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Phoenix Real Estate News & Trends
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This Month's Newsletter
Featured Report
Investment Strategies for Phoenix Real Estate
Our investor clients appreciate that we care about their financial returns enough to provide information and ask the right questions regarding the amount of investment and type of properties that best suit their needs. Click HERE
for Entire Article >>>
Also this month:
Surge of Investment Funds in the Market
Investors are buying up property quicker than ever and the Phoenix market is certainly no exception. More...
Risky Mortgages
The rising popularity of non-traditional mortgages such as interest-only loans, adjustable-rate mortgages, and low or no-doc loans has some experts worried this could mean financial trouble for both borrowers and lenders. More...
Investment Strategies for Phoenix Real Estate
by Andrea Messenger
May 27, 2005
Our investor clients appreciate that we care about their financial returns enough to provide information and ask the right questions regarding the amount of investment and type of properties that best suit their needs. There are many hyped-up programs out there who tout how easy it is to invest in real estate with little or no money down and to flip or rent the properties for an enormous profit. Be cautious! These folks only want you to buy their books and seminars – many people lose money following their advice. It is important to hire a real estate professional who knows the market where you intend to invest and who will provide the right information and ask the right questions to help you determine what your best investment will be. The Jim Messenger real estate team is the right team for the job!
One client in particular came to Phoenix wanting to spread out their investment on approximately 10 rental properties putting very little money down on each property. While that may be an appropriate strategy for some, their finances were such that if a rental war began in the near future and they had to lower their rent below their debt service costs, they could not afford to keep all the properties. With more investors entering the rental market, rents in some markets are already beginning to fall and investors need to be aware that this could happen to them. Some investors hope that continued appreciation will make their deals more profitable, however, “this get-rich-quick formula [is] more dangerous” when investors don’t consider that low rents will not cover expenses and debt service costs.1
The client we mentioned above decided to purchase 5 properties with more money down to reduce their debt service costs. They can now enjoy a nice monthly cash flow from rents along with a great appreciation rate while being in a much more comfortable debt to income position. This was the right strategy for their situation, and they are glad they chose the Jim Messenger real estate team to guide them through the complexities of investing in Phoenix real estate.
1 “As Prices Rise, Homeowners Go Deep in Debt to Buy Real Estate,” James R Hagerty and Ruth Simon. The Wall Street Journal. May 23, 2005, page A1.
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