Even though real estate prices are fairly low right now, you need to carefully plan and research any investment in rental property, as missing or not understanding a key detail can make all the difference on the success of the investment. You can severely impact the return on your investment if you miscalculate the market for rentals, or if you buy real estate in the wrong neighborhood. You need to exercise due diligence in researching the market and the property. You want to minimize as much as possible your reliance on luck and chance.
Like any city, successful investing in Phoenix, Arizona rental property is a matter of a few key consideration; earning potential, amenities and, of course, location. The process of evaluating a property should be performed as a simple checklist to make sure that it will serve your needs as an investor and also the needs of future renters. Of the things on your checklist, the first and most significant is location.
The Three ‘L’s of Rental Property
The cliché about the importance of ‘location, location, location’ in real estate remains as true now as it ever was. No other single consideration of a potential rental property is more important to the profitability of your investment. A house in a remote rural area will not be as easy to rent as a house conveniently located in a town. A location’s desirability is affected by the proximity of schools, shopping centers and other businesses. Ultimately, to make sure you always have your property rented, you want it to be located where there is a high demand for rentals.
Earning Potential
Of course, the potential for bringing in revenue is right up there on the list of things an investor wants from a property. After location, the most influential aspect affecting a rental’s price is the quality of the property. It is true that even a run-down home located in a high-demand rental market will not be hard to rent, but there may be added costs for renting this property. Low quality property is more likely to attract low quality renters. If you are interested in renting to long-term renters that pay promptly and try to keep the place neat and clean, then you want to have a tidy, well-maintained property to rent.
Amenities
Amenities are divided into two types: on-property amenities and off-property amenities. Both affect the value of a rental property. On-property amenities include things like access to cable and Internet, laundry facilities, modern appliances and energy efficiency. Off-property amenities are things like proximity to shopping and entertainment, access to public transit and availability of educational institutions. A generous mix of amenities will attract potential renters.
Landlord Duties
A rental property owner must be prepared by understanding the rules and laws that define the landlord’s responsibilities as well as his or her rights. Failure to understand the rules will invariably cause you more grief than what you prepared for.
Most rental property owners have a pretty good idea of the general rules for landlords, especially those pertaining to discrimination by race or religion. There are many situations that come up with tenants and rental properties that a landlord is not otherwise prepared to handle correctly. If you want to start out ahead of the game, you need to carefully research local rental law and carefully review standard contracts. The more you prepare the better your property renting experience will be.
