Arizona has become a prime destination for real estate investors seeking both cash flow and appreciation, attracting them to build rental portfolios in the state. With numerous favorable elements such as a robust and steady economy, a growing population and markets ideal for vacation investment properties, the Grand Canyon State has emerged as a favored choice. At Easy Street Capital, we take pride in being a prominent source of investment property loans, catering to the needs of real estate investors aiming to establish rental properties in Arizona.
Investment Property Loan Types for Arizona Real Estate Investors
When it comes to real estate investment opportunities in Arizona, there is a wide range of investment property loans to choose from. Due to its diverse landscapes and year-round favorable climate, Arizona offers numerous opportunities for real estate investors. For investors skilled in property rehab, hard money renovation loans are a perfect choice! These loans enable you to swiftly purchase a property while financing the renovation costs. Once the rehabilitation is complete, you have the flexibility to either “flip” the property for a quick profit or pursue the BRRRR Method by renting it out and subsequently refinancing it into a long-term, low-interest DSCR loan!
DSCR Loans with long-term fixed rates are an excellent option for investing in turnkey rental properties. Turnkey properties are ready to rent without requiring any renovation work. Move-in ready single-family residences and fully furnished vacation rentals offer a great combination of cash flow and price appreciation. By opting for a fixed-rate DSCR Loan spanning thirty years, you secure a stable interest rate over an extended period. Assuming historical trends persist, rents and appreciation tend to steadily rise each year, while the debt costs remain unchanged for the duration of the fixed-rate 30-year loan. As a result, properties financed through a DSCR rental loan should experience increasing cash flow every year of ownership.
Arizona: Landlord-Friendly State
With is business-friendly laws and regulations, Arizona is a landlord-friendly state. Owners of rental properties, such as typical DSCR Loan borrower, are secure investing in the state. Arizona does not have any form of rent control laws that apply state-wide. This means rental property owners are free to set rents at whatever level the market will bear. This can be an advantage for landlords who are looking to maximize their profits. Arizona has relatively efficient and straightforward eviction procedures in place, allowing landlords to regain possession of their rental properties in a timely manner when necessary. The state provides clear guidelines for serving eviction notices and handling eviction lawsuits. Additionally, Arizona allows landlords to include various provisions in their lease agreements, such as pet policies, late fees, and other rules. This flexibility allows landlords to establish clear expectations and rules for their rental properties.
Where To Invest In Real Estate In Arizona
Arizona is also a favorite market for real estate investors because of its many market options. There are lots of varying markets that offer great potential for each type of real estate investor. Phoenix is the largest city in the state and the most populous state capital in the United States. Tucson is the second largest city in the state and home to the flagship university, University of Arizona. Scottsdale is a beautiful city in the eastern part of the state and one of the fastest growing cities in the United States. Sedona is known for attracting tourists due to its sandstorm formations and picturesque landscapes. Sonoita is a lovely town with Victorian-era architecture and the Iconic Whiskey Row that attracts visitors for weekend vacations.
Phoenix
Phoenix is the largest city in the state of Arizona, with a population of over 1.6 million people, according to the US Census Bureau. The city is home to several Fortune 500 companies, including, American Express and Best Western Hotel. These companies create a stable employment base and attract professionals who need rental properties. Phoenix has an impressively low unemployment rate of just 3.60%, signifying a stable environment for real estate investors seeking to expand their real estate investment portfolios.
Phoenix boasts a thriving economy and a diverse population, making it an attractive market for real estate investors. With steady job growth and a growing population, there is a consistent demand for rental properties, whether it be long-term leases, medium-term rentals, or short-term rentals. Additionally, Phoenix offers a wealth of attractions, including the Desert Botanical Garden and Camelback Mountain, drawing in tourists year-round. The city’s vibrant cultural scene, outdoor recreational opportunities, and professional sports teams like the Phoenix Suns and Arizona Diamondbacks contribute to a thriving market for short-term rentals. With its unique blend of natural beauty, cultural offerings, and economic stability, Phoenix presents excellent opportunities for real estate investment.
In summary, Phoenix’s strong economy, various attractions, and increasing population make it a premier market for real estate investors seeking profitable opportunities in single-family and multifamily properties. The city’s active environment presents a wealth of possibilities for rental property investments and the potential for steady and favorable returns on investment.
Tucson
Tucson is a captivating city located in Pima County, with a population of over 545,000 residents. The city possesses an impressive economic landscape, with established employers like Raytheon Technologies and Meb Management Services driving growth and providing a stable income base for its residents. Notably, Tucson holds a prominent position as one of the top five areas in the United States for the aerospace and defense industry, attracting a diverse pool of researchers and professionals who seek housing throughout the year.
Tucson also hosts the University of Arizona, the flagship university of the state, with a population of 49,000. The university creates a consistent demand for student housing, presenting an opportunity for real estate investors specializing in this niche. Additionally, Tucson’s thriving tourism industry and diverse attractions make it an ideal market for short-term rentals, allowing investors to capitalize on the city’s appeal to visitors throughout the year.
Tucson also has a strong rental market, with the average market rent in January 2024 reaching $1,475 per month, according to Zillow. This makes an attractive market for real estate investors seeking rental properties with high cash flows.
Tucson also has a thriving arts and culture scene, with numerous galleries, theaters, and music venues. The city is surrounded by stunning natural landscapes, including the scenic Sonoran Desert and the nearby Santa Catalina Mountains, providing ample opportunities for outdoor enthusiasts. Tucson also offers a rich culinary scene, with a variety of local restaurants and culinary festivals. Whether it’s exploring the university campus, attending college sports events, or immersing oneself in the beauty of the desert, Tucson provides an appealing environment for real estate investors seeking investment opportunities.
Scottsdale
Scottsdale is a vibrant city known for its exceptional beauty and diverse offerings. With a population of over 243,000 residents, it offers an active and thriving community. The city is renowned for its stunning Sonoran Desert landscapes and iconic attractions, such as Camelback Mountain and McDowell Sonoran Preserve. Scottsdale embraces its rich cultural heritage and is home to renowned art galleries, museums, and annual events like the Scottsdale Arts Festival. Scottsdale offers a vibrant culinary scene, upscale shopping, and world-class golf, making it a captivating destination. Its natural beauty and cultural richness attract residents and visitors alike.
People are drawn to Scottsdale for its desirable qualities that make it a popular choice for relocation. The city’s pleasant year-round climate with abundant sunshine and low humidity is a major attraction for many. Scottsdale offers a high quality of life, boasting a safe and clean environment, well-maintained neighborhoods, and top-notch schools. The city also provides a vibrant cultural scene with world-class art galleries, museums, and performing arts venues.
Overall, Scottsdale’s diverse attractions, stunning natural surroundings, and growing population make it an enticing market for real estate investors.
Sedona
Nestled in Arizona’s enchanted rocks, Sedona charms with nature and a vibrant community of 9,000 residents. The city thrives with diverse industries, including tourism, arts, and wellness. Sedona’s renowned attractions, like the Sedona Arts Center and Tlaquepaque Arts and Crafts Village, offer a cultural experience. Scenic landscapes, such as Red Rock State Park and Cathedral Rock, attract outdoor enthusiasts. Sedona presents a captivating market for real estate investors, capitalizing on its allure and growing popularity.
Sedona has a strong market, with the average rent in June 2023 reaching $3,500 per month according to Zillow. The median market rent is up a very strong $180 month-over-month. This makes it an attractive market for investors seeking rental properties with potential for solid cash flow and returns.
As a highly sought-after seasonal destination, real estate investors should adopt a strategic approach that includes diversifying their investment portfolio across different locations. According to AirDNA’s comprehensive analysis, Sedona received a rental demand score of 71/100, and 69/100 for seasonality. This score indicates a consistent and robust demand throughout the year. Furthermore, investors can make monthly profit as high as $5,000! As investors navigate the market, it is crucial to consider certain factors and overall investment sustainability to ensure long-term success and profitability.
Sedona’s stunning natural landscapes, including its iconic red rock formations, attract visitors from around the world, contributing to a strong rental demand. Additionally, the city’s thriving arts scene, with numerous galleries and art festivals, adds to its allure. With its unique blend of beauty, cultural vibrancy, and investment potential, Sedona stands as an attractive destination for real estate investors seeking a profitable venture.
Sonoita
Nestled in scenic southern Arizona, Sonoita captivates with its natural beauty and proximity to outdoor adventures. The town’s historic downtown reflects its heritage and boasts a charming atmosphere with shops, galleries, and local establishments. Sonoita entices outdoor enthusiasts, inviting hiking, camping, and exploration of nearby wonders. Surrounded by breathtaking desert vistas and rolling hills, Sonoita offers a tranquil backdrop for residents and visitors, providing a serene escape.
According to AirDNA, a leading data provider for short-term rental investors, Sonoita boasts a strong market. Investors can expect a monthly revenue of approximately $3,308! In addition, AirDNA projects an annual occupancy rate of 48%. This ensures steady cash flow for short-term rental owners. Investors utilizing DSCR loans from forward-thinking lenders like Easy Street Capital, which consider AirDNA projections for income qualification, can capitalize on the market’s potential and maximize their returns.
Sonoita offers a variety of activities and attractions for visitors to enjoy. Explore the vineyards and sample the region’s award-winning wines. Visitors can go horseback riding through the beautiful landscapes. Furthermore, nature enthusiasts can go to Patagonia Lake State Park for outdoor activities like boating, fishing, and hiking. Investors can capitalize on tourism in Sonoita by investing in vacation rental properties and taking advantage of the steady demand.
Whether it’s exploring the charming downtown or indulging in outdoor adventures, Sonoita provides a delightful experience for visitors while ensuring promising returns for investors.
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Ready to invest in real estate in Arizona? Easy Street Capital is a top lender for loans for rental properties in Arizona, both hard money rehabs and long-term investment properties.
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