In the past decade, Prescott homeowners have gained an average of $200,000 in wealth thanks to property appreciation. Unlike more volatile investments, real estate almost always yields a strong ROI.
Does that mean you should go out and buy the first property you come across in Prescott? Not exactly.
There are some important tips and tricks you need to know before you start real estate investing in Prescott, Arizona. From finding the right property for your goals to coming up with a long-term financial plan, we've got you covered.
Read on to learn how to become a real estate investor in Prescott the right way.
Assess Your Investment Options
The biggest obstacle in real estate investing is coming up with the funding to get started. While your investment property will turn a profit in the long term, you'll need the money for a downpayment upfront. You should also be prepared to cover mortgage payments and maintenance until you begin to generate a reliable rental income.
Some first-time investors may be able to take the plunge and buy luxury real estate. Others may need to start smaller, focusing on townhomes and condos or joining a real estate investment trust (REIT). The goal is to avoid taking on more debt than you can handle, building a more profitable portfolio over time.
Perform Market Research
Once you know how much you can spend buying a rental property, it's time to start doing some market research. How much do most people pay in rent in different neighborhoods? While you may have some luck charging below average, it's risky to buy a high-end property and charge above-average rent in a low-income neighborhood.
Next, start looking at more granular information. What amenities are available near the properties you're interested in? Renters are often looking for easy access to public transportation, dining and shopping opportunities, healthcare, and schools.
Create a Long-Term Financial Strategy
If you're about to become a first-time landlord, you must know what to expect. You'll need to reinvest a large percentage of your rental income in your property. In other words, you'll use it to cover mortgage payments, upgrades, property marketing, and regular maintenance, and shouldn't expect to pocket the lump sum.
One viable option is to hire property management. Property managers can take care of the day-to-day obligations of a landlord like maintenance and tenant relations. Thanks to their professional expertise, property managers can help keep vacancy rates low, promote goodwill with tenants, and support your ROI.
Start Real Estate Investing in Prescott with PMI
Real estate investing in Prescott, Arizona is a great way to increase your assets. However, this ROI isn't a guarantee when you don't have the right strategy. Use this guide to get started on the right foot.
PMI Northern Arizona provides full-service property management for both long-term and short-term rental properties. We also make it easy to customize your property management services to get the support you need at a price point that makes sense. Contact us to learn more about how we can help.