Trip to Arizona in Search of Foreclosures and Real Estate Deals

I just returned from a fascinating trip to Phoenix/Scottsdale/Tempe Arizona to dig my teeth into the current distressed real estate market. I lived in Arizona a few years ago, playing professional golf on The Gateway Tour and various other mini-tours. At the time, the buzz words were foreclosure and Obama, and I saw real opportunity to pick up real estate at 50% of its pre-sale value but I didn't have the resources to capitalize.

On this past trip, I was surprised to see prices have dropped further, and the problem was worse, with over 800 foreclosures per day in the Phoenix area. Some people were foreclosing on 1 property while buying another, because they couldn't afford the payments and the home had crashed in value from when they bought it so they were better off just walking away and losing their down payments and equity in the property.

The primary cause of these foreclosures is over-lending, unethical lending/mortgage brokers, and misinformed Buyers who simply did not understand the structure of a lot of these $o down, 1% mortgages. Lenders weren't regulating their practices, mortgage brokers were lending to unqualified Buyers to make a buck, and Buyers were not aware that their 1% mortgages would jump to 7% in 2 years.

In Arizona, land is plentiful and construction costs are less expensive so home prices consists mostly of the pure cost of materials and labor to construct them. With the amount of foreclosures today, Buyers are picking up properties for 50% of the replacement costs.

I met up with a friend from West Vancouver who now lives and works for a Real Estate Investment Company in Scottsdale. We toured a few properties and I was amazed. A 3 bedroom house for $60,000 flipped and SOLD for $150,000. A luxury 800 sq ft condo for $60,000 that rents fro $700. A luxury 3 bedroom townhouse for $150,000 that sold pre-sale 4 years ago for $600,000. A 35 unit apartment complex with an annual rent roll of $225,000 for $560,000!

Needless to say there are amazing deals in the Desert. When the US economy turns, and the financial sector straightens out their lending practices, these houses and apartments with undoubtedly return to original replacement value and above. The trick is that is requires all cash to get the best deals and Buyers have to be willing to take on the risk of dilapidated properties as theft and damage are common place.

I hope to Buy a condo down there this winter, and if anyone reading this is interested please contact me and I can help you get in touch with the right people.

While a 1 bedroom condo in Vancouver is about $400,000 these days, and an average house is over $1,000,000, I still have faith in our financial system, our provinces rich supply of natural resources, and the strong International Demand in our city to sustain current home values.

If you have any questions regarding Vancouver or Arizona Real Estate please do not hesitate to contact me anytime.