Looking for $25,000 to $30,000 to purchase an SFR in a highly-desirable area of Scottsdale, Arizona. This home is in a gate-guarded community and has been a rental for the last 2+ years. Current comps show properties in the same subdivision with the approx. same amount of square footage listed at $420,000 to $450,000. An appraiser friend of mine says it should appraise between $417,000 to $420,000. I can purchase it direct from the owner for $349,000. While it’s very livable as is, it could use some updating. Its construction is circa 1979-80, and most of it is still original. Will share title with a lender/investor whose exit from the deal will come when it’s either refinanced or the property is sold. Where should I look for potential partners?
Nuwest,
From the information you posted this deal sounds like a serious clunker. At $349,000 you are paying 83% of retail value. Not a good deal by anyone’s standards let alone in Phoenix. I am working on a deal for a customer in Tempe right now and he is paying 175K for a property that was worth 320K about 18 months ago. Unless you are getting some cash back (which would be illegal) you are way overpaying for this house.
Christopher,
Thanks for the input, but Tempe and/or Phoenix are not Scottsdale. It’s possible to find truly smokin’ deals such as the one you described in different spots in and around the “Valley of the Sun”… even better in fact. But, those kind of deals rarely turn up in Scottsdale. Overall, Scottsdale is a bit more affluent than the rest of the Valley. And, these days while you can find some “bargains” here… that only means you can buy at some price under market value. That doesn’t usually translate to anything close to a fire sale. The deal I described, given its location, is about as good as it gets for its zipcode.
Nu,
Scottsdale is nice. I visited there last year over the Christmas holiday. Right down the street from the TPC course. I still think that this deal will not work as a rental. Do you have funds to add to the 25-30K you are looking for? If not, then your payment will definitely have MI on it which can seriously eat into your cashflow. Even at a .52 MI factor you will be looking at $150 a month in MI. What is the current rent on the property?
Although the present owner has used the property as a rental, I was looking at it for an owner-occupied property, or as a place to live. Sorry, if I gave the impression I was approaching it as an investment for a rental property. I was interested in living in it, and fixing and updating it during that time. Later, depending on how things looked with the economy, I’d either look to refinancing it to provide an exit for the partner or sell it.
If u are planning on occupying this home as your primary residence you could get into this house for under 3K out of pocket total. The next question is can you qualify for the payment. You would probably be looking at $2400 per month.