We asked some of our key clients, contacts, stakeholders and industry experts to contribute to FNT Title Talk as guest bloggers. We are pleased to introduce Cari Dandy as our next contributor in our guest blogger series. Cari is a Realtor with Realty Executives Premier Marketing Group and provides valuable information about investment property in the Phoenix market.
If you want to know what the current normal return on investment for a foreclosure property in the Phoenix market, I have the latest news. Investing is RED hot! Resales recorded in the Arizona Regional MLS (ARMLS) were the highest ever in June 2011 with 11,125 sales compared to June 2010’s 9,809 sales – an increase of 13%! It is estimated that at least 40% of the properties sold were purchased by investors.
Investor traffic at auctions is growing! “On an average it takes 13 tries to get a property at auction before an investor can purchase one,” due to the amount of competition at the auctions and lower inventory, said Dustin Gaskey of Fidelity National Title. Gaskey was on a panel of foreclosure auction experts at last week’s NAHREP (National Association of Hispanic Real Estate Professionals) Arizona Real Estate Marketing Conference. The panelists talked about their experience with helping investors purchase foreclosure properties at auction, the process of fixing and flipping, and the return on investment for a foreclosure property in the Phoenix market.
Along with Gaskey, the panelists included Frank Gerola with Posted Properties and Bobby Ghisolfo with Vineyard Homes. Posted Properties helps investors bid on properties at foreclosure auctions, along with checking out a property the morning of the sale for an investor, and providing other services like “cash for keys” to motivate an occupant to leave the property once purchased at auction. They partner with Fidelity National Title Insurance Company who checks lien positions, lis pendens, HOA liens, judgments, and IRS tax liens on every property. If there is an IRS tax lien the property cannot be sold until 120 days after investor purchase. Fidelity National Title also offers title insurance after the property is purchased, and the investor will receive a preliminary report before the property is actually purchased. Vineyard Homes has rehabbed hundreds of properties for investors throughout the years. They will get an estimate on properties within 48 hours. Rehabbing a property can certainly bring an investor more return on his investment. The average sales-to-list price for an investment property is 102% versus 94% for a non-repaired property. The average price for a property purchased at auction is about $143,000, said Gerola, and a typical investment to rehab might be $20,000 - $30,000.
If you want to know what the current normal return on investment for a foreclosure property in the Phoenix market, I have the latest news. Investing is RED hot! Resales recorded in the Arizona Regional MLS (ARMLS) were the highest ever in June 2011 with 11,125 sales compared to June 2010’s 9,809 sales – an increase of 13%! It is estimated that at least 40% of the properties sold were purchased by investors.
Investor traffic at auctions is growing! “On an average it takes 13 tries to get a property at auction before an investor can purchase one,” due to the amount of competition at the auctions and lower inventory, said Dustin Gaskey of Fidelity National Title. Gaskey was on a panel of foreclosure auction experts at last week’s NAHREP (National Association of Hispanic Real Estate Professionals) Arizona Real Estate Marketing Conference. The panelists talked about their experience with helping investors purchase foreclosure properties at auction, the process of fixing and flipping, and the return on investment for a foreclosure property in the Phoenix market.
Along with Gaskey, the panelists included Frank Gerola with Posted Properties and Bobby Ghisolfo with Vineyard Homes. Posted Properties helps investors bid on properties at foreclosure auctions, along with checking out a property the morning of the sale for an investor, and providing other services like “cash for keys” to motivate an occupant to leave the property once purchased at auction. They partner with Fidelity National Title Insurance Company who checks lien positions, lis pendens, HOA liens, judgments, and IRS tax liens on every property. If there is an IRS tax lien the property cannot be sold until 120 days after investor purchase. Fidelity National Title also offers title insurance after the property is purchased, and the investor will receive a preliminary report before the property is actually purchased. Vineyard Homes has rehabbed hundreds of properties for investors throughout the years. They will get an estimate on properties within 48 hours. Rehabbing a property can certainly bring an investor more return on his investment. The average sales-to-list price for an investment property is 102% versus 94% for a non-repaired property. The average price for a property purchased at auction is about $143,000, said Gerola, and a typical investment to rehab might be $20,000 - $30,000.
Investors will need some capital to do a fix and flip. Buyers at auction can purchase with cash, or get a hard money loan with a typical interest rate of 18% with 20-30% down payment. The normal fee for origination is $800 - $1000, with a 6-month term with no pre-payment penalty. A hard money loan can be a great way to leverage your investment for your foreclosure property in the Phoenix market, but you want to be sure to purchase the property right with no big negatives – no power lines nearby, no major roadways; a relatively newer property is ideal (within past 15years is ideal) and look for one without add-ons to construction (these may not be permitted or done to code), said Bobby Ghisolfo of Vineyard Homes. Ghisolfo said that the average turnaround time for a fix and flip is 45-60 days from acquisition – to rehab – to resale.
Current Return on Investment: Investors need to have realistic expectations. Because of the amount of competition for investment properties in the Phoenix market, and the rising prices at auction, whereas investors used to see a 20% or more return on investment a few years ago, now it is more normal and realistic to see an 8% - 10% return on investment, said Gaskey of Fidelity National Title. If an investor would rather buy and hold the property, look for a property with a cap rate of 10%. If you purchase a property for $100,000, you should be able to get $1000a month for the rent.
Some other interesting information I learned? “Most homes will have the sale date postponed at the auction 3-4 times before the property actually sells,” said Gerola. And the fastest selling properties are condos and townhomes – many being purchased by Canadians looking for a great little winter retreat.
Investing in foreclosure properties in the Phoenix market can bring a nice return on your investment – with the right team of experts to help you. Use a Realtor who knows the area to give you relevant comparables and information, a bidding service to help you get the right property for your business model, a title company such as Fidelity National Title, and a great contractor to get the most return on your investment.
For more information contact Cari Dandy, Realtor, GRI, ABR at Realty Executives Premier Marketing Group, 480-980-3577 or cari@caridandy.com.
Current Return on Investment: Investors need to have realistic expectations. Because of the amount of competition for investment properties in the Phoenix market, and the rising prices at auction, whereas investors used to see a 20% or more return on investment a few years ago, now it is more normal and realistic to see an 8% - 10% return on investment, said Gaskey of Fidelity National Title. If an investor would rather buy and hold the property, look for a property with a cap rate of 10%. If you purchase a property for $100,000, you should be able to get $1000a month for the rent.
Some other interesting information I learned? “Most homes will have the sale date postponed at the auction 3-4 times before the property actually sells,” said Gerola. And the fastest selling properties are condos and townhomes – many being purchased by Canadians looking for a great little winter retreat.
Investing in foreclosure properties in the Phoenix market can bring a nice return on your investment – with the right team of experts to help you. Use a Realtor who knows the area to give you relevant comparables and information, a bidding service to help you get the right property for your business model, a title company such as Fidelity National Title, and a great contractor to get the most return on your investment.
For more information contact Cari Dandy, Realtor, GRI, ABR at Realty Executives Premier Marketing Group, 480-980-3577 or cari@caridandy.com.
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