Think back to the days in the early 2000′s when a homeowner could sell their house in California and use the proceeds to purchase three homes in Phoenix, live in one of them and rent out the other two. Well, such a lucrative investment opportunity may never happen again anytime soon. However, prices are stabilizing after the recent downturn and people are coming to town looking for places to live.
There are prime areas in the Phoenix Metro area from the Easy valley in Mesa and Tempe, up to the north in Cave Creek, Anthem and Carefree, to the west valley in Surprise, Glendale and Peoria. These areas are somewhat close in and close to the downtown and all that is going on.
The industries that are still growing in the Phoenix area are in the medical services, the educational sector, and the private firms that cater to these areas.
There are two things that are important to establish when thinking of investing in the Phoenix rental market. One is to find a good realtor who knows the Phoenix rental scene backwards and forwards. The second thing that you will want to establish is a good relationship with a banker who is conversant with the rental real estate market.
Of course you will have your contingency funds set aside for such things as repairs, lost cash flow from renters skipping out on their rent, taxes, insurance, and all those other pesky things that landlords have to pay for.
Also, you probably want to look for bargains, but beware that you don’t too bargain minded. Sure, you can save a whole lot of money on a wreck of a house, but do you really have the time and the resources to fix it up? Maybe the price is really low because the property is situated in a questionable neighborhood. Would you be able to rent it out at a price that would make it worth your while? Would decent folks want to live there? A cheap house may not be such a good bargain if it comes with a lot of problems. You are always better off paying more for a house in a better neighborhood, with good schools and shopping, than a bargain in a poor neighborhood. Properties in good neighborhoods hold up their value better.
You will want a good neighborhood with good schools and shopping close by. That is not too difficult to find. You may want to look for foreclosure properties in a desirable neighborhood. Find a realtor who has expertise in that type of property. If you are at the right place at the right time, you may just find that perfect rental property in a desirable neighborhood at a price that you can afford.
Your real estate agent and your banker will be of great help in this area. When you go shopping for properties, think like a rental person, and ask yourself if you would live in that house in that neighborhood.
Owning rental property can be a great investment opportunity for you. You just have to be aware of the responsibilities as a landlord. If you do not want to deal with the tenants yourself, you can hire a property management service. This will be an extra expense, but it may be worth it if you do not have the time to manage the property yourself.
Take your time getting everything set up. Don’t rush into anything before you get all of your ducks in a row. Plan your strategy and work your plan. You might have to spend some money getting a house ready to show to potential renters, so you might have some cosmetic work to do such as new carpets, painting, and minor repairs.
There are some very fine properties in the Phoenix area and if you can get just a few really good properties, you will have a waiting list of people wanting to live there. It is not too difficult to get a rental property to the point that it becomes a very attractive property that is high in demand among renters.
Phoenix investment tip
Find an investment property in Desert Ridge. This is a can’t go wrong area with only a small portion of the area built out and it sits on the northeast corner of Phoenix abutting Scottsdale to the east. You have huge shopping here with the Desert Ridge Marketplace and on the “T” of the 101 and 51 freeways, meaning you can get anywhere in the valley quickly.
If you are paying cash, great. if you want a loan, be sure you have or get clean credit, and have at least 25% as a down payment. That is how you get the very best investment money to increase your cash flow as much as possible on your home investment.