Why Phoenix Is Among The Most Desirable Real Estate Investment Markets
Many newcomers have flocked to Arizona to find work, and one of the factors in their decision is the state’s affordable rental units, located in the downtown metro area and across the larger valley. With its 4.2 percent economic growth rate, PricewaterhouseCoopers, PwC, has listed Phoenix as one of the country’s top real estate markets.
With economic growth continuing to rise, rental units are occupied faster while the cost of rental properties in a number of Phoenix neighborhoods is lower. These and other factors, make Phoenix lucrative and an appealing location for investors, landlords and property managers.
Arizona offers a landlord-friendly environment. The state puts fewer burdensome restrictions on landlords, making compliance less expensive and time-consuming. For example, San Francisco puts landlords at a disadvantage with highly restrictive zoning regulations, making it challenging to develop new and affordable rental units in certain areas.
As part of its landlord-friendly philosophy, Arizona passed a January 2017 law prohibiting any city or town from restricting short-term rental services such as Airbnb. This opens the door for Arizona landlords to take advantage of the short-term housing boom. As a prime winter vacation spot, Phoenix has a regular influx of snowbirds, many of whom need rentals ranging from weeks to months, a boon for landlords.
In contrast to short-term rentals, many snowbirds purchase an Arizona property as an investment, renting it out for years prior to retirement, when they plan to use it themselves. In doing so, they’re able to own a second home in a warm locale that is largely, if not entirely, paid for by the time they reach retirement age. They benefit from immediate positive cash-flow, pay down debt associated with the property and establish an appreciating asset they can continue to rent full-time or use as their vacation home.
Like every investment class, being a landlord has its up and downs. Location is everything so choose wisely: a promising location can yield tremendous results while a troubling location can be the source of great stress. Select Phoenix locations offer greater assurance of reliable cash flow from affordable properties, plus investment appreciation over time. Investors should do their due diligence and search for desirable, reasonably priced locations. Although the air in Phoenix may be dry, the real estate market is saturated with possibility.
Is The Investment Worth The Wait?
Those interested in real estate investment will find that patience is key. Investing and improving rental properties takes both time and resources. The time to invest in the Valley of the Sun is now, as interest rates are low and property values are expected to increase within the next 20 years.
Real estate investors should target rentals with above average yields in order to have ample liquidity to off set their mortgage and maintenance fees, build cash reserves for vacancies and still collect a profitable return.
What differentiates Phoenix from an overvalued market is the longevity of the area. In 20 years, Phoenix will still have tremendous room for appreciation. Cash flow is heating up to the point of profit in the Valley of Sun.
by Tony Julianelle, the CEO of Atlas AZ, a distinctly different real estate company committed to Uplifting Humanity through Real Estate and specializing in: Investment; Property Management; Institutional Acquisition; a full-service Buy/Sell Brokerage; and a Zillow Offers Partner Agent. Learn more at www.realatlas.com.