Virtually everyone dreams of earning passive income. After all, what’s not to love? Being able to sleep in and know that money is consistently coming into your bank account is something that sounds like a complete dream come true – right?
However, making money with a rental income in Phoenix is much more difficult than it may seem and being someone’s landlord is a very time-consuming and laborious task. If you really want to make a living and make a true passive income using a rental property in the Phoenix area, then don’t stop reading.
Locating the Right Properties
Selecting the proper properties is something that can be extremely tricky. A great house is going to offer a superb neighborhood, great amenities close by for the tenants, a good location, easy upgrades, and a quality job market. Also, a great house will have superior curb appeal, as well as good street lights and well-maintained sidewalks. It’s possible to find a good location for a rental property by having an eye on the real estate market in the area and get to know the other rentals in the area and learn about current vacancies.
Good locations need to have plenty of amenities, such as gyms, coffee shops, restaurants and more. If you want to earn a good rental income in Phoenix, then it is a good idea to choose a home that has amazing features, or properties that can be upgraded with ease.
The rental income that you earn in Phoenix will vary quite a bit based on the features that are in place for your property’s tenants. If you have been able to find a property that can check all the boxes and that makes a great rental opportunity, then understanding which upgrades you need to do will help you earn the most cash.
Some areas where you should consider an upgrade to make the most rental income possible include:
- The installation of a deck
- New windows
- Garage door replacement
- Kitchen upgrades
There are also smaller updates that can be made such as updating the finishes, applying a brand-new coat of paint, and even installing a new countertop and rugs. Each of these fixes are going to help the entire property seem more modern and even more appealing to a more diverse group of potential tenants. Installing a new garage door is an extremely affordable upgrade. Be sure to keep this in mind when it comes to your rental property.
Budgeting for the Rental Income You Potentially Earn in Phoenix
Being able to budget for a rental property in the city of Phoenix is actually something that is pretty easy. You can even opt to keep track of the budget you have for repairs for the rental property on your phone. There are several budgeting apps available to help you with this.
If you want to make the most of your rental property then you need to know what you should charge your tenants, as well. You can utilize information provided by the real estate market, along with nearby rentals to figure out what you need to charge. By using properties that are comparable to yours you should be able to get a great price point.
In addition to all the factors found here, you also have to find the right tenants. This will ensure that rent is paid on time and that the property is taken care of so that you can continue earning a passive income on the property you own. This is crucial if you really want to earn as much as possible on the rental property that you have opted to purchase.
To learn more about making a passive income with rental property in Arizona, contact Barrett Financial Group today at 480-999-6183. Our expert team will answer all your questions and make your dreams come true with a hard money loan in Arizona to secure the perfect rental property.
House flipping can be a very lucrative and rewarding business if you have the know-how and are willing to put in time and effort. This corner of the market has exploded over the past decade (largely thanks to reality TV shows on house flipping), as more and more people have gotten into buying older homes for cheap with the intention of renovating and selling them for profit. Arizona in particular is a great place to get into house flipping, as the real estate market in general is strong but still has plenty of older, decrepit properties being listed for cheap.
The good news is that just about anyone can flip a house, even if they don’t have prior experience. All it takes is dedication, a little creativity and of course, some investment up front. In fact, many people who start with just one house end up doing it again and again because their experience was so rewarding (financially and, very often, personally). We’re here to help you with the financial investment that flipping houses often requires, but in the meantime here are some tips you can use to get into flipping houses and turn your venture into a success.
Keep Doors Open
There are a lot of ways to find great opportunities right here in Arizona for house-flip projects. If you want to explore a lot of low-price options in a short period of time, it is a good idea to enlist the help of a realtor. Otherwise, you can find a great deal on your own if you’re willing to put in the legwork. Using websites like Zillow is one way to find cheap listings in the area of your choice, and it is also possible to get one through a foreclosure auction. If you do find a house online, just be wary of sending money online or being asked for a check without seeing the property in person and without a realtor involved. Always do your research, which of course brings us to the next tip…
Do Your Research
Whatever you do, don’t jump to buy the first cheap house for sale without knowing exactly what you’re getting into. After all, some people make the mistake of buying a cheap house, investing a lot in renovations, then pricing it way too high for the neighborhood it’s in. Likewise, some people don’t go as far as they should with the renovations, and the house still ends up looking a bit run-down in comparison to its neighbors. No matter how the house turns out, it just won’t sell (or at least not for as much as you want it to) if it no longer fits in with the surrounding area.
Don’t Neglect the Exterior
All of your hard work on the inside of the house won’t matter much if you can’t even get prospective buyers in the door! After all, many people tend to drive by houses for sale before they decide to take a tour up close, and there’s no easier way to turn someone off from this idea than to have an unappealing curbside view. The outside of the house should therefore be inviting, and any lawn should be well-kept. If there are any trees or hedges, they should be trimmed and far from unruly. This of course includes cleaning up and properly disposing of any remaining construction / renovation tools.
Another great way of making sure the outside complements all the great features the inside has to offer is to add pops of color. All too often forgotten, for example, is the mailbox (if applicable). Installing a cute, unique mailbox is always a great idea, but at the very least you should give it a fresh coat of paint. Other ways of adding touches of inviting color include a brightly colored door (as long as it does not clash with the rest of the exterior colors) and / or window shutters.
Don’t Over-Do It
When you’re looking to flip a house, you should first look at what the property does currently have to offer. After all, why spend a lot of time and money on large-scale renovations when you don’t actually need to? Sometimes a house just needs to be updated rather than fully renovated, saving you a lot of unnecessary time and money in the process.
Slow and Steady Wins the Race
It’s healthy to set timelines and goals for yourself, but it’s never good to rush things. Be realistic with the amount of time you’re going to need to flip the home. It’s important to not rush through the project, as then you risk having to list the house for far lower than you planned. Take the time to actually execute the renovation properly and ensure that the value of the property increases as it should.
Don’t Be Afraid to Ask For Help
We all need a little help sometimes. If the house needs some extensive renovations that require more than a coat of paint or other basic modifications, it’s a good idea to consider going with a professional contractor or at least enlisting the help of someone with more experience. When it comes to actually putting the house up for sale, you may also want to sell through a realtor or consider hiring a professional stager to ensure the house is in show-ready condition. Arizona has a booming real estate market, and so the good news is that you can hire the professional help you need without spending a fortune.
And of course, if you need any assistance on the financial front, Barrett Financial Group is here for you. Please feel free to reach out to us to learn more about how we can help you achieve your house flipping dreams.
Popular shows like Flip or Flop and Fixer Upper are viewed by millions of people each day. After just a few episodes, it is evident that in the pursuit to make a profit, “flippers” do not always know what is lurking behind the walls and in the crawl spaces of the properties they buy. In order to mitigate these types of risks, it is best to devise a business plan. This plan should always ensure that enough money is being borrowed to cover the costs of any necessary renovations.
In order to invest in a fix and flip that is worth your time and money, you must first determine if it can be bought below market value. To increase the value of the property, you would then perform a rehab that consists of making improvements and repairs. Once the updates and repairs have been made, the goal would be to sell the property at a profit.
With the market full of great opportunities for fix and flip projects in Arizona, many investors look to an Arizona FIX AND FLIP LOAN. The loan does not follow customary financing and the funds received are secured by the value of the property. The loan is financed using the foreclosure of the property as collateral.
A fix and flip starts with finding the property you want to invest in. From there, you start devising a plan on how you will finance the purchase and rehab costs. This will include financing for the purchase price of the property, the holding cost, the cost needed to rehab the property, and any closing cost. Due to not meeting FHA guidelines, Fix and Flip loans do not qualify for traditional financing, and rarely do banks take part in such loans.
Unfortunately, with the level of risk involved and the speedy turn around time, you should expect to pay higher interest rates on Fix and Flip loans.
Numerous options are available to acquire an Arizona FIX AND FLIP loan, but most property investors know that the easiest and most straightforward route is to find a hard money lender. Arizona hard money lenders are individuals or private investors that know your success means translates into their success as well. With lower qualifications and a quick approval and funding process, many people have found success through a hard money lender.
The good thing about an Arizona fix and flip investment is that you don’t have to have an excellent credit score or even a down payment. With a good business plan, a carefully-planned strategy, determination, and good work ethics, you can take advantage of the great fix and flip market in Arizona. Contact Barrett Financial Group now to learn more about Fix and Flip hard loans.
Arizona is , without a doubt, is one of the biggest and most popular states in the country. The capital city, Phoenix, presents a number of appealing factors which help to make it one of the great cities to live and invest in. In fact, it offers something for everyone. The state of Arizona has modern recreational entertainment, dining and shopping facilities, great weather and interesting cultural attractions.
In recent years, the real estate market in Arizona has continued to grow and thrive. In addition to other pull factors, this area of the US offers buyers a wide array of properties to choose from, including patio homes, condominiums, twin homes, townhomes and family residences. Here, learn more about the top five factors that are helping to drive the Arizona real estate market forward.
1. Economic Growth
The economy in the state has kept gaining momentum in the past few years, which has had a direct impact on the real estate market as a whole. There has been quite a bit of growth in the existing industries, along with more startup businesses moving into the area. A number of new companies have also opened new branches, offices or even transferred their headquarters to the state, due to the friendly business environment.
The result has been an increase in job opportunities, improved standards of living, higher income and falling levels of unemployment. For example, Phoenix has several employment opportunities available in the healthcare, finance and retail sectors. This growing economic growth in the state has helped attract more people to move to the area, resulting in an increase in the demand for residential and commercial properties. Experts have estimated that Arizona is going to have sustained economic growth throughout 2018.
2. Changing Demographics
In the previous years, the population in Arizona has grown and changed significantly. Other demographics in the state have also changed, including migration patterns, economic status, age and education level. The increase in the population in the state has helped to stimulate the demand for more housing units. A large number of people have employment, which means they are able to buy or lease properties. Age has also helped to diversify the real estate market as millennials, baby boomers and Generation X will keep the industry healthy.
This growth in population has helped to increase the demand for other services and goods, too. As a result, there’s a greater need for all types of properties, including office spaces, restaurants, hospitals and apartments. With a growing number of people, investors are finding this a promising area to inject more money into the real estate market.
3. Appealing Interest Rates
The interest rates on property loans play a huge role in the overall real estate market. This is because most people prefer to have a mortgage payment plan. A low interest rate means a lower mortgage payment and a higher demand for real estate in the area.
The mortgage interest rates in Arizona are low, which makes it appealing for people to buy, rather than rent. Also, buyers can expect to see under four percent interest on various fixed loans. Hard money lenders have also helped to boost the Phoenix real estate market. These private lenders have made it simple to get fast hard money loans.
4. Competitive Pricing and Affordability
While Arizona is listed as being one of the top five metro regions in the U.S., the property prices are still affordable. In fact, the average cost of a home in Phoenix is around $255,000. As a result, many people find it more affordable to live in this state. In addition to the property prices, Arizona cost of living is lower compared to other larger states. This means that you will spend less on education, transportation, healthcare, gas, and food. The friendly living environment has helped to boost the real estate industry in this area.
There are varying climates in the state of Arizona that range from warmer weather in Tucson and Phoenix to cooler temperatures in Flagstaff and Prescott. As a result, it’s a suitable location for many lifestyles. The region is home to some of the very best golf courses, local events and hiking trails in the United States. While the social amenities are amazing, the state of Arizona is also much safer than other parts of the country.
When it comes to where you want to live, work and play, there’s no question that Arizona should be on your list. In addition to having a booming economy, you can easily invest in real estate here. This state has grown in recent years, and if the experts say buy, then you should listen. If you want to take advantage of the amazing opportunities in Arizona and become a real estate investor, now is the time to make a move.
If you’re the owner of a business, chances are that you already know that growth can be difficult. After all, it’s challenging enough to start a business in Arizona much less expand it. But the good news is that you can give yourself and your business a much needed boost by getting a commercial loan. If you’re hesitant, you’re not alone. However, it is important to consider the following when deciding whether or not a commercial loan in Arizona is for you.
A Commercial Loan Is a Long-Term Solution
Whereas other types of loans are meant to be repaid quickly, commercial loans in Arizona are meant for those who have long-term, multi-stage plans for their business. Many different kinds of long-term payment plans are therefore available, allowing you to move more steadily and carefully along with your plans. This in turn allows for better results.
A Small Loan Now Can Lead to Big Time Results
Commercial loans are intended for those who have a solid business plan and are looking to see considerable growth over a period of time. And because the overhead costs of securing the loan are relatively cheap, many business owners in Arizona who use a commercial loan to invest in their business end up seeing a lot more growth than first anticipated.
Large Amounts Can Be Loaned Out at a Time
There is no “standard” amount when in comes to commercial loans, and while many people choose to start off modestly, many others are able to foresee that they’re going to need a lot more help. Need a lot of money upfront to achieve your business dreams? Hey, the truth is that most business owners do. And with a commercial loan, you can get the money you need right from the start or work out a system where you’ll have access to it over time. Because these commercial loans are meant specifically for business ventures and, again, long-term plans, you are much more likely to be approved for a large sum of money than with other types of loans.
Commercial Loans Are Lower Risk
Overall, commercial loans in Arizona are considerably lower risk than many other types of loans often sought out by business owners or general entrepreneurs. This is largely due to the fact that many types of commercial lenders do not require any collateral upfront, though it also helps that these loans have flexible repayment plans and generally high approval rates.
Never Lose Ownership of Your Business
Going along with the above, lot of other types of lenders require collateral like the property deed or even ownership of the business for the duration of the loan period. It’s important to realize here that even though the lender may not be acting on their ownership, they can take it over in the end should even a small error occur on your part.
Considering the Bottom Line
It’s true that not all businesses need a commercial loan to get ahead, but they are often few and far between. If anything, those that do take advantage of commercial loans in Arizona are making an important and well calculated investment in their business and their future.
If you have made the decision to get in the investment property game, that’s a great move. Regardless of if you are planning to flip a few single-family homes or become a landlord by investing in a multi-family property, the first step is to determine how you will finance your project. After all, if you don’t have a clear idea of where your funding is coming from, you aren’t going to be prepared to make any offers on the property to begin with.
What you need to understand is that making real estate investments usually follows a different path that buying a primary home. Most investors use private money lenders. That’s because this allows them more flexibility and they will have the chance to build a business relationship that only becomes more beneficial for both people involved over time.
The challenge is finding the right lender. If you want your deals to move quickly and easily, then you need to do your research to find the right lender.
Three things you need to look for in a quality private money lender can be found here.
One of the biggest benefits offered by working with private money lenders over a traditional finance company or bank is that deals are usually closed much more quickly. In fact, it can be done in just days, instead of weeks or longer. This is why the lender you choose needs to be responsive. If you have found the ideal property, you don’t want to put it in jeopardy by working with lenders that take much to long to respond.
During any transaction, you want to make sure you know what’s happening each step of the way. Reputable lenders are going to ensure you remain informed, and they will also adhere to the guidelines and the regulations that have been set by the local or state government regarding the loan origination process.
3. Competitive Points and Rates
When you are shopping for a lender, regardless of if it is for more traditional lending or from a private lender, one of the most crucial things that you need to consider is the points and interest rates associated with the loan terms. With that in mind, you also need to know what you are looking at. The points and interest rates for any type of single-family home mortgage from a typical lender are usually going to be significantly lower than the rates provided by private mortgage lenders.
This is because a traditional mortgage is given with the thought that it is a long-term investment. Lenders know they are dealing with fix-and-flip properties and investments. You can’t try to compare the rates of a private money lender to what a large bank offers. That’s like trying to compare oranges and apples.
You also need to think about the type of funding you are going to have to have. Certain fees and down payments are considered standard in the industry, but you should not be “fooled” by a company that wants you to put down a huge “engagement fee” as well as the typical fees.
1. Many real estate investors in Arizona understand money is made when they purchase a house, not when they sell it. A lot of people are mistaken when it comes to flipping houses. They think they will buy the house, make any necessary repairs, give the home a little uplift, and then turn around and sell it for a major profit. What they fail to realize is there are numerous fees tied to flipping a house, like title company fees as well as potential buyer contribution fees, both of which can eat away the profit. And unfortunately, these fees are large enough that they eat away the entire profit and cause the flipper to lose money.
This is why the purchase price of a home is far more important than the intended selling price. Amateurs in the real estate business in Phoenix and Scottsdale often fail to understand the complexities involved in flipping a home. Take for example the vacant property insurance that has to be paid while the home is sitting on the market unsold. When you combine this expense with the cost of renovations and other taxes, it makes it fairly difficult to make a profit.
2. There is also the aspect of getting an Arizona home inspection performed that real estate investors need to be aware of. And even though this inspection tends to cost several hundred dollars, in the long run, it tends to be worth the investment. Having this inspection conducted will reveal any hidden major aspects of the home that need to be repaired that were not initially seen during the first walk-through of the home. Things like an improperly installed HVAC system or rotting wood under carpeted floors are both major repairs that a home inspection can uncover. It’s also important to have an inspection performed because it’s during this period of time that the house is still under contract, and if preferred, the buyer can cancel the contract and choose not to purchase the home.
3. Many investors who purchase a Phoenix home think they can perform all of the remodeling themselves, thus allowing them to save money and walk away with a higher profit once they flip the home. What they don’t realize is there are numerous remodeling jobs that need to be performed by professional contractors, especially anything relating to plumbing and electrical. Also, when investors perform all of the remodeling themselves, this extends the total amount of time it takes to remodel the home, thus increasing the amount of time the home sits on the market. The longer it sits, the lower the profit. This is why most successful home flippers agree that it is best to have professional contractors perform most of the remodeling to ensure it is completed correctly the first time and in a reasonable amount of time.
4. If you have the intention of flipping a home in Arizona, your goal should be to remodel it as quickly as possible and sell it even quicker. This is a major reason why numerous seasoned investors will price a piece of property several percentage points lower than what the competition will. In doing this, it allows them to resell the property according to a much faster timeline and decrease the amount of money they spend on holding and financial expenses. Time and time again we see that selling a home faster at a lower price will turn into a higher profit than pricing it higher and having to wait for months on end for it to sell.
5. You should hire an experienced agent. You may think that purchasing a home, remodeling it, and listing as for sale by owner is the best route to take, but it most definitely is not. And even though you may be turned off by the fact that most Arizona realtors have a six percent commission they keep for themselves when listing a property, the advantages a realtor can bring to the table are typically well worth the commission they earn. If you take the route of listing the home through sites like Craigslist, Zillow, or ForSaleByOwner, you are probably going to have to wait for an extended amount of time before you find a potential buyer. And once you do find a potential buyer, you may discover the buyer has a realtor working for them. If this is the case, you may have to be out a three percent buyer’s realtor fee anyway. When you have a realtor in your corner, you are going to receive much better exposure, meaning the home is likely to sell much more quickly than if you try to sell it yourself, and even better, since you are likely to sell it much more quickly, you can list it at a higher price.
There are several reasons that real estate investors are choosing hard money loans. The primary reason is the ability the lender has to fund a loan quickly. In the majority of situations, hard money loans can be funded in a week or less. If you compare that to the 30 to 45 days that it can take to have a bank loan funded, it’s pretty speedy. Additionally, the application process for a hard money loan usually only takes a day or two, and in some situations, your application can be approved during the same day. You will never hear from a traditional lender about approval within the same week.
The ability that you have to obtain funding faster than a bank loan is a huge advantage for the average real estate investor. This is especially true when an investor is working to acquire a property with quite a few competing bids. Having a fast closing with a hard money loan can help to get a seller’s attention and ensure that the offer is set apart from the remainder of buyers who are using conventional financing methods.
Another reason that a real estate investor may opt for a hard money loan is if they have already applied with banks but have been rejected. Unfortunately, life isn’t always perfect, and it doesn’t always go as planned. Credit issues, foreclosures and short sales all happen. Another crucial thing that banks need access to is a person’s income history. If the borrower has recently begun a new job, then the bank may decide to deny their request for a loan because of an insufficient income history. This is the case even if a borrower has a pretty good income.
A hard money lender can look past all these issues. They will make a decision based on whether or not the loan will actually be repaid and whether or not the borrower has plenty of equity invested in the property in question.
Points and Interest Rates Paid for a Hard Money Loan
The points and interest rates charged by a hard money lender are going to vary from one to another. They can also vary from one region to another.
Because these lenders are taking on more risk compared to traditional financing methods, the interest rates are typically higher. Additionally, the points usually range from two to four percent of the total amount of the loan. Be sure to keep this in mind when considering this type of loan for your real estate investment.
Loan to Value Ratios
The loan amount that the hard money lender lends is usually determined by the value of the property divided into the loan amount. In most cases, a borrower will be able to access 65 to 75 percent of the property’s current value. While this is a riskier loan, it’s still beneficial to anyone who is borrowing the money in order to have access to faster funds.
When it comes to taking out a hard money loan for a real estate investment, there are many things you have to keep in mind. It’s best to be informed to get the best possible results. To find out more, contact Barrett Financial Group today at 480-999-6183.
Mortgage Loan Originator
NMLS ID: 370470
AZ MLO License: 0923102
2168 E. Williams Field Road, Suite 245
Gilbert, AZ 85295
NMLS ID: 181106
AZ License: MB-0904774
40 N. Central Avenue, Suite 1400
Phoenix, AZ 85004
NMLS ID: 1421237
AZ Branch License: MBBR-0120728