Arizona is a state rich in natural resources and abundant scenic settings. It is home to numerous educational institutions, company headquarters and a diverse culture that flock to the larger cities of Phoenix, Tucson and Tempe as well as the smaller towns like Avondale and Scottsdale. Real estate here is just as diverse as the residents of this southwestern state, which can make investing in cheap homes in Arizona a little tricky. 

Start by doing some research on the Arizona region in which you want to invest. Obviously, you are going to pay a different price for a home – even a foreclosure listing – in, say, Phoenix than you will in Scottsdale. Take a close look at real estate prices and what the trends have been over the years. Home values, depending on the area, may range anywhere from the low $100,000s to the low $200,000s, with more luxury properties going up from there. For example, in the Phoenix metro area, you can score a foreclosure home for around $123,000 if you take your time to look carefully.

Spend equal time researching the demographics of the area in which you are interested. Because of its proximity to the Mexican border, Arizona does have a large Hispanic population, many of which flock to the larger cities to avail themselves to the resources available in these areas. For example, household incomes in metro Phoenix hover around the $40,000 mark and close to 20% of the population lives below the poverty line. What does this mean in terms of purchasing real estate? You are privy to lower property values that will get you a cheap house in just about any area of Phoenix. However, it almost means that you have to be wary of empty and dilapidated foreclosure properties around you that may drag down the value of your chosen property.

By comparison, in the Phoenix suburb of Chandler, where the median household income hovers around $81,000 and just 6% of the local population lives below the poverty line, home prices are considerably higher and finding an inexpensive foreclosure property is more difficult.

Don’t settle for just anything. Cheap homes and foreclosure properties don’t have to mean poor quality homes. Invest in a home inspection and ask for major issues to be addressed by the seller or the bank holding the note. Be a smart investor and look for the unseen potential in a property, and use that savvy to get a cheap home; at the same time, know when to walk away from potential problem properties.

About the Guest Author

Spending the last ten years contributing to several major magazines, online publications, top ranking websites, and blogs including foreclosure deals, John E. Miller has delivered a plethora of content for the real estate industry that is unmatched by even today’s most notable contributors.

Delivering content that is both enlightening and informative in today’s tough economic times alongside the mortgage crisis, his writing speaks volumes to those who need the information most. His work has led to the highly-rated ForeclosureDeals.com where Miller has compiled a team amazing writers who continue to provide the most unmatched real estate and foreclosure news around.

Foreclosures

Foreclosures have been at the forefront of the real estate market, no doubt, but on the other side of distress is opportunity – for those who are able to take advantage of it.

In Phoenix there has been a steady flow of foreclosures averaging about 4,000 units per month and buyers are grabbing them up.  While bank owned homes make up a small percentage of active homes, they make up the largest share of sold homes – around 40% depending on the month.

Investor Role

Investors have played a large part in purchasing these properties, first as regular purchases and now at auction.  In 2008, only about 5% of the properties sold to third parties were trustee sales but that number has been gradually increasing for the last three years.  In Phoenix alone thus far for May, 2011, distressed home sales incorporated 63.3% of sales.

Pricing

Generally people are under the misconception that buying a short sale or a foreclosure will allow for a substantial discount on the listing price but this is often not the case.  The property has to be sold for what is considered a reasonable market value and that would mean in comparison to other homes in the area and would also take into consideration the condition of the property. 

Banks are out to recoup as much of the loss as possible on a foreclosure for their shareholders and investors.  For the most part the listing prices of bank owned homes are already discounted, that’s why they are having such a detrimental affect on traditional sales and the market prices overall. 

Distressed sale prices are closer to listing prices than regular sales at this point in the game.  In Phoenix from the beginning of 2010 to the end of the 1st quarter of 2011, while regular homes have been selling at 95.5% of the list prices, foreclosures are selling at almost 98% of their list prices.  This is happening in most other markets as well, not just in Phoenix.  (Note:  that this is considering the final list price, not the original list price).

Notably, in a highly distressed market buyers are a lot less likely to get a bank to negotiate on price than they are in a less-distressed market.

In some markets, banks are putting homes up for sale at well below the market value, which encourages multiple bids and average sale prices that are higher than the list price.  Various trends show distressed listings were more than twice as likely to sell for over list price than non-distressed listings.

Distressed Doesn’t Mean a Steal

So if you’re thinking about taking advantage of the distressed part of the market, you should consider that distressed doesn’t mean a steal.  Don’t expect to unrealistically negotiate.  And remember, the more distressed your market is, the better the banks are at pricing homes compared to their owner-occupied competition.  If you’re seeing a lot of distressed homes for sale in your market, chances of negotiating a better price with the bank are not good.

This wave of foreclosures and short sales isn’t likely to disappear anytime soon, so if you’re thinking of taking advantage of it, plan your offers accordingly!

Arizona real estate purchases are increasingly popular with Canadian buyers. Technology has allowed for those who are not even at retirement age yet, to shop for real estate from afar and ultimately join Arizonians for perfect weather, golf, and so much more.  Summers can be spent at home in Canada while winter can bring the gorgeous sunshine and pleasant temperatures of the Valley of the Sun. 

Second Home

Arizona’s real estate, including Phoenix, Scottsdale, and Glendale area properties offer great second home investment opportunities for Canadians.  Due to the recent recessive years in the Arizona housing market, the state has many low priced homes, foreclosure properties, and short sales for experienced, savvy real estate investors to grab onto!

Recreation and Sophistication

Whether Canadian investors are looking to relocate to a climate with 325 days of sunshine each year or just acquire a second home, Phoenix properties offer a great mix of outdoor recreation opportunities and metropolitan sophistication.  The beauty and individuality of the Sonoran desert is unlike anything on the Canadian continent. Phoenix area golf communities offer more than over two hundred golf courses as well as low maintenance homes and landscaping and neighborhood amenities such as pools, community recreation centers, and great dining and entertainment options.

Phoenix is Growing

Phoenix is the fifth largest city in the United States allowing residents access to many different terrains as well the urban economic opportunity and social life of a great metropolitan area.  However, some investors have no intention of moving to the area but rather simply want to take advantage of the over fifty thousand people who are moving to the area each year.  

Rental Properties

With properties available at about $50 a square foot, Canadian investors can get a phenomenal deal on real estate in Phoenix and the surrounding areas.  Utilizing the property for rental income can provide a revenue stream that can be managed by local realtors or a Phoenix AZ property management company.  For Canadian investors, home can be wherever they choose while they have Phoenix properties they own working for them to generate monthly cash flow.  Relocation, rental properties, or second homes in these communities are all great opportunities for Canadian people who wish to buy property in Arizona.  Phoenix area realtors can offer a listing of Phoenix real estate that will entice potential Sun Valley residents as well as investors located from western Canada to the Eastern seaboard.

Great Properties to See

• Scottsdale Ranch: click here
• Troon North: click here
• Terravita: click here

Here’s a quick rundown of the different types of investments in the real estate market. This includes dealing with a lender, mortgage company, banks, and REITs. Getting the feel for how each of these works will provide the most benefit to the would-be investor.

Lenders

A lender is an individual, or an institution, who lends a borrower some money in order for the latter to purchase a house. There are different kinds of lenders like the hard money lenders, commercial lenders, educational lenders, or mutual organizations. A bank can also serve as a commercial lender. The lender lets people borrow money, but with certain terms. The terms include the length of the loan, the interest rate, and a payment plan.

FRM/ARM

A mortgage company is one which specializes in proposing loan mortgage services like loan calculating, free mortgage quotes offer, deal guides and excellent customer services. They also have the power to approve mortgage loan applications. These companies can offer wither a Fixed Rate Mortgage (FRM) or an Adjusted Rate Mortgage (ARM) to interested borrowers. Other services offered by mortgage companies include mortgage refinancing, new mortgage acquisition, obtaining a home equity loan, property evaluation and many more.

Banks

A bank is a business that accepts deposits and uses these deposits in lending activities through several ways, one of which is the capital markets. The bank is one of the institutions people run to when they want to make a loan in buying a house. The loan would help them assist in their finances or would add to the amount in buying the house. The borrowed money will have a certain interest and the rate of interest varies in various banks. The rate can either be a fixed interest rate, floating interest rate or a flat rate.

Another entity to turn to when one wants assistance in buying a house is the government. The government offers cheap loan programs and flexible payment plans that could really help the citizens in acquiring a home. Also, other government loans don’t require the applicant to have a perfect credit or a large amount of down payment. There is also no worries though on is a first-time buyer. Finding government sponsored programs is often done through a bank.

REITs

Real Estate Investment Trusts or REITs are business organizations which capitalize in real estates to obtain income. REITs have trust managers who are able to offer major services like locating probable properties, buying these properties and dealing with possible tenants. There are shares in REITs that one can buy, sell and purchase from tax-deferred accounts of retirement. The shares are also being traded on major stock exchanges. People who are not knowledgeable of the real estate business, but want to engage with the trade opt for this investment type.

Guest contributor: Susan Redfield, a real estate agent at USREOProperties.com, reo properties for sale & online listings

Housing markets struggled in the fourth quarter of 2010, despite lower interest rates and fewer foreclosures.  There was a major decline in first-time home buyers with the elimination of the first-time home buyer tax credit and increases in investment and second home property purchases.  One poll reflected 61% of agents nationwide reported having more sellers than buyers in their local markets. 

Only 32% of the agents polled reported a predominantly buyer-heavy market at the end of 2010.  Homes definitely stayed on the market longer during that period with fewer buyers driving up sales prices.  In fact, 89% of agents revealed that properties sat on the market for 60 days or more and more than 20% said they showed homes on the market for over 120 days!  Quite a change from the housing bubble we experienced in the earlier part of this decade when there was a much more balanced real estate market between buyers and sellers and typically the average time a home was on the market was between 30 and 60 days.

Housing Prices Still Falling

Phoenix home prices have continued to fall.  In addition to lower prices in the last quarter of 2010, 87% of agents reported a good supply of homes in their market.  This is no surprise as a lot of property development took place during the housing bubble earlier in the decade.  You add that to the large number of people who lost their homes in a distressed economy more recently, and it’s no wonder we have a surplus of available homes and at lower prices.

If rates are lower than they’ve been in a long time, available homes are at a surplus, and the prices are right, who wouldn’t want to buy right now!?

Here’s the thing, real estate has no magical properties as an asset class, despite people believing it does on occasion.  When they do, a bubble is formed which subsequently pops and everyone gets hurt as we have overtly and unfortunately experienced these last few years.  As mentioned above, those that know the markets well (the investors) are taking advantage of this market – as they should.  And tax credits being revoked are only one factor and they certainly don’t dictate the market alone.  This is a buyer’s market folks!  And who wouldn’t want to buy in Arizona?  Conditions are perfect!  Prices dropped 8 percent the end of last year and have now fallen for five months in a row.  With projections of continuing foreclosures (which drive the declines), prices will surely remain low only strengthening the buyer’s market in Arizona.  And considering that Arizona boasts some of the best weather nationwide and a wide variety of attractions and resorts, who wouldn’t want to live here?

Now is the time to buy!  Check out Show Appeal Realty for varied lists of the best deals on Arizona real estate.  Beautiful homes with a plethora of amenities for the right price.  Feel like you don’t know enough about investing in real estate?  Contact Nuff Said Enterprises, LLC, a real estate investment group that offers a myriad of investment strategies for the Phoenix Metro Area.  Whatever you do, Don’t miss out!  The market will inevitably turn around eventually and when it does, don’t you want to be on the winning end?

HUD Waives FHA 90 Day Rule on Flipping

In an effort to expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties, HUD has announced a temporary waiver of the 90-day flipping rule. The waiver takes effect February 1, 2010, and lasts for one year, unless otherwise extended or withdrawn by HUD.
The waiver is limited to those sales that meet the following conditions:

1. All transactions must be arms-length, with no identity of interest between the buyer and seller or any other parties participating in the sales transaction, including:

• Seller must hold title
• LLCs, Corporations and trusts must be established in accordance with state and federal law
• No evidence of previous flipping within 12 months
• Evidence that property was marketed openly, such as via MLS, auction, FSBO
• The waiver is limited to forward mortgages and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program

1. If the sales price of the property is 20% or more above the seller’s acquisition cost, the waiver will apply only if the lender meets the following condition

• Significant work has been done to the home (documented by a second appraisal verifying that legitimate repairs and rehabilitation have been done to substantiate an increase of more than 20%)
• In cases where no work has been done, the appraiser must provide explanation to support the increase since the prior transfer
• A property inspection must be provided to the buyer prior to closing. (The lender may charge the borrower for the inspection.) The inspector does not need to be FHA approved, but must have no interest in the property, must not receive compensation other than from the lender and may not be involved with the repairs recommended from inspection.

The complete text of the waiver including what the inspection must include is available on the HUD website

Here is a video tour of a completed flip project in the community of Johnson Ranch in Queen Creek. This project took only 4 days from acquisition to market. All the home needed was a fresh coat of paint, backyard landscaping, carpets cleaned and a little TLC. BTW: sorry for the ‘ad’ at the end of the video. I have to do a little marketing for myself, you know..

Here are some of the details about this Queen Creek home:

• $119,950 List Price
• 2,308 Square Feet
• 4 Bedrooms | 2.5 Bathrooms and a Loft
• Built in 2006 by DR Horton

Premium north/south lot and move in ready with fresh carpet, ceramic tile flooring and designer paint. Gourmet kitchen with modern chic countertops, upgraded rich maple cabinetry and tile backsplash. Large master suite through double doors with a luxurious bathroom and walk-in closet. Ceiling fans and 2′ blinds throughout. Backyard with covered patio and nicely landscaped for enjoying outdoor Arizona living. Move-in ready and clean. Not a short-sale or REO. Bank-owned pricing. Johnson Ranch amenities include a community pool, spa, golf course, play parks and more. MUST SEE!

This is my latest completed flip project. I actually put this on the market last week, however I’ve been a little backed up in getting a video tour of the finished product. Nonetheless, here it is:

I have the property listed at $249,950 and hope to make it move fast. Here is the rest of the MLS description:

This luxurious home has been extensively remodeled to feature a gourmet kitchen with rich venetian gold granite countertops, travertine stone backsplash, clean steel appliances and upgraded maple cabinets with brushed oil bronze fixtures. The greatroom has soaring vaulted ceilings with designer paint throughout. Upstairs is a functional loft that makes for a great home office or extra living space. The welcoming master suite has double doors and plantation shutters, it also features a posh bathroom with travertine floors, granite countertops and a separate relaxing tub and shower. The large and private backyard has a sparkling blue pebble-tec pool with a cascading waterfall. Smooth epoxy floors in garage. Not a Short Sale or REO! Clean and move-in ready. Must See!

Yes, between now and fall of 2009 is a great time to consider investing in rental properties in the Phoenix Metro Area. Let’s look at some of the data and see how you can generate great cash flow in this market. Please note, that appreciation is ALWAYS icing on the cake and that cash flow is the main course!

Finding a great rental property begins by identifying the right area and investment strategy that meets your long-term objectives. So let’s assume that we are investing in a home in Gilbert Arizona. Here are the breakdown in costs for acquiring a 1,600 square foot three bedroom home via auction or foreclosure:

• $150,000 – Purchase Price
• $30,000 – 20% Down Payment
• $120,000 – Financed
• 5.25% – Interest Rate
• $3,000 – Closing Costs
• $2,000 – Fix-Up Costs

• $663 – Monthly Payment
• $140 – Taxes & Insurance
• $100 – Vacancy, HOA  & Misc Costs
• $903 Total Monthly Expenses

So, with an investment of $35,000 you can have a property that will generate roughly $200 per month in cash flow (assuming an average monthly rental rate of $1,100). Also, take into consideration the tax benefits and future long term appreciation of the property as icing on the cake.

This is a perfect storm for investors looking to acquire rental homes in Phoenix Metro Area: low housing prices for premium homes at historically low interest rates.

Here is a new video of a flip project in Gilbert Arizona. Here are some of the details:

• 2,036 Square Feet
• 3 Bedrooms | 2.5 Bathrooms
• Upstairs Loft
• Built in 1999
• Pebble-Tec Play Pool
• Shea Homes Builder
• 14 Days Estimated Completion
• $15,000 Estimated Fix-Up Costs

Some of the renovations for this flip project include; granite countertops throughout, travertine backsplash in kitchen, designer paint, landscaping, travertine flooring in bathrooms, stainless steel appliances, epoxy in garage and carpets cleaned. Here is a map of the home:

View Larger Map