The Arizona real estate market can certainly be a great investment if you know what to look for in a property. But it is not as simple as finding a property that you feel is selling below market value or below its potential. There are several factors that you will want to consider to determine if the property will be a suitable and profitable rental for you in the future.
The most popular comments about real estate all concern location. That is the one feature that you can never change. The location of a home today is the location that it will always have. That is not to say that the area around it won’t change, in fact, that is one reason you want to investigate the neighborhood around a potential rental property. You need to try to figure out if the area is up and coming or if it is stagnant and will not change or improve much in the coming years. Your goal is to locate a property in an area that is just beginning to improve and become more desirable. You will be purchasing before the property values rise and then enjoying the added value as the neighborhood improves and helps your equity to grow. Improvements in the local retail scene, the opening of a new community college or a satellite campus, and upgraded public transportation are all factors that will make the area more desirable for renters and will increase both your property value and your rental potential.
You will also want to dig into the financials of the property. It is not enough to just look at the asking price and believe that it is below market value. You will want to look at comps in the area to know the true market value of the home but also explore what the local market can support for a similar rental unit. In addition it is crucial that you explore the occupancy rate for the area. Knowing that there is a shortage of rental units in the area will make the property a much more sound investment. If it is taking several months on average to locate a tenant, then calculate that additional carry cost into your budget to be certain you can cover the additional expenses without any incoming revenue from the property.
You will also want to evaluate the cost of any repairs or renovations that you believe the property needs to be a successful rental unit. Are they items that you can complete in a timely manner and for only a small investment or will you need to use a contractor to complete the work? Not only would a contractor cost more but it would also extend the time period before you could rent the property. Again, this means more carrying cost for you and a longer wait to see a return on your investment. Evaluating a property for a real estate investment is not as simple as looking at a property that you would be living in. The investment property must be viewed as a financial evaluation and not hold any emotional value as you would place on your own home. Visit www.azrealestatewholesale.com to learn more about the process of purchasing a real estate investment property. You can talk to investment professionals and benefit from their years of experience to be certain that you are investing in a rental property which will make you a good return on your investment.