The universities, year-round golf, scenic mountain views and other factors draw many to Arizona. In fact, Realtor.com is projecting the Phoenix Metro area will be the top housing market in the country in 2017, the Arizona Republic reports. To help ensure they maximize their return, there are several things people may do when purchasing investment properties in the Copper State.
Apply the one percent rule
When people are purchasing a property with the intention of renting it out, it is important to make sure the home is worth the price they are paying. To this end, potential real estate investors may find it helpful to use the one percent rule. This principle states that people must get back one percent of their purchase price each month. For instance, if they purchase a property for $200,000, they must receive a monthly rental income of at least $2,000. In cases when a property may not rent out for the required amount under the rule, people may consider passing and looking for another home.
Buy from a motivated seller
Simply put, if a seller is not motivated, then the buyer may not get the best price for their situation and goals. Therefore, when looking at properties, it is advisable to find driven sellers. Buyers may get an idea whether people are motivated to sell by looking at the asking price and how long the property has been on the market. When homes have been listed for extended periods with little or no reduction in the asking price, it may be an indication that the seller is not in a hurry to unload the property.
Get familiar with the tax benefits
Particularly if they have not invested in a real estate property before, people may not be aware of the tax benefits. Since they may depreciate over time, investment properties, including rental homes, may be eligible for a tax write-off. Further, people who rent out their properties may incur expenses much like those assumed by other business owners. Therefore, they may be able to claim certain necessary and ordinary deductions, including maintenance expenses, insurance costs and mortgage interest.
Location, location, location
Perhaps more than the overall condition of the homes people are considering purchasing is the importance of their locations. A ready-to-move-in house or an unbelievable rental are great, but if they are not in a desirable neighborhood, the investment may prove less than successful. Rather than focusing on finding a perfect property, people may look for a home in a highly sought-after location that could use a little work. This may help them control their investment costs, as well as provide them with an opportunity to build their equity.
Obtain legal counsel
Investing in Arizona real estate may be a profitable enterprise. However, the complexities involved with purchasing, developing and even renting properties may create unexpected challenges, and threaten their returns. Thus, those who are considering purchasing real estate may consider seeking legal guidance. An attorney may help them understand their rights and options, as well as what to expect from any associated legal processes.