I should write about AZREIA’s 9th Anniversary and what it means to be serving Arizona investors for so long, but I’m not going to. Maybe I should write about AZREIA bright future and changes we are making as we begin our 10th year, but I’m not going to. I should probably write about our new membership plans that provide every member or new member with options that fit their unique needs and budgets, but I’m not going to. Why? Because I believe that this time in our market is so special, so unique and so important that I must provide my opinion, so you can determine your own opinion and decide how you are going to move forward.
I believe we will look back and see that August 2011 was the second price low in our market and that our “W” recovery on price has begun. Why is this important? Well, given that you can’t time a market or at minimum there is heavy risk in trying to do so, you still have to look at trends a make a call. If your call is like mine and you think that pricing has bottomed and is on the way up, you will start making other decisions and making them faster.
What type of decisions? Purchase decisions, lease option decisions, how you structure your option agreements, financing decisions on types of loans, terms and rates, etc. You may get more aggressive on your fund raising and partnerships to take advantage of the pricing. You may start to increase your knowledge on alternative cash flow strategies, like seller financing. Or, you may start looking at different types of real estate that are more distressed like commercial.
Changes in market conditions always bring changes in strategy. This will be different for each of you, so don’t ask me what you should do, but here are some suggestions:
- Review your business plan.
- Update your business plan based on how you think conditions are changing.
- Execute on your revised plan.
While I think now is the time to double down, don’t do so carelessly. Inventory is low. A higher percentage of the inventory will be on questionable (the dregs) houses or apartments to invest in. You have to be careful or said another way, smart about what you are doing. Just because pricing may be headed up, don’t overpay because you think you might lose the deal. Don’t pay more than the property is worth. Communicate extremely well with your partners and private money sources. Let them know what you are doing and why, especially if you have changed something about your strategy or plan.
I also think that Arizona is the best state to invest in. Sure, I know more about Arizona than the other states. But, I do talk to a lot of investors and there is a reason so many of the Canadian, Australians and Asians are investing in Arizona real estate and it is more than the exchange rate. It is the value of the investment from both a cash flow perspective and a strong belief in future appreciation.
Last month, I presented in Calgary, Edmonton and Saskatoon. In each presentation I was surprised by the number of Canadians that are buying second homes rather than income producing property. There were several reasons with the Canadian dollar being on par with the US dollar and the median sales price in those three cities being nearly $400,000. Arizona looks and is cheap. They feel the investment is safe because of the low acquisition price.
Certainly I not telling you anything you don’t already know. The only question is what are you going to do about it?