Are you looking to buy investment properties in the greater Phoenix – Scottsdale – Tempe – Paradise Valley market?
The valley of the Sun is smart place to invest your money whether you’ve been buying homes, condos, and apartments to rent in this area for a while, buying your retirement home and leasing till you move in, or you’re looking to add to your financial portfolio horizons in the desert of Arizona.
Before you commit to a place within the Valley of the Sun, however, there’s several things you should and should not do to make the best moves. Here are (Juan Pesqueira Realtor and Appraiser) 9 do’s and don’ts when buying investment properties in Phoenix to enjoy the benefits and avoid the pitfalls of joining the real estate game in Arizona.
The 5 Dos when Buying Investment Properties in the Phoenix metro, Scottsdale, Tempe, and throughout Maricopa County.
If you’re interested in using real estate to increase your personal capital, the available properties in Phoenix, Scottsdale, Tempe, Paradise Valley area can be sound investments. The combination of lower interest rates and the potential for the resale values of said properties to grow over time sets the stage for return on investments that could work out in your favor.
Before you take a chance on reaping the benefits of successful investment properties in Arizona, nevertheless, you should learn as much as you can about real estate in this area. It’s easy to dish out million dollars for properties in and around Phoenix, so keep these do’s in mind when looking for the right investment property for you…
1. HIRE A REALTOR and APPRAISER
REALTORS® are known for helping people buy and sell real estate, but much of what a REALTOR® actually does to earn their commission happens behind the scenes. A good REALTOR® will make your real estate transaction flow smoothly through each step of the process, leaving the impression that their job is fairly simple… https://lightersideofrealestate.com/real-estate-life/agent-life/what-does-a-realtor-do-to-earn-their-commission
An appraisal is a professional appraiser’s opinion of value. The preparation of an appraisal involves research into appropriate market areas; the assembly and analysis of information pertinent to a property; and the knowledge, experience, and professional judgment of the appraiser. https://www.appraisalinstitute.org/appraisal-profession/
2. CONSIDER THE TAX BENEFITS
The first thing you should do when buying investment properties in Phoenix, Scottsdale, Tempe is considering the tax benefits (including 1031 exchange). With the income you’ll make from the property in mind, think about interest, taxes and insurance, while also focusing on things like losses against your income and wear and tear that you can deduct later on. The tax advantages can also include benefits like selling one rental property and using the funds to pay for another one without paying steep taxes on your profit.
If you’re pursuing tax breaks through investment property in Phoenix, Scottsdale, Tempe, finally, make sure you’re well versed in the advantages and disadvantages of both Arizona’s property and income taxes. This is an are you should consult with your accountant.
3. TAKE PROPERTY TYPE INTO ACCOUNT
The second thing you should think about when investing in rental properties in the Valley of the Sun is taking property type into account. Once you’ve decided that you’re in the market for a rental property, 2nd home, vacation home, or retirement home. Do some homework on the sort of property that will help you reach your goals, while taking the city’s attractions and other amenities into consideration.
For example: Tempe (Home to Arizona State University #1 largest university in the country) is a college town, your #1 renter will be a college student with parents money for the most part. Condominiums and homes are great but consider the type of renter (college student). Full disclosure, I went to ASU, and boy we beat the shit out of the dorm room and our apartment unit. Consider damage when calculating cap rates.
Old town Scottsdale and Scottsdale in general is great for snowbird and young professionals renters. This area is also great for seasonal and Airbnb type rental.
Downtown Phoenix also gets college students because of ASU downtown campus but also business professionals, families, etc.
Maybe your looking for your future retirement property in North Scottsdale, Paradise Valley, Phoenix early on in life. You can easily rent out for the time being to cover cost and buy down the mortgage. You’re ready to retire and move (if not payed cash) financially you’ll be better off.
Millennials are buying property and renting a part of your residence to save money. Vacation homes and condominiums is another way to generate extra income. If you’re focusing on the Phoenix area, think about attractions like Arizona State University, golf courses, Old Town Scottsdale, Downtown Phoenix, Fashion Square Mall, Sky Harbor airport, Sports team locations (Arizona Diamondbacks, Phoenix Suns, Arizona Cardinals) and concert venues, and others that cater to the city’s tourists, families, and retirees.
4. BE AWARE OF THE CHANGING ECONOMIC LANDSCAPE
Be aware of the changing economic landscape in the Phoenix metro area. In addition to learning about Arizona’s real estate scene, get ahead of the game by thinking about the industries establishing themselves in Phoenix, Scottsdale, Tempe or in Maricopa County. Consider how your property could appeal to renters who work for these up-and-coming companies. Due to our inexpensive real estate and city tax benefits some major teck companies, finance companies, and insurance jobs, are relocating to Phoenix. According to our Governor of Arizona Doug Ducey “we are open for business” …
BBC News recently published an article about how financial firms—looking for a place to thrive—are saying, “Goodbye New York, Hello Arizona.” The story notes that, over the 12 months leading to March 2017, hiring for finance and insurance jobs in Arizona grew faster than any other state in the country:
All this can lead to lucrative investment properties if you play your cards right. A sound investment is offering housing close to the area’s for these thriving employers. This is an opportunity to take advantage of booming industries in the area and make business savvy decisions in Phoenix.
5. GO WITH YOUR GUT!
When the market crashed many investors left the Phoenix, Scottsdale, Tempe real estate market. Some went bankrupt, others choose to leave. During this time buyers were scared to buy investment properties. Some investment properties were as low as $60K – $100K and the luxury market dipped as low as $600K-$999K. Today those smart investors that went with their gut are reaping the rewards. The $60K – $100K properties are now valued at $190K – $250K and the $600K-$999K are now valued at $1.2M – $2M+. to quote Warren Buffet “as an investor it is wise to be “Fearful when others are greedy and greedy when others are fearful.”
The 4 DO NOT when Buying Investment Properties throughout Phoenix, Arizona
If you know what to do when spending money on Phoenix real estate, avert setbacks by also knowing what not to do when searching and buying investment properties. The drawbacks associated with buying investment properties often stem from financial issues and tax problems.
It’s easy to think you’ve found a golden property and then wind up with difficulties. Therefore, it’s best to understand the risks before you dive head first into this competitive real estate landscape. Real estate rental properties are not ideal financial moves for everyone in Phoenix, so make sure these don’ts – don’t end up costing you in the long-term.
6. DON’T UNDERESTIMATE THE RESPONSIBILITIES ASSOCIATED WITH BEING A LANDLORD
Because valley locals pay high rents, they will want a landlord who is available immediately when issues arise, while also expecting more from their landlord in day-to-day life (See landlord tenant act). The responsibility of managing an extra property requires you to commit time and expend energy to make sure small repairs are completed around the property and your tenants are taken care of regularly. When you’re ready and willing to become a landlord here, consider how it might affect your day to day life. A GOOD PROPERTY MANAGER can take away this stress.
7. CRUCH NUMBERS – ONCE…TWICE…THREE TIMES+
The 2nd thing included in the do’s and dont’s when buying investment properties in the Phoenix, Scottsdale, Tempe area is not slacking when computing the numbers. There are easy-to-use tools like online mortgage calculators at your disposal, your REALTOR, or an APPRAISER. Be sure to take advantage of these resources to estimate your future housing costs with the information you have about your current finances and how they relate to your properties of interest.
Costs, down payments, and taxes are as essential as insurance and interest rates, so don’t skimp on the details when figuring out the amount you should expect to pay each month. Take the time to see if buying an investment property in Arizona makes sense for you this year. You can make an informed move or avoid a detrimental one now for smart investment practices that will work out in your favor later on.
8. RESEARCH LOCAL REAL ESTATE TRENDS & SPECIFIC PRoperty characteristics
When investing in rental properties in the Valley of the Sun, DO NOT forget to research local real estate trends. Even though you are working closely with a Realtor, an Appraiser, advisor of some sorts. And don’t forget to pay attention to property characteristics such as zoning & zoning laws, encroachments, building codes, HOAs, etc. while looking for rentals. The property characteristics will affect the property when its time to sell for a profit and reap your rewards. Also Having proper knowledge of local neighborhoods will help you in your search for a spot, especially when you consider schools, transportation, and recreation.
Given that tenants will be drawn to locations with ample shopping and dining opportunities, focus on up-and-coming communities, as well as ones that have been thriving in Phoenix for a while to refine your search and find hidden gems.
9. GET EMOTIONAL and stick to the end game
The final thing you should make sure to remember when investing in rental properties in Phoenix is keep emotions out of the process and remember this is an investment! Unless your buying a retirement property, its best to stick to your numbers and game plan.
Are Looking to or considering buying an investment or retirement property in the Phoenix, Scottsdale, Tempe, or throughout Maricopa County? Contact TOP Realtor. Appraiser. Consultant Juan Pesqueira with Attorneys Realty – lets chat real estate investing and retirement what you are looking for…
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