The World's Worst Salesperson

So I have a new Realtor friend. Scott lives and works out of state in Nowheresville, but grew up in Phoenix. He moved 30+ years ago. I sent him a referral. He sent me a referral. And, most important, Scott is absolute joy to speak with every time we get a chance to talk.

Last weekend, Scott called me out of the blue. Did I want another referral? If it is anything like the last one he sent me, I certainly do! But alas, it isn't.

Scott works with an investment group that wants to buy property in Maricopa County, rent it, hold it and eventually sell it. They have been working with Scott for a while and it is time for them to make their big leap into the Arizona market. Then he said, "What do you think?"

And here is why I'm the world's worst salesperson: any fool buying for investing in Maricopa County at this time is up against multiple offers. Investors like wholesale pricing, that is, they don't want to pay full price or top dollar. Good luck finding that right now. And even if an investor is willing to pay $375,000 for a single family home in a reasonable neighborhood, they aren't getting 1 percent ($3,750 a month) of the value in rent--which is considered the "standard" baseline in most real estate investing circles. And yes, rentals are in short supply, but so are single family dwellings. And with interest rates low, people can buy cheaper than they can rent.

Scott was undeterred. "Well, what about new builds?" he asked. There are lotteries right now. Every lot has a premium--even ones that back up to busy roads. Plus, builders got a bad reputation for selling to investors in 2004-2005 and aren't excited about being "that guy" and doing it again.

I then told Scott what we did in 2004. We bought in other areas of the country where prices were lower, rents were made up of the 1.5% of the sales price and there was a shortage of rental homes. We made bank for years (until we missed the major signs on the wall and hung on too long. But, that's another story, for another blog).

Seriously, as much as I would love to help out Scott's folks, I'm not the agent for this. But, I did make a recommendation. What about multi-family? This is the fastest growing market right now in Maricopa County. I can sell apartments but I am not going to. I referred him to my commercial agent friend, Bill who is a better fit, and obviously a better salesperson.