Hi everyone, I’m a 23 year old college student currently attending ASU in Phoenix, AZ. I just moved out here about 5 months ago from Columbia, MO. I’m currently saving cash and working on getting my credit score up to par, so that I can start investing in real estate at some point in the future.
My problem is, I really like it here, but it seems like there are already a billion competitors in the REI industry here. I see ads about “we buy houses” pretty much every single day. I’m told that this is because all of the investors are coming down from California and buying everything up. Is there any hope for a beginner in this market or should I start thinking about moving back home? :-/
PS, My main interest is in developing positive cash flow - I’m assuming through SFRs at the beginning, but then eventually moving into apartments when I can afford it.
Currently I go to school full time and work (a good job) the rest. So I’m not sure how well I’d do trying to bird dog - though perhaps this summer I could do that. I mean, if I’m spending a lot of time to find a sweet deal, I’d prefer to be the one who gets the payoff.
Consider Lease Options. There are so many investors in Phoenix that rents are lower than normal. Getting cash flow is difficult wihtout a significant down payment in that market. Get a long term lease for a below market rent and then live in it for a while till rents come up. Then sell your option and assign the lease for a fee. Keep in mind that most Lease contracts contain language that state you cannot sub-let or assign. You will need to negotiate this with the owner/agent.
Another thing you can do is look for the homes that some investor bought for $250-300k and is trying to flip for $100-200k profit. Many of them are carrying the property because the builder said they could not rent or sell within the first year without a penalty. They may be desperate to unload if they are carrying too many properties.
Back home is Columbia, MO and it doesn’t seem like there’s that much activity there that I can see. Rents seem fairly low, but then again, so are the prices. Like, 300k there would buy a HUGE house as opposed to the 300k here that buys a regular house.
Real Estate works kind of the same no matter wher you are. It moves a little faster or slower or the amounts are bigger or smaller, but in general you can buy a house in all 50 states and rent it for more than the costs. You can also buy a house and rent it for less than the costs. You have to look at each deal and decide if there is money there or not.
What do you want to do? I am a buy and rent guy now, but in 2006 I plan to buy about 20 houses. This should net me about $8500/month in rents. I will flip those that are flippable (minimum $20k net per deal) and hold and rent the rest. My goal is to make enough cash flow off my rents that I don’t work (a job) anymore. I will keep myself busy by buying fixing up and selling.
You need to get your strategy and stick to it no matter where you are.