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bpnbpn
ParticipantIn general, I really like having slope in my backyard. Not a huge believer in feng shui but I have heard it is a great feng shui to have slope (something to do with good financial growth ;-))
If you keep the slope with appropriate plants, trees and greenery, it will really look great. As everyone said, just make sure the house on top of the hill is not directly overlooking your backyard. You could grow trees at the top to hide that as well.
Having a retaining wall with proper drainage will do the trick. Depending on the size of the slope, I have even seen some folks built stairs and seating area in the middle, again I am not a huge fan of that either. It’s just more land for you to play with…
Participantok, finally made the decision to pull the offer out. the market is too unpredictable at this point, so took a safer path.
Participant[quote=FlyerInHi]
I am curious why you think it could be a “big return” situation. Are you thinking you are buying an undervalued asset? Are the risk and return symmetrical in your analysis?[/quote]
Here is my thinking, let me know if I am not thinking right.
High return:
1) Phoenix valley area is a hot market. Great schools (BASIS), lots of tech companies moving in (Intel, Paypal etc), great infrastructure (101/202 loop).
2) I heard Maricopa county sees around 5,000 people moving in every month from various parts of US (including CA).
3) Affordable market – the price of 2,000 sqft single family (3 to 4 bedroom) house is around mid to upper 300s. We can’t get anything with that money here in SD.
4) Cashflow is great. The rent for such house is running around 2,100 to 2,400 $.So, if AZ real estate market stays resilient through this covid and possible recession, it’s a great investment for long term.
High risk:
1) AZ market may not be resilient and can still see a dip in price if Covid situation gets worse or recession prolongs. There are studies ranging from “no impact to housing” to up to 30% dip in value. I haven’t seen a lot of studies saying the property value will go up during this tough time. So I may not lose much for waiting (except for the earnest money)
2) AZ has also seen high unemployment rate and renters going default.
3) AZ govt is very similar to CA in supporting rent relief program
4) I believe rents will go down across US as vacation rentals will now move towards long term rentals, no new crowd moving in from outside of USA etc.What do you think?
ParticipantYes chandler is very close to Phoenix (around 20 mins). This particular property is off of 202 loop which is a big plus to get easily to anywhere in the valley.
I am still thinking about this. It’s a big risk but possibly big return situation. I usually avoid taking too much risk. I don’t see a lot of help to landlord from AZ government as well.
I twisting the arms with the builder and their lender to shave few 1000 dollars of the home price and get a very good interest rate. Their rate is horrible (3.99 with 0.25 points). If I shop outside I will lose their 5,000 $ incentive towards closing.
When we visited Chandler late last year, looking thorough the community, we definitely felt that it’s a great place to invest. It’s just that not sure it’s the right time now.
ParticipantYou are right. It’s a confirmed news. Great to see AZ getting this opportunity. BTW, I also saw this news:
Zoom is opening up an office in Phoenix area.
Participant[quote=Coronita]Are you sure you really want to back out of an Arizona property?
https://finance.yahoo.com/news/tsmc-build-chip-plant-arizona-185039746.html
Seems like Arizona is in this administration’s good graces and should benefit form any sort of pork that comes out of this administration. Seems like more jobs coming to Arizona.
“TSMC to Build Chip Plant in Arizona With Government Support”(Bloomberg) — Taiwan Semiconductor Manufacturing Co. is planning to build a multibillion-dollar chip plant in Arizona, a potential realignment of global trade designed to allay U.S. concerns over supply chain security.The Taiwanese company is negotiating a deal with the administration of President Donald Trump to manufacture semiconductors in the U.S. to create jobs and produce sensitive components domestically for national security reasons, according to people familiar with the situation. Talks have been progressing swiftly in recent days and an announcement could come as early as Friday, according to the people, who asked not to be identified because the deal is not public yet.
“We are now actively evaluating the U.S. fab plan,” TSMC Chairman Mark Liu said on a recent analyst conference call, referring to fabs, the industry term for chip factories. “There is a cost gap, which is hard to accept at this point. Of course, we have — we are doing a lot of things to reduce that cost gap.”
TSMC is the largest and most advanced maker of chips for other companies. Its factories, which are primarily located in Taiwan, produce important components designed by Apple Inc. and most of the largest semiconductor companies, including Qualcomm Inc., Nvidia Corp., Advanced Micro Devices Inc. and China’s Huawei Technologies Co. That makes TSMC a crucial part of many electronic devices, such as smartphones, laptops and servers running the internet, and corporate and government computer networks.An agreement would call for TSMC to build a plant in Arizona by 2023, according to the people. It’s unclear what type of support the project will get from the federal government or the state of Arizona.
A cutting-edge fab is expensive to build. TSMC spent NT$500 billion ($17 billion) to build an advanced facility in the southern Taiwanese city of Tainan that will churn out components for new iPhones this year. It plans another $16 billion in capital spending this year.
If the federal government provides cash for a U.S. plant, it’ll mark a shift in policy and rhetoric from a Republican administration. Trump’s White House has rarely supported such direct industrial intervention, favoring market dynamics. However, emerging trends may be forcing a reconsideration. The U.S. government is already giving or lending billions of dollars to keep companies afloat in the midst of a pandemic-fueled recession. The crisis has also highlighted how vulnerable global supply chains are to such shocks.
Semiconductor companies have not really slowed down due to covid, at least not yet. And neither has their stock price…
https://finance.yahoo.com/quote/TSM
https://finance.yahoo.com/quote/AMD
https://finance.yahoo.com/quote/INTC
https://finance.yahoo.com/quote/AVGO
https://finance.yahoo.com/quote/NVDA
https://finance.yahoo.com/quote/QCOMSemiconductors are critical to high tech supply chain. Asking a US company to build something from the ground up is not feasible (Intel is the only US company that still has a fab). However, getting Taiwan Semiconductor (who is #1) who is also a U.S. ally might actually work… Because TSM would have a vested interest to have a fab on US soil if it means skirting future import tariffs. And sensitive chips used for military and communications could be securely done here, instead of overseas. It could be a win for both US and Taiwan.
I’m biased. Maybe if you were talking about a rental property in Nevada, I would say hell no, back out. But seems like Arizona and Colorado…I don’t know. The probably aren’t getting hit as hard.[/quote]
You always bring in great data points. This is an interesting news. Let me think through this weekend. I fully get the point that the best time to buy is when there is blood on the street. I am not sure whether I am triggering too soon before there is a lot blood on the street.
Participant[quote=FlyerInHi]To the original poster, whatever you decide to so, please update us every so often in real estate prices In Chandler. It would be interesting to get a peak to trough snapshot in this recession.[/quote]
Absolutely. We did send our intention to pull the offer and the builder confirmed that they won’t be able to refund the earnest money. we haven’t officially signed the cancellation notice yet. I plan to take few more days to finalize it.
AZ does look enticing to be honest. It’s an affordable market unlike CA.
ParticipantYep I saw the details on rent relief program. It’s bit vague for the landlords. Not sure if the landlord also have to prove financial trouble to get the rent refunded. That will be bad as landlords who are still employed but will have a gap by losing the rental income. This is an unprecedented situation and very hard to predict what will happen.
AZ also coming up with similar program that will pay the landlords the rent but will have a cap based on the tenant’s base income.
Participant[quote=scaredyclassic]It’s hard to eat a loss.
I’d consider the 5k as lost either way and just think independent of the 5k do I want to move forward.
Look at it this way. If you bail, and its relisted will the price be 5k less?[/quote]
I think it may not be 5K less immediately. I think it may stay in the same price. But again, you are right. I thought to myself. If I hadn’t put the deposit for this house, would I be shopping right now? The answer is NO.
ParticipantI’d venture over to craiglist and zillow lookup the zip code where your investment property is and figure out how much and how many properties are currently listed for rentals…
In fact, I’d try to make a fake craiglist or zillow post offering this house as a rental at the price you think you were originally going to rent it for to see how many people will respond. That will give you a reality check as to how much demand is softened near your particular sub market.
When I did this for one property near SDSU, the response rate was roughly 4 per week, and many had not so great credit score
When I did this for one property in mira mesa, the response rate was roughly 15 per day, where 3 out 4 had 700 or above credit scores. Hence, why I sold that condo near SDSU and did a 1031 exchange.
This probably matters even more during these times.
92126 still is a shitty market if you are looking for a 1/1 (and lesser extent 2/2) to live in. Very little inventory.
https://sandiego.craigslist.org/search/a…
92130, on the other hand, plenty of rentals available.
Carmel Valley, contrary to popular belief is not that great as a rental market versus say Mira Mesa.
Looks like an expert in this area! A lot to learn from you. This is a fantastic idea. I will keep this in mind.
BTW I do agree that 92130 is a very bad place for investment property. I did the math for cashflow and it looks like I will have -ve cashflow for at least 10 years in the future.
This kinda applies now to most of SD as well given how high our prices have gone. That’s the reason I started looking into AZ.
ParticipantTeam,
Great questions and thanks for quick replies. I used piggington while I was shopping for house in 2012 and you all provided excellent help that helped me to make great decision during the down market.
Ok, here are more details, sorry I didn’t provide it upfront.
1) This is a 2000 sqft independent house in Chandler Arizona
2) It’s priced around 350K and we paid earnest money of 5,000$
3) I estimate the rent will be around 2100$ or so
4) Chandler has been a hot market, especially due to their outstanding schools. They are surely at the peak (this house would have costed 220K back in 2012/2013).
5) The builders are claiming that they are still seeing strong sales though I clearly witnessed that they moved from lottery system with multiple offers to tons of unsold units. so I wouldn’t believe them fully.I hope this helps. I know 5,000$ is a lot of money but I am very concerned about not able to receive the rent and/or the house price plummets right after we buy.
Please share your thoughts.
ParticipantWe didn’t go with that property…the cluster mailbox and stop sign are the reasons…and also the additional premium is not justifiable.
ParticipantIt is funny, I asked the question on which school the kids will go in the Pardee’s facebook page. I also mocked saying “I hope it is not mira mesa school”. They deleted my messages 🙂
Participant[quote=sdrealtor]Right now they are releasing their worst lots. A lot of people show up at releases and defer for the better lots in later phases. This way the builder creates a huge list of buyers waiting for the primo lots and when they release them they can get top dollar at release for those. Along the way they learn about demand for their product and hopefully can increase prices each phase.
FWIW I dont think the drive to 15 is an issue for these houses. The buyers for these mostly arent concerned about that, They are staying in SV for work or heading west towards UCSD.[/quote]
I got to agree, why would someone in SV want to go to I-15? Going down Sorrento Valley Road to I-5 isn’t hat bad either.
All said, 700K+$ is not worth for the zip code 92126 and the schools it offers (you at least need 1000$ per month for a private school for one kid).
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