Did you move to the valley and start by renting an apartment, condo or single-family home? Many people who move here start renting off the bat so they are able to get an impression of neighborhoods and find out where they want to buy. Some people decide not to become an homeowner at all, this fits with the national trend of homeownership rates dropping from 70% to 65%.
One-third of renters are leasing out single-family homes, not apartments. What does this mean for you? Investment properties, of course! Phoenix has a strong demand for housing, and paired with the popularity of renting, this is a good time for those interested in rental properties to strategize.
The good: Buying an investment property is a way to diversify your holdings, and renting increases cash flow.
The challenge: Are you prepared to make the right choice in property, and to maintain it while working with tenants? Do you have the means and some extra time to deal with issues that might come up?
If you’re not intimidated by the idea of after-hours calls and taking care of surprise repairs, then investing in a rental home can be a solid decision for your financial future. Arm yourself with resources (or an experienced partner) to help choose the best property that fits your criteria. You should also be aware that investment properties incur a large down payment; since mortgage insurance isn’t available for the rental property, you will need at least 20 percent down for traditional financing. Break out that calculator to check your margins, operating expenses and the return on your investment for your efforts. A recent study showed rental properties in Phoenix returned an annual average over 8%, which is quite high.
If this sounds like a venture for you, give the Sibbach Team a call! 480-500-1738