Low home prices and low interest rates make this a great time to become an investor in any Real Estate. While the timing my be perfect, there are some simple strategies you must follow to be successful.
5 tips will help you get started
- Know Your Options:
Not all Arizona investment properties are the same so it is important to determine what type or class of property fits your strategy. Do you want to become a landlord, or would you rather restore and resell properties? Are you interested in apartment buildings and other commercial real estate, or in buying land that can be developed? First-time real-estate investors may want to start with residential housing, since commercial real estate and land development still face challenging market conditions.
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- Partner with Experienced Persons:
First-time investors should find a real-estate agent experienced in investment property in Arizona. “Look for relational brokers who expect to do business with you again and therefore are going to be much more careful with what they recommend,” Merrill says. Even if you don’t collaborate with other real-estate investors, talk to them about pitfalls they’ve experienced. “Go down to the general district court in your area and listen to some landlord/tenant cases so you can get a sense of what kind of challenges landlords face,” says Jeffrey Taylor, author of “The Landlord’s Kit.”
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- Location, Location, Location:
If you buy a property with hopes of renting it out, location is key. Homes in high-rent or highly populated areas are ideal; stay away from rural areas where there are fewer people and a small pool of potential renters, Sjolin suggests. Also, look for homes with multiple bedrooms and bathrooms in neighborhoods that have a low crime rate. “Renters gravitate to a safe neighborhood, and if they have kids, they will want a good school district,” Sjolin says. Also think about potential selling points for your property. If it’s near public transportation, shopping malls or other amenities, it will attract renters, as well as potential buyers if you decide to sell later. The more you have to offer, the more likely you are to please potential renters, Sjolin says.
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- Have enough capital backing just in case:
Speak to potential lenders or even a financial planner about whether you have enough assets to handle the ups and downs that could come with investing. Even if you plan to rent out the property, count on paying the mortgage whenever there’s a vacancy. “If you can have about six months of mortgage payments saved up, it’s there if you need it, and you can use that money for repairs,” Sjolin says. Even if you’re planning to fix up a home and sell it, you may end up holding onto it for several months in the current market, Sjolin adds.
- Have a strong supporting cast
Don’t wait until a rental property needs repairs to find someone to handle them. “Line up maintenance individuals who can take care of the different challenges that occur so you can simply call the person when a particular issue comes up,” Taylor says. Other sources you may want to have relationships with are an attorney to consult with on tenant issues, a property management firm to handle the day-to-day rental affairs and an accountant to help you understand the tax ramifications of investing. The more support you have, the better you will be able to handle the problems that come your way.Whatever you do, understand that buying investment property is an entirely different experience than buying your primary residence. “When you go to buy your own home, you usually have emotions in it,” Sjolin says. “When you go to buy an investment property, you need to put all that aside and ask, ‘What makes sense?'”
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