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Transcript

Arizona As A Wholesaling Market

Phoenix Strengths And Saturation

Comparing Phoenix To Texas Metros

Secondary Markets And Buyer Depth

Assignment Fees And Title Process

HB 2747: Disclosure Rules

HB 2486: Appraisal Mandate Concerns

Potential Impacts And Industry Motives

Practical Advice For New And Pro Wholesalers

SPEAKER_00 0:03

Welcome to Wholesaling Around the World, and today we're going to be talking about the Valentine's Day. Now, tomorrow is Valentine's Day, and as I was preparing for today's wholesaling around the world episode, I just did a quick Google search and I was like, is there any state that is synonymous with Valentine's Day? And shockingly enough, I did not know this until yesterday that Arizona has multiple nicknames, including the Valentine's State, because Arizona was the 48th state in the United States, and it was admitted into the Union on February 14th, Valentine's Day, 1912. And so one of its many nicknames is the Valentine State, which is just shocking to me. I didn't think that there would actually be anything that popped up, but it's also better known as the Grand Canyon state. And it's also very well known as a wholesaling hotbed of a state. And so we're going to break down my personal feelings about Arizona. And then we're also going to cover the many different regulations that have come down on the Grand Canyon State or the Valentine State. Now that being said, we always share the population rate because there is a direct correlation between the amount of people that live inside the state to how I feel about it being a viable location to wholesale in. Arizona is the 14th most populated state. And I feel like that's pretty fair in comparison to how I feel about the state in general. Not Phoenix, not the major city, but the state in general. Those areas are fairly decent to wholesale in. But overall, you kind of just lack locations, and there's so much of the state in general that is so rural, just plain desert or mountains, and there's there's nothing going on. There's no end buyers, there's not enough motivated sellers. And so because of that, that's why I feel like Arizona ranks somewhere in the teens to early 20s in regards to wholesale. Now, Phoenix in general has always been one of the best locations to wholesale in. And why? Because there's a ton of population there, and there's an astronomical amount of in buyers. The hard part about wholesaling in Phoenix has always been the acquisition side because it is saturated and there's so much competition, not only just in the wholesaling world, but the in buyers are also running their own marketing. You've got the amount of realtors, you've got the i buyers that are big in Phoenix. And so there's a ton of competition, not only for what we do, but just in general when it comes to real estate. And so the downside to wholesaling in Phoenix has always been like, man, I've got to really compete, especially when you compare it to places like Texas, which I have always felt like is the best place for wholesaling. Even in a location where I'm at, Dallas Fort Worth, it is not as competitive as it is in Phoenix, Arizona. A place like Houston, Texas, not as competitive as Phoenix, Arizona. And that's pretty much how I've always felt, especially when it comes to virtually wholesaling. You are going to compete with all of the investors that are willing to go sit down and do the belly-to-belly appointments and really offer more money. And that's always been our issue. So when I've looked at Phoenix, it's always been hey, can I do somewhere between five to ten deals a year? That's kind of my goal, and and not really ever trying to do more than that. Now, when it's a lead outside of Phoenix, it's not nearly as competitive, it's not nearly as difficult for acquisitions. It really kind of becomes more of a normal state in comparison to the competition. And so acquisitions get a little bit easier, but what else suffers because of that? Well, there's less buyers in some of those locations. So using Yuma, Arizona, which is on the far west side of the state, not nearly as many buyers. And so you do have to buy deeper than you would have to buy in comparison to Phoenix. And then Tucson, where the University of Arizona is a solid market, you know, not as many buyers, also not as populated as Phoenix. So you could do volume there to a certain degree, but you're going to get tapped out as far as the amount of buyers that you have in that location. And so overall, Arizona, fantastic because you can get really high assignment fees, higher than the average. And so it's very common to be able to get a$20,000,$30,000,$40,000 assignment fee in Phoenix, whereas the rest of the state is pretty average$10,000 to$15,000. Now, Arizona, one of the things that are going for it, it is a title state, it's not an attorney state. So I love that. Closing deals is fairly easy, but we have had some regulations come down, and then there's even future proposed bills that are currently going through legislator right now. So let's talk about this real quick. HB 2747 in 2022 was passed. Arizona mandates that wholesalers disclose in writing their status as a wholesaler before entering a binding agreement with a seller. Sellers have the right to cancel contracts without penalty and keep any earnest money if this disclosure is not made. So this regulation enforces transparency between wholesalers and sellers. It also empowers sellers to back out of deals if wholesalers fail to meet their disclosure obligations. Now, this is very similar to the regulation that was passed in Ohio. I don't necessarily hate this regulation. I don't think that there's anything wrong with the regulations coming across all of the United States saying, hey, wholesalers, you just need to disclose this up front to the sellers. There's nothing wrong with that. And the reason why is because this will weed out the bad wholesalers, the people that are lying and manipulating, and there's no issue whatsoever if you are truly doing the right thing by the seller, you disclosing that you are a wholesaler. So I have nothing, I have no issues whatsoever with HB 2747. Okay, it's very easy to disclose up front to a seller that you're a wholesaler. Now, there is a new bill that is being proposed, and it is HB 2486. Now, this is still ongoing, and and and hopefully this is so out there that it's it's not going, but this would be a bill aiming to establish new regulations for real estate transactions involving homeowners who are in financial distress, potentially affecting methods like subject to deals, seller financing, wholesaling. They're really going after the off-market, direct-to-seller deals when there's not a licensed realtor or real estate agent involved. And based off some of the research that I've seen on this, it is they're wanting to like mandate that there's an appraisal done and that a seller could not sell below a certain percentage of the appraised value, that to me is wild. And I totally understand why regulations are coming out to try to protect sellers, but to literally get rid of a seller's opportunity to be able to sell a property for however much they want. If I don't want to involve the licensed realtor, now I have to get my property appraised, and I cannot sell it below a certain amount, that is wild. Especially when you start thinking about the amount of financially distressed sellers there will be that will their backs will be up against the wall facing a foreclosure or or any sort of financial distress element, and they lose their right to be able to sell their property for whatever amount they choose. That isn't I have an issue with that. I don't think that that's right that the government would step in and want to mandate to that degree. That to me is kind of us losing our rights, and ultimately, what are the reasons behind regulations? Well, to me, it's always been that they're attempting to protect sellers, and this is the first regulation that I've seen that really is taking sellers' rights away when you're mandating what a property can or cannot be sold for value-wise. That is an issue that I have with that regulation. I honestly I think it is so uh extreme and radical that I don't see it getting passed, at least I hope not. Um, I know Jerry Norton has a video out about this regulation. He has a a uh a link in there that shows you how you could go in there and essentially kind of protest or lobby against this being passed. So I highly recommend checking that out. But I when every anytime we've seen regulations come out that are this radical, um, very rarely does it actually get passed and move forward. And again, that what would this create? I think it would create issues that they are trying to resolve with the regulations, and so this doesn't even feel like they're coming after wholesalers, this is just coming after the need to have a licensed realtor, and so this feels more of like a money pump towards the Arizona real estate department, where it's like, hey, in order for you to choose what you want to sell your property for, you would have to have a licensed realtor. And so that to me is just eliminating rights of sellers and their ability to do what they want and make a choice for themselves. And I don't know if that has anything to do with wholesalers more than it does just trying to literally get more transactions done by licensed realtors. That's my synopsis of this. So, overall, from a virtual wholesaler perspective, as of today, I don't have an issue with the regulations that are there. Transparency is not that difficult to just tell a seller, yeah. Are you going to potentially lose out in deals in Arizona because of the competition that exists? Yeah, in Phoenix, probably. The rest of the state, probably not near as often. But I think these types of regulations are actually beneficial for us as wholesalers. I would not recommend Arizona, though, as a state for a newer virtual wholesaler because of the amount of leads that you're probably going to get in that metro Phoenix area and how competitive it is and saturated, even today, despite the fact that the market has kind of softened a little bit in the Phoenix area, still highly competitive. I would much more refer the Midwest and the Sunbelt states for newer wholesalers. If you're established and you're looking for an area where you can go get a higher assignment fee, those$20,000,$30,000,$40,000 rips, Phoenix, Arizona is absolutely a great location for you. And then those secondary markets are fantastic for just deal flow. So kind of middle of the pack, that's my feelings about Arizona. It's kind of always been my feelings. And I have to tell you, Arizona is probably the state, the second state that I've spent the most time in. And so I absolutely love the location. Um, I've even contemplated moving to Arizona in the past. So I do really love the state, but just overall, in comparison to places like Texas, Florida, Ohio, Michigan, Missouri, I don't think it compares. I would much rather wholesale in those states than Arizona. For those of you that are wholesale, I know there's a ton of wholesalers in Arizona. Let me know. Do you agree? Do you disagree with my take? Let me know in the comments. Regardless, show me some love, like today's video. We'll see you guys tomorrow.