of NuWire Investor it came as quite a surprise to have them give me a call last week.

NuWire tackles issues related to investing. They perform first person interviews and combine that with intensive reasearch to bring their audience a balanced view of the varied markets across the country and around the world.

I was one of the persons interviewed for an article regarding the current conditions for investors in the Phoenix market.

Today the story appeared and I must congratulate the author, Melana Yanos, as I feel she did an outstanding job capturing a current snapshot of the local market conditions.

Rather than give you a summary, it would probably better to have you read it. Here is the link:

Real Estate in Phoenix, Ready to Rebound?

I'd love feedback... let me know what you think. Of course, I'm always willing to expound on areas that may be of interest you.

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Chuck Willman is the founder of AZvest, a collection of investment minded individuals interested in Arizona real estate. See more at www.AZvest.com.