People everywhere have come to realize that others will always want to rent homes and apartments, making it a practical and smart business proposition to invest in rental properties in Phoenix. However, you shouldn’t rush out, find a for-sale sign and buy the property. You need to consider your options and what makes it an excellent purchase.
Almost every building you look at will have some problems, whether minor or major. It’s up to you, and an inspector, to determine what the problems are, what they’ll cost to fix and whether or not they need to be fixed. If the building has sewer problems, it’s going to take a lot of money to fix them and get them up to code. Likewise, ignoring the problem could lead to backups and plumbers, so it’s important to know what you’re up against before deciding.
When considering the price of the purchase, it’s important to determine how much money you’ll get from those Phoenix rental properties. You should make sure that the monthly rent of the unit can be at least two percent of the purchase price, plus any repairs. Therefore, if the house you’re buying costs $100,000, you must expect to get at least $2,000 each month in rent. However, this is likely impossible, depending on the area in which your property exists.
It may be better to determine what the total costs are for the house, including local taxes, property types, maintenance, and others. Figure out what you expect to spend for the year and plan the rents accordingly.
Costs Associated With Rentals
Most people don’t realize all the costs associated with an apartment building or home you’re renting. They can include insurance, maintenance, taxes, utilities, property management, marketing/advertising, HOA, and vacancies. It’s not safe to assume that every unit will be rented for a full 12 months. People will leave, leases will be up, or the units will need to be cleaned and repaired.