Purchasing Investment Properties In Arizona
Are You Looking At Investment Properties in Arizona?
It’s certainly a great long-term investment, especially if you’re considering high-demand areas like Scottsdale. According to one source, there has been a 32.35% year-over-year increase in home prices in the Phoenix metro area, making it one of the fastest-growing areas in the U.S. From 2020 to 2021, there has been a 27% rent increase. This is why you need to take a serious look at purchasing investment properties in Arizona.
It may be challenging to get in as a buyer now but if you are prepared to navigate the Arizona property market, it can be a rewarding investment, especially in the long run.
Here are some reasons to consider investment properties in Arizona.
Strong Demand and Low Vacancy Rates
Even before the pandemic, migration has always been a major driving factor in Arizona’s population growth. In 2021, the vacancy rate in Phoenix fell to 3.8%, the lowest in two decades
For rental property owners, this has translated to higher rental prices as demand continues to surge. It also means higher and more consistent cash flow as well as a lower tenant turnover rate.
Robust Job Market And Local Economy
The Arizona Office of Economic Opportunity released a study projecting that the Grand Canyon State will add nearly 550,000 jobs between 2019 to 2029 (assuming there are no major economic and political disruptions that can radically affect job growth).
This annualized growth, which is estimated at 1.6%, is expected to outpace national growth which is projected at 0.4% annually.
As more people flock to Arizona for job opportunities, more investment properties will be needed to accommodate a fast-growing renters’ market.
Appreciation
We know that the value of real estate appreciates over time. As the owner of an investment property in Arizona, you can turn a profit if you decide to sell. Even if you don’t, you can generate cash flow from rental payments, and this will only strengthen as you pay off the mortgage and build your equity.
According to a report by the Federal Housing Finance Agency (FHFA) for Q1 2022, Arizona had the second largest house price appreciation among all states for the period between Q1 2021 to 2022 at 27.5%.
Let’s Talk Insurance
As a property owner, you will need to get insurance for your home, whether it is your primary residence or your investment property.
Business Insurance For Investment Properties
If you have a rental property, you will need commercial property insurance. Rental property can refer to an individual house, an apartment complex, or commercial rentals like an office or warehouse space.
Having insurance protects your livelihood and investment. By purchasing properties in Arizona plus insurance, you can get coverage for natural disasters, fire, theft, flooding, as well as business interruption and loss of income.
For instance, in the event of water damage due to a burst pipe, this kind of insurance would cover the repair or replacement of anything that was damaged in the leak. It can also cover the cost of removing the water from your property, including cleaning and restoring the affected area to its original condition.
Personal Insurance For Residential Properties
In Arizona, you are not required to get an insurance policy for your residential property but unless you are paying for it in cold, hard cash, your mortgage lender will need home insurance.
Home insurance covers material damage to your home, your household items, and even your personal belongings. Your coverage can include living expenses if your home becomes uninhabitable due to a covered incident or liability protection if someone is within your property.
If you have a second home, like a vacation property, you can also get a separate policy for it.
Secondary Home Insurance
As the name suggests, secondary home insurance can protect your second home, both the structure and what’s inside, while you are away. This is a separate policy from the one that covers your primary residence because the risk factors are different.
Since it is presumed that you won’t be staying in this house full time, second homes will be assessed for threats like fires, burglary, or vandalism. As in other policies, you can get additional coverage depending on how you plan to use this property.
Condo Insurance
If you purchase a condominium unit, you can get a specific type of insurance for condo residents.
Condo insurance can help protect your unit from incidents like theft, water damage, or vandalism. You can also get liability protection from personal injury inside your unit, if, for instance, someone slips on your wet floor due to a leaking water pipe.
Your condominium association may have its own coverage but, in many cases, it only covers the building and common areas.
Every Property Owner Needs A Trusted Insurance Agency
To better understand your insurance needs for your investment property in Arizona, reach out to Luxe Insurance Brokers.
Call us at 480-568-2566 to set up an appointment, we’d love to help you with your insurance needs.