Phoenix Real Estate and Community News

March 29, 2021

Revealed: The Top 5 High Schools in Phoenix, Arizona

Best High Schools in Phoenix Arizona

Phoenix is a beautiful city in, and the state capital of, Arizona. Home to nearly 1.7 million residents Phoenix is also the most populated city within the state. The exciting and vibrant city is home to an array of amenities which include restaurants, shopping districts, entertainment venues, medical facilities and top rated schools. 

With such a large population, Phoenix has a large educational system which is administered through a total of 33 school districts. Of those districts, 4 are high school districts, of which, 3 only partially serve the city. Regardless of which district you reside in, the city is filled with many excellent educational facilities which serve students for their high school years. 

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Posted in Uncategorized
March 29, 2021

Revealed: The Top 10 Neighborhoods in Phoenix, Arizona

Best Neighborhoods To Live In Phoenix, Arizona

Phoenix, Arizona is a thriving and diverse city which is not only the state capital but the most populated city as well. Being home to over 1.5 million residents, Phoenix is filled with many amazing features which include amenities, schools, entertainment venues, business districts and much more. 

Some of the best neighborhoods in Arizona can be found in the exciting city of Phoenix. From family friendly suburbs to hip and cool urban centers, Phoenix offers an eclectic mix of communities which suit each and every walk of life. 

Below is a snapshot of 10 of the best neighborhoods located in Phoenix, Arizona and a few of the reasons why residents have come to love calling them home. 

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Posted in Uncategorized
Jan. 27, 2021

The Ultimate Guide to Buying a Phoenix Investment Property

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Investment properties in Phoenix are extremely popular.

There are many reasons why you may want to purchase a rental property.

Suppose you have a child attending college in Arizona. It may make more sense to purchase a property versus having them rent for four years or longer. Owning the property can provide your child with stable accommodation and save money in the long run.

Suppose you’re looking to become a real estate investor in Phoenix and start to build your portfolio and generate additional income. Suppose you’ve decided that you’re ready to take on the role of landlord and you want to own a rental property in Phoenix. In that case, the first step is finding a reputable realtor who is an area expert with experience with rental properties.

First, you should consider your goals.

 Are you looking for a short-term or long-term investment?

 What is your objective?

 Do you want to purchase a fixer-upper at a lower price, or do you want to have it move-in ready immediately?

 What is your budget?

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Suppose you decide to fix up your property and flip it. In that case, it’s not considered an investment, which does not qualify as a 1031 tax-deferred exchange or other tax breaks.

A 1031 Exchange is a way for sellers to part with their investment property and roll the profits into another investment property sale. A 1031 can be used for residential and commercial properties, but the investor must follow the rules outlined by the 1031 Exchange.

Choosing a real estate professional who has plenty of experience with this exchange is essential for tax purposes.

Something you may want to consider is having a buyer consultation. Many realtors offer a free consultation to discuss your wants and needs as a buyer. If you’re a new investor, this can be helpful for both you and your realtor, or if you’re a seasoned investor, you likely know what you’re looking for.

An investment property is slightly different from meeting with a realtor about a home you’re looking to live in. A home for your family needs to meet your needs and align with your lifestyle. A rental property looks a bit different, as it should consider maintenance levels, cash flow, what needs to be upgraded immediately and should make sense as an investment.

An investment home doesn’t need to be a property that you have an emotional attachment to or adore. It is more of a financial transaction.

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Determining your budget is more than just how much money you’ll be putting down on the property or paying cash.

If you decide to pay cash, you will be required to show proof of funds from your bank statements. You will also need a letter from your financial institution as proof that you have the liquid funds for the transaction.

If you’re looking to finance your investment property, you will decide based on your down payment, HOA fees, and other fees you’re comfortable paying on a monthly basis. You will need to be comfortable covering those payments when the rental is vacant, or there are issues with tenants being unable to pay on time.

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Before you start house hunting, it’s essential to understand the current market.

Your realtor will know whether it’s a buyer’s, seller’s, or balanced market, but knowing what the landscape is is important.

If it’s a seller’s market, you won’t be able to make lowball offers to get a steal of a price. In a buyer’s market, you are in control, and it’s likely you’ll be able to get your new investment property in Phoenix for lower than what the seller is offering.

Your agent should be able to provide you with a CMA, or Comparable Market Analysis, to help you understand if a seller’s home is priced fairly based on the market.

A CMA is an analysis of similar properties in a given area and comparable areas. Reputable realtors will offer a CMA to determine the listing price of their clients’ homes or buyers looking to get a reasonable price on a property.

While no two properties are the same, even if they have a similar floor plan or same square footage, the numbers are relatively accurate and can be a beneficial tool in the process.

A CMA compares homes that are currently listed, under contract, and recently sold homes. Adjustments can be made for renovations, similar to an appraiser.

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Here are some of the most important factors when choosing the right property for you.

Age
Choosing a newer property will likely result in less immediate upgrades, building code issues, or other issues. While this isn’t always foolproof, as newer buildings can also have issues, it’s less likely.
Location
Home investors in Phoenix have a better chance of renting their properties in traffic-heavy areas. Choosing a home close to transit, amenities, or popular businesses will be much easier to rent out.
Neighborhood
If the neighborhood is established or up-and-coming, you’ll have an easier time renting out your home if the community is growing. With the addition of terrific amenities, it becomes more desirable.
Schools
Choosing a home close to excellent schools will allow you to get a better price for rent.
Home Prices
If you have the budget, choosing a more expensive home as a rental property could be the right move. Renters want desirable home options, so more expensive homes that they may not have a downpayment for might still be an option for them as rentals.
Low Maintenance
If you want to be a hands-off real estate investor in Phoenix, you want to choose a home that is relatively low maintenance. All homes will require maintenance, but there are high-maintenance building materials that could be avoided. If you’re concerned about the level of maintenance, you can ask to see previous records. Ensure you do a comprehensive inspection as well.
Account for all Expenses
Try to figure out every single expense you may encounter to ensure you have a positive cash flow from the get-go. Researching and paying close attention to insurance costs, property taxes, and HOA fees. It would be best if you also had money set aside for repairs and maintenance.
Rental History
If the property is already a rental, ask to see the rental history and assess how long residents typically stay and if they pay on time. If there is no history, your realtor may be able to assess the area.

Once you’ve chosen your perfect property, your agent will do the Comparable Market Analysis to have some information to discuss the offer. Your offer will include the price you’re willing to pay for the home and the closing date, which is also the possession date.

Typically, there is a 30-day closing period, but it depends on the buyer and the seller’s scale and circumstances. This time frame allows for the loan to be processed, the inspection to be completed, and time for the seller to move out.

Once the offer has reached the seller, you may be in a situation where you are negotiating. If they accept your offer, then great! You’re almost there. If not, they will provide a counter-offer asking for a higher price, a different closing date, or other stipulations. Sellers in Phoenix are able to counter-offer on any part of your initial offer.

Once you receive the counter-offer, you can either accept the offer or return another counter offer.

Once you both have agreed, you have a binding purchase contract.

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Once you’ve reached your agreement with the seller and you’re about to become the proud homeowner of a Phoenix investment property, you need to schedule your inspection.

The standard timeframe for the State of Arizona is ten days for the buyer. It would be best to have a reputable inspector inspect the home within ten days of the sale. Your inspector will check for severe structural damage, issues that impact the home’s safety, or the soundness of the home.

In Arizona, you will also be required to have a termite inspection completed as well.

It’s prevalent in Arizona for homes to have termites at some point if the home hasn’t had them already. The subterranean termites are a problem for Arizona homeowners, but they are easy to treat, and they move slowly.

Once your inspection is complete, you can ask the seller for repairs. Depending on how significant the issues are, you may want to ask the seller to take care of them before taking possession. If they are minor issues that you planned on changing anyway, you may just continue the process.

In the contract, there are certain items like electrical, pool equipment, or plumbing are warranted. If there’s significant damage to the roof, you may ask for it to be repaired before moving in. Of course, you are purchasing a home that has been lived in, and there will be normal wear and tear, so cosmetic damage isn’t typically written into the contract.

Once you’ve both agreed to any repairs and they’ve been written into the contract, you are almost ready to close.

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When you’re financing your new Phoenix investment property, your financial institution will require an appraisal for the property. A professional appraiser will come by the house, measure each room, take photos, and compare to three similar properties that have closed within the last three months and three still actively for sale.

The appraiser will determine based on the comparison to similar homes whether your home comes in above or below the purchase price and deliver directly to the lender. If the appraisal is lower than the contract price, the seller will be asked to lower the price. If the seller refuses, you are back to negotiating, and you can pay the difference between the appraisal and the price, or cancel and head back to house hunting.

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Once your appraisal is matched and sorted, the lender will submit your loan to get final approval through underwriting.

Once the loan documents request is sent, the title company can prepare all the buyer and loan documents for you to sign.

Once you’ve signed your life away, you will have your loan funded. The documents are reviewed to ensure nothing was missed, and every spot was signed. Your lender will wire the funds to the title company on the closing day.

On your closing day, the funds will be confirmed to have been received, the title company releases the file to the county, and homeownership is transferred.

Once this is completed, your agent will give you your new keys!

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Now that you’re the proud homeowner and real estate investor in Phoenix, you need to decide how you will manage your property.

If you’re renting out the home to one of your kids attending college, you likely don’t have to do much to manage the property.

If your kids want roommates, they can help you find suitable ones, or if they have friends who also need accommodations, that’s even better for you.

If your home is being rented out to tenants, and you live in the Phoenix area, you can manage it as a landlord, or you can outsource to a property management company.

Depending on how busy you are and how hands-on you’d like to be for this investment, you may find investing with the help of a professional is worth it. They typically have access to running credit and background checks. Your realtor likely has some excellent contacts for professional property management companies in the area.

If you don’t live in the Phoenix area, a property management team can take care of issues, like late rent collection, repairs and maintenance, and scheduling cleanings in between residents.

Investing in a Phoenix rental property is an amazing opportunity for many people, and it’s the perfect way to start your real estate investment journey.

Posted in Ultimate Guide
Jan. 26, 2020

How a 1031 Exchange Can Help You Upgrade Your Multifamily Property Tax Free

One complication that comes with owning multifamily property is the capital gains and other tax consequences of your investment. While it's the goal of every real estate investor to eventually upgrade to more valuable properties eventually, conventional property sales carry a high enough tax burden that it often isn't worth doing, especially for properties only a little more valuable than what you have now. You can defer this tax with a special kind of real estate transaction, called a 1031 exchange, that might bring those marginally more valuable multifamily properties within range and make a potentially complicated transaction simple enough to do for investors of any size.

What is a 1031 Exchange?

The 1031 exchange is a special kind of real estate transaction that can let you defer the normal costs of property sales and acquisition. Named for section 1031 of the tax code, these exchanges permit you to skip paying the capital gains tax on a property you're selling, if you buy another investment property within 180 days. You can also roll forward your depreciation, which can be an enormous help if your multifamily property winds up selling for more than you paid for it.

Who Can Use a 1031 Exchange?

Any real estate investor can take advantage of section 1031. If you own a multifamily property in Arizona, 1031 exchanges can help you climb the property ladder without incurring prohibitive taxes every time you transfer ownership. While the specifics get complicated, even by the standards of the tax code, you can generally use a 1031 to sell and buy properties you're holding for an investment. This includes multifamily apartment complexes, duplexes, single-family houses, commercial buildings and even empty lots, though you're generally expected to hold your acquisitions for at least two years before selling again. The 1031 deferment is not for private residences you plan to live in, nor is it for a commercial or industrial site you're working at, as opposed to owning for the property value or rent itself. You also cannot use a 1031 to exchange real estate for anything other than other properties, which must be "of like kind," as opposed to selling your multifamily property and buying gold or savings bonds with the proceeds.

How Does the 1031 Process Work?

To get the full advantage from a 1031 exchange, it is extremely important to go through the steps the IRS has laid out. Getting professional help with the process is a very good idea, since this is usually a major transaction and taxes owed from a mistake along the way can wipe out the profit you make from selling your property.

Step 1: Hire a qualified intermediary

Federal law requires 1031 sales to go through a qualified intermediary. Find the most experienced brokerage you can for this, since the timing of the sales and payment are very important.

Step 2: List your multifamily property

List your multifamily property as you normally would but be sure to mention that you are looking to do a 1031 exchange. Notify any interested buyers of your arrangements in writing as early as you can.

Step 3: Negotiate the sale and close the deal

Negotiate the sale price as you normally would. This part of the exchange is not significantly different from any other investment property sale, except that the buyer pays the intermediary, not your company.

Step 4: Identify your replacement properties

Once the sale closes, you have 45 days to give the intermediary three new property listings you're looking into. Make sure the sellers of these properties know you're doing a 1031, and that time is short to close.

Step 5: Sign one or more contracts

Sign the contract with your first-choice property. You can sign contracts on all three to be safe, but make sure you have contingency clauses to back out if your preferred deal closes first.

Step 6: Close the deal

Once you've agreed to a deal with the seller(s) of your new property, you have up to 180 days to close escrow and wrap up the deal. Keep your deadlines in mind, since the IRS can both charge you capital gains tax and recover the depreciation you've been writing off if the deal takes too long.

 

Trading properties through a 1031 exchange takes patience and attention to detail. It also takes an aggressive REALTOR® that knows the Phoenix market well and has experience representing owners of multifamily properties in Arizona. Patrick O’Sullivan with Cap CORE Real Estate can help you manage the property transfer when completing a 1031 exchange on your multifamily property. Call us today at (602) 366-5078 to speak to a Patrick today.

 

Posted in
Jan. 7, 2020

Is NOW a Good Time To Sell Your Multi-Family Property In Arizona?

Are you looking to sell your multi-family property in Arizona? Perhaps you’re wondering about the best time to sell it. As compared to homes, selling multi-family properties are more complex as you have to consider there are likely tenants involved. It also means that there are several things you need to put into consideration before you can decide to sell the property.

Although there are many factors, timing is everything when selling any property. Whatever your reasons for selling your multi-family property, keep reading to discover the best time to sell your unit, key requirements, and how you can maximize returns on your investment.

1.    Market Timing

As mentioned earlier, timing is fundamental to selling any real estate property. You must know where in the real estate cycle you are in and ensure your property is cash flowing to obtain the highest price. 

One significant indicator is when the market shifts in favor of the sellers more than buyers. If sellers begin to sell more, it might be a pretty good opportunity to put your multi-family property on sale. However, it is also imperative to note that there might be a considerable divergence between the replacement property cost and the existing property.

2.    Have All the Documents Ready

If you own a multi-family unit in Arizona, it is likely you purchased it as an investment. Therefore, being prepared with the necessary documentation is critical. What’s more? Ensure your property is in top-notch condition. If there are repairs that need to be addressed, if you are able to, do complete them before putting it on the market so that you make an excellent first impression.

When it’s time to sell your property, gather all the necessary due diligence materials, including a current rent roll, lease agreements, financial details and any other relevant documents and information that might contain pertinent information.

3.    Pricing Is Critical

How much are you selling your multi-family property for? Is the price too high or too low? Conducting a thorough sale analysis will ensure you are pricing your property right. By research the sub market, including its cap rates, rental rates and the recent sales activity, you should be able to know where your property stands.

If you price your property too high, it might take longer to sell. The longer it takes to sell, the less attractive it will be to your potential customers. Alternatively, you can incorporate the services of a professional multi-family broker to help you settle on a reasonable price.

4.    Familiarize Yourself with the Rules of Selling Your Property

Of course, upon going through all the above steps, the last thing you would wish for is a setback. It might be not only costly but also time-consuming. Ensure you are aware of the rules and regulations before putting your property on sale. You can also hire a real estate agent that specializes in multi-family for a smooth and quick sale. That way, you can also avoid other setbacks associated with property selling.

Besides, a multi-family real estate agent can also act as a professional liaison between you and the buyer. He or she should be capable of coming up with a strategy that will get you the highest price for your property. Preferably, you should hire a professional real estate agent or broker who is familiar with the local real estate market and has experience working with multi-family sellers.

The Best Time to Sell Your Property

So, when is the best time to sell your multi-family property in Arizona? Although most sellers consider the time of the year, but the best time depends more on research and proper planning than just the month of the year. Take this into consideration and there is no doubt you will successfully sell your property and maximize your returns. 

Do you plan to sell your multi family property? Contact us for a free consultation and let us ensure you get the right buyer in the shortest time possible.

Posted in Uncategorized