Real estate investing comes with many benefits that you may be eager to start taking advantage of. For example, the right rental property can provide you with monthly cash flow coupled with equity appreciation, tax deductions and more, and these can have incredible effects on your overall financial situation. As a first time real estate investor, you may be excited to start searching for a property to invest in, but you may consider following a few helpful tips to make your search more successful. In Metro Phoenix there are so many opportunities where real estate greatly out performs any other investment vehicle. There is no other investment that offers such gains with virtually no risk. If you are an all cash buyer, and you wish to do a fix and flip; what is the worst that could happen? The home doesn’t sell so you rent it out until the market recovers and then sell it. And earn a great return as well! Here are a few pointers to help guide you and remember I deal with investments as more than 50% of my business, so if you have any questions about where or what to purchase, call me. The Valley has hundreds of sub-markets and each one has its nuances that will differ form one market to the next.
Determine Your Budget
There are investment properties that range in price considerably, and you will need to know up-front what your budget is before you can begin your search. The right real estate investment will generate revenue to pay your monthly mortgage payment and expenses, but there may be months when your property is vacant. Therefore, in addition to thinking about the amount of down payment that you can afford, also think about how affordable it will be to manage property expenses when the space is vacant. Make sure you consider the downside and ask yourself if you can weather the worst case scenario.
Consider Different Communities
You may consider being flexible regarding the communities that you invest in. Each community may have a different economic base and primary demographic. For example, some towns or even suburban communities may be largely comprised of college students or military professionals. Think about the benefits between the ease of finding new tenants versus the benefit of having long-term tenants. Phoenix has hundreds of communities and the exact same home in one community could sell for a wildly different price and time frame for selling this home depending on the sub-market conditions.
Analyze Cash Flow
After you have found a few properties to consider, it is important to analyze cash flow. Each property will be unique with regards to the required mortgage payment, income generated, property taxes and even repair and maintenance needs. While you can estimate these expenses initially, you should request historical operating statements from the sellers early in the process. You will find that some properties can be considerably more profitable than others, so it is important to complete a thorough analysis.
Some real estate agents have considerable experience helping their clients from excellent real estate investments to consider, and they may even complete a basic review of operating statement numbers on your behalf before showing you a property. When you are new to real estate investing, the experience and guidance of a savvy and knowledgeable real estate agent can be invaluable. When you are preparing to make your investment, consider following these tips, and seek the advice of a helpful real estate agent. Please call me if you need help putting together an investment strategy and then finding properties to meet your goals. I have been working the investment market for years in Phoenix and can be a great asset to your team and success.