The best markets for real estate investing in Arizona

Real Estate | 10 Dec, 2018 |

Real estate investing is one of the best ways to diversify a portfolio and make a little side cash. It’s one of the most stable markets there is, and you can leverage others’ money to make it happen.

According to CNN Business, 2019 may be a good time to invest in rental property, thanks to the reduction of home sales and increase in rentals.

“Additional inventory will help contain rapid home price growth and open up the market to prospective homebuyers who are consequently — and increasingly — being priced out,” National Association of Realtors Chief Economist Lawrence Yun said. In other words, as the demand for these houses decreases, prices will begin to fall, making it a great time to swoop in and make a profit from rental properties.  

But real estate investing is only as good as the market you’re in. It’s important to judiciously research a potential investment area to ensure it will lead to profits. In Arizona, you’ll want to carefully watch the following markets.

Scottsdale

For decades, Scottsdale has been one of the steadiest thriving communities in the state. It’s certainly not the most affordable market with the median home price reaching over $871K. However, the rate of appreciation has been steadily rising at nearly 4 percent per year for the last 20 years. It was one of the few places that didn’t completely tank during the 2008 recession.

“The total real estate appreciation over the past 8 years has been recorded at 102.77%,” explains a Mashvisor report.

There’s also a fantastic tourist community here, which drives great demand for Airbnb and VRBO rentals. The average rental income for Airbnbs is nearly $1,600, according to Mashvisor, which has a cash return rate of 1.2 percent.

You can double that rate by investing in traditional rental incomes instead, charging upwards of $3,300 with a handsome rate of return at 2.34 percent. It doesn’t get much better than that for rental property income!

Investing in condos, apartment complexes, or single-family homes to rent out as traditional rentals or vacation options is a great way to maximize any investment. Scottsdale home appreciation will continue to rise, so get in before prices take off.   

Phoenix

Like Scottsdale, Phoenix seemingly never falls off the charts for great real estate investing. This giant metro area features a booming economy with quality job opportunities, shopping, nightlife, arts and entertainment, educational opportunities and more.

You can invest in pretty much any type of investment property here thanks to the various interests of the massive city, from fix and flips to vacation rentals. However, Jim Belfiore, owner of a real estate consultancy in the area, recommends that you stay away from the downtown area.

“This is because the cost of renting in the Phoenix Metro Area is becoming less desirable than homeownership of a similar size,” he told AZBigMedia in a previous article. “The laws of supply and demand suggest people will buy a home if they can afford it.”

Instead, look to the suburbs in residential areas like Ahwatukee Foothills, Gilbert, Rio Vista, Desert View, Deer Valley, and other top-rated neighborhoods in the area. You’re more likely to see demand for rentals in these areas.

Tempe Lakeside

Tempe, a college-town suburb of Phoenix, has a lot to offer by way of peaceful residential living with great nightlife, activities, and shopping nearby. One of the best areas for real estate investing is the Lakeside district. It’s not only a gorgeous place to own a home, but it’s also making huge strides in sustainability.

“Tempe is a really strong leader – definitely in the Valley, if not in the whole state – in moving toward sustainable urban planning development,” Aaron Golub, associate professor of urban planning and sustainability at ASU told Phoenix Mag. “The downtown and expanding lakeside areas where the streetcar will go [in 2016] will be really interesting, very urban places in 20 years.”

You’ll continually see growing volume in glass buildings, poolside cabanas, spas, and other commercial buildings that you can invest in to see a profit. Jump in now before the prices become overinflated and you miss your window of opportunity to collect appreciation.

Tucson

Tucson, particularly Corona de Tucson, is an excellent place to invest in single-family rental properties. Real estate is somewhat pricey here compared with the surrounding areas, which drives a lot of people to rent.

The housing here is beautiful and the public schools in this area are fantastic. This small, but growing neighborhood is rated by Niche.com as very family-oriented with opportunities for growth and economic stability. Renters often pay a premium for the location, ensuring an excellent profit for landlords.

In order to see success with your investments, vigilantly evaluate any market before leveraging a real estate investment. You want to be sure that it will pan out, and an understanding of Arizona’s best markets can help get you there.

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