Arizona Real Estate Tips
Is it better to buy for cash flow or appreciation?
Arizona real estate has exploded over the past several years as homeowners and investors flock to places like Flagstaff, Phoenix and even Prescott, Arizona to enjoy sunshine and great weather. An important question for Arizona real estate buyers is whether the state will continue to offer good real estate investments.
It depends on your concept of investing. Are you investing for cash flow or appreciation? Many homebuyers and investors don't take the time to ask that simple question in advance, so they make fundamental mistakes when searching for and purchasing a home in Arizona.
Cash flow simply refers to generating a profit above and beyond the cost of a mortgage, repairs, fees and other costs of owning a home in Arizona. It's easy to look through Arizona real estate listings and think you can turn a profit by buying low, but repairs, vacancy rates and other holding costs may reduce the cash flow.
Working with an Arizona real estate agent who is familiar with the area, local economy and rental market is imperative. Do your homework and don't overestimate your profit and underestimate the cost of repairs, vacancies and insurance.
The second form of investing in Arizona real estate is for appreciation. In this case, the buyer is interested in the long-term escalation of price rather than short term gains. This buyer is looking to the future, hoping that as Baby Boomers retire to Arizona, this will increase the resale value of the home several years from now. According to the Census, Arizona is expected to grow rapidly for many years making it a strong candidate for future appreciation.
Before contacting an Arizona real estate agent or broker, know what type of investment fits your need best: Will you be purchasing real estate in Arizona for appreciation or cash flow? It can dramatically impact your choice of city, neighborhood and more. For instance, if investing for appreciation, you may desire areas with strong Baby Boomer appeal: Look for homes in Phoenix and Scottsdale. On the other hand, if cash flow is your primary objective, search for cities with a younger population.
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Should I buy a new or used home in Arizona?
In the last few years, Arizona real estate has been in high demand. Now that prices have stabilized and even come down from their highs, first-time homebuyers, retirees and others are revisiting the idea of buying Arizona real estate.
One of the first questions to consider when contemplating homes for sale in Arizona is whether to shop for new construction or an existing home - also known as re-sales. When you begin to search for an Arizona real estate agent, look for one that specializes in these areas. Many builders and developers have a team of real estate agents they work with to sell their listings, whereas other Arizona real estate agents will specialize in re-sales of existing homes.
Intuitively, most people think an existing home will be less expensive, but there are a lot of hidden costs associated with the purchase of an existing home. For instance, deferred maintenance or repairs on older homes may run far more than originally anticipated. It’s certainly not unusual for someone to purchase a “fixer-upper” only to find all their profits and equity wiped out due to costly repairs. It’s even worse for investors who find it impossible to rent an older, less desirable home--especially one in need of repairs.
Many people are stunned at the price of labor and supplies required for remodeling. What initially appears to be a bargain quickly becomes a drain. Contractors and service people are backed up (in some cases for months at a time), and older homes often require costly updates to bring them up to the current building standards.
Always compare the numbers in terms of total ownership costs; maintenance, desirability, future appreciation, neighborhood comp’s and required down payment. Many people find new construction to be very desirable and competitively-priced, especially when combined with builder incentives and financing offers.
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Is Arizona still a good place to buy real estate?
By now everyone has heard the debate – is there a real estate bubble or not? Some statisticians cite claims of “unaffordable housing”; vacancies across the nation, even homes listed for sale on eBay for $10,000. On the other hand, the media cites examples of shacks in the desert selling for hundreds of thousands of dollars or even $1 million, so sellers believe that they can put any price on a piece of property to get rich quick and buyers assume they can't qualify to purchase Arizona real estate.
Both situations are misleading and false. The hype surrounding a small number of high profile homes is one cause for the number of unsold homes currently on the market - they are the product of unrealistic expectations as sellers believe they can put any price on their home. Unfortunately, that isn't true. Market conditions always dictate the selling price of a home even in popular locations, such as Arizona.
Other examples popularized by the media are specific cases. Maybe a shack here or there sold for an outrageous sum of money, but it was in the path of progress, such as a highway or casino. Those houses you see selling for $10,000 on eBay usually don’t turn out to be such a great deal once you dig a little deeper into it. Many require extensive repairs or are slated to be torn down.
The first step is finding a real estate agent who can help you locate Arizona homes for sale in your price range and make sense of the unusually high or low prices you may encounter while reading listing magazines.
Despite what you may have heard, there are many affordable homes and Arizona is considered a "hot spot" for future growth and appreciation. Compared to high income states, like California, that benefited from the working years of the Baby Boom generation; areas like Florida and Arizona were significantly less costly. As the Boomers retire and seek out warm areas for fun, relaxation and quality of life; the Census bureau estimates these areas will rapidly grow for the next 30 years.
To locate an Arizona real estate agent order a copy of a listings magazine.
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How Can I find a great Arizona Real Estate Agent?
Finding a great Arizona real estate agent just became easier thanks to online agent finders, like that provided by HomesAndLand.com, as well as the Arizona Department of Real Estate.
HomesAndLand.com, the nationwide leader in listings magazine, has a convenient online search form that makes it easy to find an agent anywhere throughout the nation. Once you locate agents in your area of consideration, take a few minutes to visit the Arizona Department of Real Estate website. This official website from the state of Arizona provides a menu of services and information about education, complaints, laws and much more. You can look up a license for any Arizona real estate agent, contractor and even development in the state of Arizona. Best of all, it's free!
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How do I make an offer on real estate?
The key to buying Arizona real estate is to make an offer that benefits both the buyer and seller. Looking through the listings magazine to find an attractive home is the first step. Next, contact the listing agent or find an Arizona real estate agent to represent you as a buyer's agent in your search.
Once you find homes of interest, it's time to do a little homework. By researching the following questions you will have the information needed to make an attractive offer on any property:
1. How long have the sellers owned the property and how much is owed on it? Often you can look this up on the local Clerk of the Court Web site but keep in mind, you may not have information on the full cost of the home. It will however, often provide a good estimate or starting place.
2. Why do they want to sell the home? Is there deferred maintenance? Have property taxes increased in recent years? Do they simply want to relocate due to schools or health? This allows you to understand their motivation for selling.
3. What upgrades or recent work has been done to the property? You may be surprised to find how many upgrades people simply forget about! These represent bargains for you, but equally surprising is how much work often still needs to be done. If the roof is 25 years old then there is a good chance you will be the one stuck with a home improvement, so take it into consideration when negotiating a price.
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How can I find a virtual tour of Arizona real estate?
Thumbing through listings magazines is a great place to begin searching for real estate, but thanks to technology, it's only the starting point! The Internet has changed the way we shop for real estate. Follow these quick and easy steps to make your search for Arizona real estate more productive and enjoyable:
1. Visit HomesAndLand.com to order a listing magazine and make contact with local brokers, especially if you are outside of Arizona. This is a fast and easy way to have thousands of listings immediately available.
2. Use virtual home tours to see Arizona homes for sale. Many listing agents are going above and beyond the simple description (of one static photo) and including 360-degree virtual tours of the inside and outside of the home. It's an easy and convenient way to see listings without leaving your home.
3. Use Google Maps to see the town. Google maps is now available for many locations including Phoenix. If you are shopping for real estate in the Phoenix area, then it's easy to type in the address and zoom in to see an aerial view, traffic patterns and even a street view. Take a virtual tour of the neighborhood or visit downtown!
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