1031 Investment Opportunities In Arizona

1031 Investment Opportunities In Arizona

There are innumerable reasons why investors have always found 1031 exchange investments in Arizona favorable. Copper State is known for various landmarks, including the Hoover Dam, Petrified Forest, and Grand Canyon. Known widely for its condo market, Arizona has witnessed a significant rise in single and multi-family rental properties. With trade, business, and hospitality being its powerful sectors, Arizona is an ideal place for someone looking to do a tax-deferred exchange, popularly known as a 1031 exchange.

Arizona has Always Been One of the Best Locations for 1031 Investors.
Hundreds of 1031 investors like Adrien have found Arizona to the best marketplace for investors of all stature. No matter whether you’re a beginner investor or a pro like Adrien, Arizona would never disappoint you. A few factors that make Arizona an investor-friendly market include –

Cheaper Homes – There is a reason why Phoenix, the capital city of Arizona, has been ranked as the 13th most affordable city in the United States. The average price of homes in Arizona varies from $230K – $240K, which is just a bit higher than the average price of homes in the entire US ($216K). A close observation will tell you. It’s a lot cheaper than some expensive places like Hawaii, where the average price of homes is $755K.

Sky-rocketing Economy – With a tremendous increase in the number of companies shifting its base to Arizona, its economy has sky-rocketed in recent years. In 2017, Phoenix had witnessed a record-shattering growth in its job market with over 51,000 new openings. It’s a mammoth 140% increase since 2007. Since the demand for more private and commercial real estate properties is rising in the state, 1031 investors are likely to find more affordable and luxurious properties for their exchange.

Never-Ending Demand for Rental Properties – New job opportunities and booming economy has also increased the demand for rental properties in the state. With more and more individuals and companies relocating to Arizona, it doesn’t seem to drop either. 1031 investors can find newly built institutional-grade properties with little-to-no management responsibilities.

Ongoing Development – Though Phoenix has been ranked among the top 20 most affordable cities in the United States, it is still experiencing a continuous rise in real estate prices. The reason is obvious. Its suburban areas are still developing. This makes Phoenix and entire Arizona the best place for first-time investors who’re looking to do a 1031 exchange.

Important factors when planning a real estate investment
Possessing a rental property is anyway going to be profitable. However, some factors can control the revenue that your rental property is generating or is likely to generate. Here are some of the factors that you must pay attention to when buying a rental property –

Location – The area where your property is located plays a major role in deciding the future of your investment. The location of your rental property will determine what kind of tenants you’re likely to get or what’s the vacancy rate there. For example, if you buy a rental property closer to a university, there is a high probability that you’ll get a bunch of students as tenants.

Property taxes – Tax is the only thing that makes an investor’s life difficult. Property taxes are likely to be on the higher side in highly developed areas. However, high property taxes aren’t always bad. A developed area, where the flow of tenants is also high, could have high property taxes. However, there are some lousy places as well that have high tax rates. Therefore, you should choose a location where the property taxes aren’t too high and which offers a fair flow of tenants.

Neighborhood – You must check the neighborhood in which your property is located. After all, what kind of tenants you’re likely to get depends upon what kind of society it is. A good and wealthy neighborhood is likely to have good quality tenants.

Job Market – You may also want to inquire about the job market near your property. A good job market is likely to attract a sea of crowd, which is a good prospect for an investor who owns a rental property.

Amenities – Another thing that can increase the flow of tenants is amenities. Everyone wants to live in a place where there are parks, gyms, good restaurants, etc. These things play a vital role in finalizing a property from a tenant’s point of view.

Average Rent – Next thing that you should check is the average rent payable in the area where you’re deciding to purchase the rental property. You should stay away from areas where rents are too low. After all, it’s the only source of income you’ve.

Future development – This is an important factor. The scope for development of the area where your rental property is located will determine the flow of tenants in the coming years. Nobody would like to live in a place that has no scope for development. Hence, you must look for a locality that has a good prospect for development.

Talk to a 1031 exchange expert if it’s your first 1031 exchange.
1031 exchanges are complex transactions and require proper diligence before the investment. Generally, a Qualified Intermediary does all due diligence related to your 1031 exchange. However, you can reach out to a 1031 exchange expert at first and discuss your requirements with them. It can help in understanding the entire process and avoiding potential risks.

“Our tax-deferred 1031 exchange programs can save millions in taxes, increase investor equity, and compound annual cash flow distributions and returns”