Real Estate Investing in Phoenix - the Florida of the West 🏜️
Market Trends
If Elon Musk fails in his quest to colonize Mars, at least America will have the next best thing in Phoenix, AZ. Whether it's golf, red rock formations or the fry bread, there's something for everyone in the Florida of the west. After all, the free-spiritedness of both of these states lends itself to a certain ✨je ne sais quoi ✨ that comes through in the fun but concerning news article headlines.
Resident extracurricular activities aside though, Phoenix, Arizona is a bustling city with a strong real estate market. Although its prices and cash-flow are definitely not what they used to be, there are definitely deals to be found here. With its sunny weather, strong job market, and large influx of Californians who took one look at Arizona and dared not risk Austin, we'd recommend every wild-west-oriented investor checks it out. In this blog post, we’ll take a look at the best neighborhoods to invest in, and the average cash flow you can expect.
Top Neighborhoods for Investment
1. Melrose Woodlea The Melrose Woodlea neighborhood in Phoenix is one of the most promising areas for real estate investment. This neighborhood, known for its idyllic, tree-lined streets, and vintage mid-century modern homes, is undergoing a rapid and positive transformation. Surrounded by other gentrified neighborhoods, Melrose Woodlea is experiencing an influx of interest from both local homebuyers and investors. The convenient access to public transportation is one of the major draws, providing easy commute options downtown Phoenix via Valley Metro Rail (always handy if your tenant has had one too many on a Friday night). The community is blessed with several amenities such as schools, hospitals, gyms, and parks. Furthermore, the city of Phoenix is pushing for adaptive reuse projects to update old buildings in this area, with one example being the Royale - an old body shop turned small business collective. If you're looking for a real estate investment opportunity with potential for strong returns in a rapidly gentrifying area, Melrose Woodlea should definitely be on your radar.
- North Encanto Nestled within the heart of Phoenix, North Encanto is a gem for real estate investment. This vibrant neighborhood has a median home price of $555,000 which might sound steep, but this community is equally close to downtown and also surrounded by amenities! The neighbourhood is a stone's throw away from Phoenix college and is close to both the Encanto golf course and the historic Norton House, making it an attractive locale for families and young professionals alike.
- Roosen Gardens Strategically located between Phoenix and Tempe, this neighborhood that is a gem for real estate investment. What makes this area particularly appealing are the gorgeous views that come as part of the package. Imagine waking up to breathtaking landscapes every morning, right from the comfort of your own home. Roosevelt Gardens is only 5 minutes away from the renowned Pima Canyon hiking trail, making it a perfect spot for nature enthusiasts and fitness buffs. For the sporting fans, it's only 10 minutes from Diablo Stadium. Transportation links are excellent, with a 10 minute drive to Phoenix Sky Harbor (America's self-proclaimed friendliest airport), and easy access to I-10. With 6% YoY appreciation for Sep. 22 - '23 according to Redfin, and a median sale price of around $350k, this is not one to miss.
- Ahwatukee Lying at the base of South Mountain Park, Ahwatukee is a hidden treasure for real estate investment. This picturesque neighborhood boasts a median sale price of $500k, demonstrating its desirability and robust real estate market. But what's more exciting is the staggering 17% year-on-year appreciation from Sep. '22 - '23, which is a testament to its rapidly growing value. This growth could also increase further after the Phoenix city council unanimously approved a development project to bring 400 apartments to this area. Ahwatukee’s unique combination of natural beauty, low crime rates, and bustling local amenities make it a prime location for both families and professionals.
Lowball. Lowball. Lowball.
As you may have heard, interest rates are high right now. Very high. Which is why if you're looking for cash-flow in Phoenix on a 20% down payment and a 7-8% interest rate, you're not going to find much. The city's growing popularity in the last decade have led to escalating property values, which means mortgage payments are gobbling up rental income, and then some. These market dynamics underscore the need for a more aggressive investment strategy. As our friend Ben Mallah says, now's the time to lowball! By bidding below the asking price, you can secure properties at a cost that ensures a positive cash flow, despite the high interest rates. Remember, the goal is to make your profit when you buy, not just when you sell. So, put on your negotiating hats, and start lowballing!