Why investing now in Real Estate in Phoenix, AZ is a good idea?
Mike Skvortsov, One Percent realty , Vancouver
1.Mike Skvortsov -Why investing now in Real Estate in Phoenix, AZ is a good idea?
Linda Gerchick - The Phoenix market is primed for investment:
· WE ARE IN THE SUNBELT
· WE HAVE POPULATION GROWTH
· WE HAVE ECONOMIC GROWTH
· WE HAVE NO NATURAL DISASTERS
Our real estate market is the prime target for investing, NOW is the time! Our population is expected to double between the year 2000 and 2030. Take advantage of this extraordinary Buyer's Market! Right now prices are a fraction of what it actually costs to build. Not only will you be getting an excellent month to month cash flow return on your investment (5-10% on average) you will have considerable appreciation gains in a few years when real estate is selling for what it actually costs to build.
2.Mike Skvortsov - Why Phoenix, not Hawaii, not Miami. not Florida or Las Vegas, not California?
Linda Gerchick - The growth that Arizona will experience in the three key areas of population growth, income growth and job growth will be unmatched by any other state except for that of Nevada. And there are two reasons why we don’t like Nevada… they have limited amounts of water and are on a water restricting program. Here in Arizona we have a 100 year water supply, even with all the future planned growth and the doubling of our population by 2030. We also have a diversified economy and are not solely focused on gambling, entertainment or hospitality.
3.Mike Skvortsov - What kind of investments are available in Phoenix ( flip, long term), what kind of properties are available there (townhouses, single residential houses, duplexes, maybe multyfamelies).
Linda Gerchick - While there are fix and flip opportunities available, the margins are small and it’s really a great buy and hold market. We have condos, townhomes, regular homes, duplexes, fourplexes and even apartments that are all great types of property to buy today.
4. Mike Skvortsov -Give me please 2 example of hot deal available in Phoenix now .
Linda Gerchick - We have a nice 3 bedroom 2 bathroom home with a 2 car garage in a good neighborhood that is tenant occupied at $950/month providing the investor with $11,400 in yearly gross rents and we figure a 5% vacancy rate equates to an effective income of $10,830. Yearly expenses of $2,506 gives you a net operating income of $8,324 which equates to an 8.41% Cap Rate.
We have an amazing deal on a tenant occupied large 1,240SF 3 Bedroom 2 bath condo. Just $28/SF! This community has a pool and nice walking paths. The condo is rented for $843/month and after expenses the net income is $4,591/yr. with a CAP rate of 13%. HOA Dues (included in expenses) are $250/unit/month. This garden-style condominium community is located in a strong rental area of north central Phoenix.
5. Mike Skvortsov -In Canada we got very good informational system for locate real estate properties - MLS, does in the USA similar system available, similar souses? Where we can get last information ( the internet , maybe webinars, or even real seminars in Phoenix, and who organized them ).
Linda Gerchick - In the US, there are a couple sources for real estate here in Arizona. Arizona has the Arizona Regional Multiple Listing Service (ARMLS). This information is provided by Realtor’s and is the most accurate information on property available in Arizona. There are other internet sources such as Zillow.com, Realtor.com and Loopnet.com.
6.Mike Skvortsov -Many question about double taxation. Is any way how to avoid it? What is a most popular form of business organization for foreign investors you can recommend?
Linda Gerchick - As a Realtor, when it comes to tax issues, we recommend talking with a CPA that knows tax related benefits and consequences that come up with owning real estate in the US. It is their knowledge that helps the investor pay the least amount of taxes. The CPA that is used though does not form the entity that will hold the property in. It is the lawyer that does this. It is the combination of the tax advice from the CPA and the liability advice from the lawyer that will tell you what entity to form to hold an investor’s property.
7.Mike Skvortsov -What kind of services available for Canadian investors in Phoenix ( maintenance companies, lawyers, mortgages?, Realtor). What is cost for those services?
Linda Gerchick - Team Gerchick has put together a one-stop shop for the Canadian investor looking to buy in Phoenix. There are maintenance companies, CPAs, lawyers, property inspectors, termite inspectors, lenders, property managers, insurance companies, home warranties and many others that deal in real estate. A realtor’s services for a buyer come at no charge to the buyer as the seller pays commissions. Property managers generally charge 7-10% of rents collected as their management fee. Setting up an entity with a lawyer averages around $500.