Top Tips When Buying Investment Property in Tempe
For rental investors, the real estate market in Tempe, Arizona, is booming. Both beginners and seasoned investors have plenty of chances in the local real estate market. One of the benefits of investing in Tempe, Arizona, is the combination of the excellent quality of life, employment options, and fully developed housing units.
Tempe, AZ, has one of the best real estate markets in the country. When you think about the benefits of investing in Tempe
This article will share some tips for purchasing real estate in Tempe, AZ, for investment purposes.
1. Focus on the Property Type
You must take into consideration the type of property you plan to invest in. In Tempe, Arizona, a wide variety of rental housing options are available. You could, for instance, rent to tourists or students. You’ll need to consider a variety of target markets. Due to the constant need for student housing generated by the ASU Downtown Campus, you may cater to college students.
Old Town Scottsdale in Scottsdale is an excellent location to start if you want to appeal to the families with children. Keep in mind the local opportunities and attractions and the target audience for each. In many instances, concentrating on these factors may enable you to envision the kinds of people who could be interested in renting from you in a specific place.
2. Understand the Current Housing Market
Avoid making low-bid offers on a property if the market is in favor of the seller. The seller will have received market education from their realtor, and will be aware of the value of their home. In a buyer’s market, you might be able to submit a lower offer and have it approved.
The key in any market is to request a Comparable Market Analysis (CMA) from your agent for the property you intend to purchase. Some vendors set a competitive starting price for a home, which may already reflect fair market worth. You should also be aware of current local home sales prices for comparable properties.
3. Consider All Possible Expenses
When you start looking at what goes into maintaining an investment property, there is a lot to cover, so the running expense checklist will be lengthy. The most typical prices that spring to mind are the normal maintenance costs, such as repairs, renovations, and property tax, but there are certain particular charges that landlords must take into account.
A home that you intend to rent out requires general maintenance. You will have to keep money set aside to keep up with the maintenance as well as a plan to up with maintenance and repairs.
4. Organize Your Finances
It is always preferable to make sure that debts are completely paid off before buying a rental home in case your estimated returns from your rental home turn out to be lower than the cost of any outstanding obligations you might have.
Additionally, to obtain the most practical deal for your circumstances, make sure to shop around as much as possible when speaking with realtors and banks.
When looking for a mortgage you should pay close attention to the high-interest rates you’re likely to encounter and run the numbers on each potential offer to ensure that you’ll still be generating money after mortgage payments and property expenses.
5. Consider the Location of the Property
Your investment property must be matched to its overall environment. If a magnificent vacation home is situated in an area that tourists don’t frequently travel to, it won’t attract many visitors. Consider the people you are marketing your property to, and build the marketing around that.
Consider the neighborhood first, then the property itself. The right property in the incorrect location isn’t necessarily the best option.
6. Think About Bringing on a Property Manager
If you are handy and only own one property, it might be possible to take care of most issues on your own. You could call repair experts for maintenance above your skill set, just like you would with your own house.
However, you might want to think about hiring a property management business if you own more than one investment property, don’t live close to your investment property, don’t want to do hands-on work, or just don’t have the time to deal with renters on a daily basis. A property manager can relieve you of a lot of responsibility and help you bring in more income by handling multiple properties for you.
7. Understand Demand and Yield for Rentals
Investors sometimes intend to rent out their property in order to make money and cover expenses. Assessing the financial sustainability of an investment property requires looking into locations with high rental demand and income.
Rental yield determines how profitable a property can be. While gross yield calculates profit before subtracting payments, rental yield includes these other expenses. Mortgage payments, council fees, upkeep, and insurance costs are a few of these. Ideally, you should be able to pay these expenses out of a consistent, stable rental income.
For these calculations, it may be helpful to look at the performance history of other comparable properties, including vacancy rates, average rental yields, median weekly rent, and its prospective growth rate, as well as what kinds of properties are in demand with tenants.
Tempe is a city of unrivaled opportunity for those wishing to invest in profitable real estate. Like any other market, it pays to do your research and do as many calculations as you can. Looking for assistance with a Tempe, Arizona, real estate transaction? Contact the knowledgeable staff at get MULTIfamily.