Scarcely a week goes by without a phone call or email from someone wanting to purchase a 3 bedroom, 2 bath home, 2 car garage (of course,) in a great location, for under $100,000.
Thankfully, the days of bust have passed and home values along with prices have recovered.
There's no more free lunch and today's investor must be smart if they intend to profit in today's market
Before deciding to take the plunge as a "real estate investor," you mush first define the term according to what it means to you. There are a lot of aspects to real estate and many ways to make money. The trick if finding your niche, your place, with consideration to your time, talents, and resources.
Land speculators have long tried to anticipate the eventual growth of cities and their population. Get it right and you may be sitting on a gold mine. Case in point are the East Valley cities of Phoenix which were used primarily for agriculture. Get it wrong and appreciation will be flat or even worse - a loss in value. Of course there's always the next generation and the next, and great grandfather's have certainly helped successive generations prosper.
**Difficult to finance, large down payments, high interest rates, installment sales. Property taxes ongoing. Must "know" what you are buying for potential future use. Land is not a depreciable asset.**
Few people like being called "landlords" and those who will admit they know nothing about the Arizona Landlord Tenant Act or how to write and enforce a lease agreement, happily hand "the lording" over to property managers. It is an arrangement that works well for most investors of residential real estate. Since people require housing (leased or owned) there is always some element of demand. Some of the risks include: excess supply vs demand which erodes prices, periods of vacancy, churn, and in very rare cases - destruction of property.
**The game plan is tenant pays mortgage while home appreciates. Minimum down payments run 20 to 30% of the purchase price with no PMI. Mortgage payments are usually PITI with HOA fees paid separately. In the past, expenses have been "largely" tax deductible - I have no idea what the future will bring.**
Fixers and Flippers:
Like I said, you've gotta' be smart! Higher prices mean tighter margins and a couple snags could mean no profit at all. You must do your homework and assemble your team for the re-hab well in advance of closing. If using hard money to finance, time is money and you don't have a moment to spare. Forming a pool of your own investors for capital is much better choice. Consider NOT being driven by the cost of acquisition. Buying a cheap house in a cheap neighborhood, means you will sell a cheap house in a cheap neighborhood - only in better condition. The objective is upside potential. Also, bear in mind "Disclosure is the Law" in Arizona so whatever you discover during your project will have to be disclosed to the Buyer on the flip. Finally, if you're just starting out and contact an agent for assistance, admit you need help and/or advice. We already know, you don't know, before the call is long underway.
**Tight profit margins. Abominable interest rates if using hard money to finance. Don't buy cheap. Look for upside potential. Disclosure is the Law in Arizona.**
Any plan you undertake must have an exit strategy. As an Investor, your exit strategy is tied to a buyer's ability to obtain financing and "hold" times should be part of your profit (or loss) equation. Additional costs of sale include: commissions, repairs, taxes, disclosure, title, and escrow fees, etc., and may include Seller concessions should you choose to help the buyer with their closing costs.
Also, be aware there are "Flip Rules" for buyer financing - typically 90 days from recordation of the last deed. When selling, you will want to know you can sell and the buyer can buy - so do investigate beforehand.
Chandler AZ Real Estate Investors
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Investing in Chandler, AZ real estate. Chandler investment properties. Financing for investment properties in Chandler. How to sell investment properties in Chandler.