Investing in Arizona Real Estate
M any of the homes sold in the Arizona Real Estate market today are bought by investors hoping to make a tidy profit in the future when the market fully recovers. It’s true that during this economic downturn, many good deals exist. However, if you aren’t careful, you can become victim to several investor pitfalls that can turn your investment into a real estate nightmare. To make sure your investment is a profitable one, here are 5 main traps to avoid:
1. Lack of planning: This is one of the biggest mistakes a new investor can make. Don’t plan a strategy after you find a home. Develop a plan, pick your investment model and then find the house to fit that plan. You should also educate yourself and do your homework before putting your financial security on the line. If you go in with an investment strategy, you will be much better off in the long run when you decide to sell.
2. Going solo: If you want to succeed in your investment, you need the right team of professionals. You need a solid Arizona Real Estate consultant, an appraiser, a home inspector and a lender. If you have the right Arizona realtor, he/she can help you immensely in analyzing deals and researching costs and market conditions. If you need to remodel, your team will most likely consist of a plumber, electrician, painter, a floor installer and/or handyman. Trying to accomplish everything on your own will only lead to frustration and mistakes.
3. Paying too much: Investors don’t make money usually because they have paid too much for a property. Once an investor buys a property, the profit is locked in immediately. If you have made mistakes in your analysis, don’t be surprised if in the long run, you are in the “hole” financially.
4. Underestimating expenses: Most first-time investors underestimate what it takes to do repairs on a home. If you are buying a foreclosed property that needs extensive repairs, you should double the amount of time and money you think it will take to remodel. If you can still make money and possibly rent it out, it’s most likely a good deal.
5. Miscalculating cash flow: If you want to buy and then rent out a property, you need sufficient cash flow to cover maintenance or pay a property manager who will charge up to 10% of the monthly rent. And if you can’t rent out the property, you still have to pay mortgage, taxes, insurance, condo association dues and the cost of advertising. That asset can quickly become a liability if you don’t have enough money.
By avoiding these common pitfalls, investing in real estate can be a rewarding and profitable business. If you are looking to invest in Arizona Real Estate I would be happy to help you with your real estate needs. Please contact me at 602-904-1496 or send an email to aboydston@cox.net.
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