Buying a Phoenix investment property is an excellent way to diversify an investment portfolio and build some long term wealth. Zen Rent manages single-family homes, condos and townhouses in and around the Phoenix area, including in Mesa, Scottsdale, Chandler, and Gilbert. We work with a lot of investors at every level of experience who are purchasing homes that they will turn into rentals.
Through our many years of experience, we have learned that there are a few things to consider before, during, and after the purchase of any Phoenix property that will help you have a better investment experience.
Buy the Right Phoenix Property
Make sure you understand your investment goals and have a strategy in place for reaching them. The house prices in Phoenix are stable and attractive; it’s easy to buy a property just because it’s a good deal. But, to be a successful rental property investor, you need to know what you’re looking for and you need to be able to identify it quickly.
Remember that you’re not buying a property that you’re going to occupy. While you might insist on granite counters and a garden bathtub in the master suite for your own home, renters aren’t necessarily looking for those upgrades. They want a clean, well-maintained home in a great neighborhood for a good price. Think from the perspective of your potential tenants when you’re evaluating investment homes.
It can be a good idea to invest in a fixer-upper if that’s what you’re looking to do as an investor. But, you should stay away from homes that need a lot of work unless it’s the cornerstone of your investment plan. While the prices may be low and appealing, the amount you’ll have to spend to get that property into rent-ready condition may be more than you expect. Not only will you have to invest in repairs and rehab, you’ll also wait longer to begin earning rental income.
Do the Math and Make Sure the Numbers Work
Buying a home can be a very emotional experience, but when you’re investing in a rental property, you want to forget those emotions and focus on your numbers and your data. The right investment property will make sense for you financially.
Figure out what your income and expenses will be. Make sure those numbers fit into what you need and expect from this investment. Your comfortable cash on cash return and cap rate will depend on your investment goals and what you need to make this purchase work. Run the numbers across several different scenarios. For example, what will happen if you have a vacant property for six months? How will your cash flow be impacted by maintenance work? These are things you need to factor in when you’re determining what you’ll earn and spend on a property.
Phoenix Property Management Help is Invaluable
Another important tip that can help you have a better investment experience is to get professional help early in your investment process. Your Phoenix property management company can help you determine how much rent a particular property will bring in.
A good property manager can also discuss what kind of cosmetic or functional repairs and updates will be needed before the property you’re considering is ready for the rental market. You can get some advice on the types of tenants to expect and how long it might take to rent out your home. Don’t wait until you’re ready to rent the property out to consult a property manager; find out what you need to know before you buy.
We’d be happy to help with any investment questions or with your Phoenix property management needs. Please don’t hesitate to contact us at Zen Rent.