Tuesday, December 21, 2010

Back to Location, Location, Location

Back to Location, Location, Location
By: Payam Raouf Owner/Assocaite Broker
Arizona Property Management and Investments

Looking for a better return on your investment? I am not going to tell you what to do with your money. If you are a savvy investor you already know and you are my target audience.

You can easily get somewhere between 7 to 8 percent net return on a good investment property in Phoenix Metro Area right now. I am not going to tell you what to buy and where to buy here on this blog. The same popular floor plan may not be as an attractive in a subdivision within a block away from the other. Arizona is weird when it comes to that. The same home could rent $200 more or less and may not appreciate as much, or appreciate substantially in the future.

One thing I can tell you for sure though is we are back to Location, Location, and Location in real estate again. I get all these calls every day from investors who want to know what such and such home rents for. Some are right on the money; some are misled that it rents for a lot more than it should. Here are the things you need to consider when buying a rental investment property:
A) Location
B) Curb appeal
C) Floor Plan/Landscaping
D) Builder
E) Year built
F) Amenities
G) Taxes and Insurance
H) Costs associated with leasing/management /vacancy factor/maintenance cost, etc.
I) Legal and Tax consequences
The way we calculate these factors, a good rental property should rent for 1% of purchase price and the total annual operating cost should not exceed 30% of the gross rent.
Price of the home $100.000.
Gross Rent $1000 per month
Total Operating Cost including, tax, insurance, maintenance, management fee, Vacancy factor, HOA Fee etc should be around $300
Your Net Return should be $700 per month or 7% per year

If you are collecting less than that after you calculate all your costs, you are in the wrong business!

I own a pretty good size property management/ Investment Company in Phoenix. I am extremely busy with my own personal investors. However if you need some hints as what to buy and what it rents for etc, give me a call. I can give you my 2 cents to put into your own calculations. I also have several agents I have trained to help you find the right property if you need one. As for managing your property, we are a full service Real Estate/Property Management Company serving the entire valley. My designated Broker Rhonda Urtuzuastegui or one of our seven district managers can give you the personal attention you need. You can reach me at 888-777-6664. Ask for Payam Raouf. Good Luck.

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