Have you noticed old houses getting sold in your neighborhood, fixed up and then sold again? Sometimes known as flippers, real estate investors are repairing old homes in Globe and getting them back on the market, where the demand for housing is great.
“They invest their money and time,” says Eric DuFriend, associate broker at Oak Realty in Globe. “They revitalize and save homes.”
DuFriend says short-term investors represent 10-15% of the Globe-Miami market, a figure that has not changed much in the past few years. There are, however, more investors in the market, driven by a lack of low-end properties in the valley.
“For the money, you get more up here,” he says, “you just don’t have the selection.”
That goes hand in hand with the small town, he adds, and its heating up the competition for available houses. Globe residents have received cold calls, and this past fall, billboards along highway 60 offered to buy old houses. For long-time investor Dallin Law and relative newcomer Michael Candelario, the best way to find houses is through referral.
“When people see the before and after,” Candelario says, ”they tell their friends.”
Real estate investor Michael Candelario grew up in a small mining town in West Virginia, the son of a military man. He bought his first property, a 4-unit apartment building, in 2000, from the football coach; his first tenant, a fellow football player.
From that first experience Candelario “got the bug” and has been doing it “on and off” ever since. He studied Real Estate at the University of Wisconsin-Madison, spent time in Texas and moved with his family to Arizona four years ago.
To date, he has flipped 11 houses in Gila County. For the past two years he’s been doing it full-time, and for now his focus is on Globe. He likes that real estate is stable here, due to the strong mix of economic activity in a small market. FDA and FHA programs are also strong in the area. The last housing boom in Globe was in the 70s, he points out.
“There are a lot of homes with deferred maintenance,” says Candalario, “and a shortage of homes for sale or rent.”
He sees himself playing a role in the housing solution.
“There are people who really need to sell their houses and can’t,” he says. “We’re taking a property that nobody can buy, or it’s too much work. We bring it back to life and save it.”
Some of the houses in the Globe-Miami area are “too beat up to get conventional mortgage,” according to Dallin Law, who has been a loan officer at Sun American Mortgage for 34 years. Houses in need of major rehabilitation, he says, require “hard money loans” that have higher interest rates and greater down payments.
If a house is built before 1978, chipping paint on the eaves is enough to limit a potential sale to cash buyers, according to DuFriend. Getting the painting done, something an owner can do themselves, will avail the home to three times more buyers.
“Here, part of the mystery is behind the wall,” Candelario says. “Every project has unique challenges.”
The old mining homes built between 1915 and 1930 have a lot of wood construction, and according to Candelario, the renovation work is frequently foundational. There are termites in Arizona, for sure, he says. No exception here.
Another challenge is how to retain some of the unique aspects of the space while addressing new trends, like the size of living rooms. On a December day he walks through a house under renovation at 457 E Cedar. The floors and walls have been removed. A low ceiling has been taken out to reveal the original ceiling, three feet higher.
“There is a lot of history in the houses,” he says, “great craftsmanship of the built-ins, the high ceilings.”
His favorite part of the process in bringing the prior owners back to the house. One woman was overwhelmed at seeing the changes to the home her family lived in since 1931.
“She appreciated that it had new life,” says Candelario, “and I got to hear all the stories about the house.“
Candelario “thoroughly enjoys” fixing up the house and making it look nice, but he calls himself a “numbers guy.”
To date in his real estate endeavors, he has yet to take a loss. While acknowledging a little luck in that record, a key to his success is his quick turn-around. He bought the house next door to his current project on the corner of Cedar and High on July 3rd, listed it by the end of August, and sold it in October.
“We go pretty fast,” he says of his renovation timelines. “10 weeks max.”
For Dallin Law, rehabbing houses is more of a family thing.
“It started as a way for our kids to make money over the summer, for college,” he says. “We’re not super fast, but we enjoy working together.”
Law has had rentals in Globe and Miami and with his family, have been rehabbing one or two houses a year. He employs local licensed contractors for electrical and plumbing, roofing, and AC, but for demolition, painting, tiling, he gets help from his kids.
“My most profitable were initially the most gross,” Dallin Law reveals. “One was so full of cockroaches, it was disgusting.”
Law, however, says there are properties he couldn’t make profitable, even if they were given to him. According to Candelario, very few houses cannot be salvaged. It’s about how much risk an investor is willing to take, he says.
The biggest challenge, from his business perspective is the availability of qualified contractors in the market, and a lack of a job board specific to this area and type of work. While he always bids locally first, Candelario’s rapid time-to-sale model makes it difficult to schedule with local contractors. He brings people in from Apache Junction and Payson. He also recruits locally and provides training in Phoenix. It’s “a hard gig,” he acknowledges, with a 5-6 am start time.
“There are good talented people here,” says Candelario, “but getting ahold of them is hard.”
Sell the House — Return on Investment
“Be an expert in one thing,” says Candelario decidedly,” not everything.”
When it comes to selling houses elsewhere, Candelario has tried his hand as a real estate agent. Here in Gila County, he uses local agents.
Houses that have been updated or renovated by investors move faster than those in disrepair, according to Du Friend. The buyers are varied. From people escaping the heat of the valley to husband-wife teams working at the mines.
“People don’t want project after project to do,”says DuFriend. “They want to be able to move in and start living life.”
After years helping others move into their new lives, both Law and Candalario have purchased homes of their own in Globe. Law and his wife moved into their “labor of love” in November, 2019 after working on it for a couple of years. Candalario resides here part-time when he’s not in Buckeye, with his wife and three children, who he says offer him harsh critique, on everything from door placement to paint colors.
Candelario notes that it’s not just the new owners and previous owners who benefit when old, unoccupied houses are refurbished and put on the market. With the increase in value of the property and reassessment at sale, the county collects more property taxes for schools, roads and local government.
For DuFriend, the community benefits are clear and simple.
“If someone is willing to take a risk and put their money into something that was previously an eyesore in the neighborhood, make it nice, and add another 50 years to the life of it, who wouldn’t want that?” he says. “Especially if you live next door.”
A traveler, Patti Daley came to Globe in 2016 to face the heat, follow love, and find desert treasure. She writes in many formats and records travel scraps and other musings at daleywriting.com.