Are you thinking about investing in a rental property in Prescott? There are many things to consider. Owning the property is only the first step; managing it is something completely different, and more importantly the location of the property needs to be the starting point. Far West Realty’s Property Management Division would like to share with you some features that make a great rental property investment. This week we discuss where to look.
Where to start your search.
From the first decision to invest in a rental property, to buying your first rental property, there are a lot of things to consider. â€‹ You may want a Realtor to guide you and we can help with that to, since our staff included several highly qualified sales agents. Either way, we suggest that you consider the following points as you proceed:
Do you intend to manage the property yourself?
- Do you have a sound, working knowledge of the Arizona Residential Landlord-Tenant Act?
- Do you have an attorney available, who can answer some of the more complex questions you may encounter?
- Do you have the skills needed to repair and maintain the property yourself? If not, do you know a reliable and trustworthy tradesman who can?
- How far will you be willing to drive when needed to manage the property?
These are common things investors must consider before even looking for a rental property. Answers to the questions above will impact the amount you can spend. The potential rental income, after mortgage, taxes, insurance and management fees, will impact the property you select in order to make it profitable investment.
What else to consider when selecting where to start looking?
Neighborhood: The neighborhood you select may determine the quality of applicant you get and/or what you can charge. This may also influence the frequency of vacancies. Spend some time reviewing local building permits and future development in the area. It may be nice now, but in 5 years? Also, have a look at any vacancies in the area. Does this neighborhood have more than usual? Lastly, we all agree that no one wants to live near a hotspot for criminal activity, this should be on your radar from the beginning.
Property Taxes and HOA Fees: Taxes and HOA fees are not the same everywhere. You will need to plan for these when deciding on what to charge for rent in the community you choose.
Job Market: Locations like Prescott area are perfect when considering an investment rental property. We have seen tremendous growth recently, and the new construction and businesses have brought many new people to the area.
Average Rent: Looking at the average rental in the local area, if the average is not going to be enough to cover the items we mentioned above, you may need to find another property in a different location. Additionally, you should consider where the local market is heading. A downturn can really cause issues with your rental.
Insurance: Another expense we have not covered is insurance against typical and unforeseen events. You should have an idea of what usual insurance or additional coverage against natural disasters is going to cost. A property may be in a flood plain or in an area prone to natural disasters like hail. There may be additional costs.
Getting more information…
â€‹The last thing we suggest when looking for where to purchase an investment rental property is to talk to renters as well as homeowners in the neighborhood. Renters may be more open about the negative aspects of the area because they have no investment in it. If you are set on a particular neighborhood, try to visit it at different times on different days of the week to see what the neighborhood is going to look like.
As we have outlined above, there are many things to consider when looking for a rental property, we have only discussed the “where”. Be sure to join Far West Realty’s Property Management Division for the next big question, “what to look for in the actual property.” For more information on how we can help you manage your rental property in the Prescott, contact us today at 928-772-9400, we will be happy to help!