flipped homes in the Phoe- nix metro area accounted for 9.1 percent of all home sales in the metro area last year, up 7.4 percent from the previous year although down 19.8 percent from five years ago and down 52.4 percent from its 2005 peak, according to ATTOM. In all, 55.9 percent of all flips in Phoenix last year were purchased with cash and 44.1 percent were financed. The median pur- chase price was $201,000 with a flipped price of $240,000. Investors made a gross return on investment of 19.4 percent last year, down from the 28.8 percent gross ROI they earned in 2017, a 33 percent decline. Despite the tougher mar- ket conditions, Manley said he and his partner are mak- ing a good living. The secret is to be smart about the buying side of the deal. Both of them have an extensive background in data, so they are not afraid to do the deep data dives it takes to locate potential properties to flip. “It was a lot easier two or three years ago,” Man- ley said. “If you’re coming out here to invest, I would only look at short-term flips. There’s danger in the longer flips.” He continued, “Our end game is to buy, rehab, and sell, or to wholesale it. There’s always a market for wholesale deals,” Manley explained. “A house that needs extensive rehab may keep us from buying it. We don’t want to get caught holding anything as the market softens.”
When it comes to buying and holding rental proper- ties, Richardson suggested avoiding the single-family market altogether. “The play right now is multifamily. For buy- and-hold, there’s a lot of low-density multifamily in the Phoenix market. You can still find good cap rates. We’re still seeing 8 percent on C and D proper-
ties, which is really good. Section 8 properties are paying more than market rent and getting a decent cap rate,” said Richardson, who indicated that inves- tors don’t have to go out into the periphery to find decent multifamily invest- ment properties. “Good deals can still be found in the city’s inner core,” she said. •
arbitration clause that requires a panel of three arbitrators. This is an easy, inadvertent mistake to make. Many national arbitration firms recommend claus- es because they include a specification that their firm is appointed as the arbitra- tion provider. This could be a drastic mistake for owners/ managers of residential rental property. If you think that arbitration may work in your situation, carefully consider the advantages and disadvantages, and then visit with your attorney. > Continued from :: PG 108 Phoenix Market Is Basking in the Desert Sun Once Again from institutional investors along with internet buy- ers (so-called “iBuyers”) through websites such as Opendoor, Offerpad and Zillow, has him diversifying his business model. “Our strategy is to find our own deals. A lot of guys were eating well when they could go out and buy foreclosures. That’s all dried up,” said Manley. “Most investors are buying from wholesalers. The thing is that we buy with enough margin that we feel pretty good about it. We’re steering away from those long rehabs.” ATTOM reported that all-cash sales in the Phoenix metro area grew by 25 percent in 2018, while the number of home sales to institutional investors increased by 47 percent last year. Even so, the number of
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