Are you looking for investment opportunities in Phoenix metro area? Read on to learn why Scottsdale homes for sale may be the best choice.
Table of Contents
- Why Scottsdale AZ is a Great Investment in 2022
- What’s the Best Investment Strategy in Scottsdale?
- How to Find the Best Scottsdale Investment Properties
- Is Scottsdale AZ a Good Investment in 2022?
Arizona is becoming a hot market for new real estate investment. The trend that started with Californians leaving the state for Texas to find cheaper and better housing is now growing stronger. People are moving to other, less populated states, and Arizona is one of the top picks. The reason is that there are fewer regulations in the state, and the cost of living in Scottsdale AZ is far lower than in California or New York.
What it means for the people moving is the ability to live in a less crowded and cheaper place. What it means for investors is a new opportunity to invest in a growing housing market in 2022 that is expected to appreciate with time.
Ready to explore if homes for sale in Scottsdale AZ are right for your investment strategy? Let’s learn what the city offers to potential investors.
Why Scottsdale AZ is a Great Investment in 2022
Thousands of Americans are wondering whether they should move to Scottsdale Arizona. It makes investors wonder whether they should start looking for homes for sale in Scottsdale AZ.
It’s true that the Southern city got a lot to offer. Yet it’s not perfect for any investor. Here’s why:
Phoenix Metropolitan Area
Probably the biggest advantage of living in Scottsdale is that it’s a part of the Phoenix metro area. Living next to the state capital does come with benefits. Depending on the exact location of your home, it’s not going to be farther than 10-15 miles from Phoenix city center.
It means both business and entertainment are within a very short trip provided the traffic isn’t too bad. Phoenix is quite congested as any other metropolitan city, but on average, trips to the city center take less time than in larger cities.
As the largest city in Arizona, Phoenix is also a hotbed for business opportunities. It grows faster than any other city in the nation, which means more businesses open and more jobs are created.
Paired with the fact that both Scottsdale and Phoenix provide a lot of sightseeing and entertainment opportunities, from fine dining to a multitude of museums, it creates a unique opportunity for investors. The metropolitan area brings in both long-term tenants and Airbnb stays.
The only downside is that Scottsdale is as removed from the idyllic ranch Arizona lifestyle as possible. It actually made it to the top ten list of snobbiest cities in the US.
Nature
Another thing that attracts people to Scottsdale is the nature around it. Despite being a part of a metropolitan area, the city is home to wildlife spots in and around the area.
There are several trails within Scottsdale, like Lost Dog Wash Trailhead, as well as multiple parks and walking areas. For a city with skylines shadowed by the Phoenix mountain range, it’s not surprising that Scottsdale has plenty of trails around the city.
There are dozens of wildlife reserves and national parks in close proximity to the city, and most of them are well developed. Some of the areas are suited for hunting, so both recreational hikers and serious hunters can find something to do in Scottsdale.
On top of that, the city is close to Salt River to the South and a pretty large Lake Pleasant closer to North Scottsdale. From fishing to rafting, there are enough activities to suit pretty much anyone.
All of the above means that if you invest in Scottsdale real estate, you’re guaranteed to meet a constant stream of short-term guests that love spending time in nature.
Golf
What’s the best use for large swathes of land that are not particularly good for agriculture? There’s nothing better than golf. And Scottsdale is full of golfing amenities.
There are over 200 golf courses in and around the Scottsdale area, and all of them are quite popular among professionals and amateurs. What it means for investors is another stream of short-term guests that may want to visit the city.
300 Sunny Days a Year
The major factor that multiplies the importance of all the amenities in the Scottsdale area is the fact that it’s Arizona. It’s hot there. In fact, the state experiences over 300 sunny days per year, and the temperature rarely drops below freezing.
The scorching summers may be a bit too much for some people, but in the end, your Scottsdale rental unit will be able to use your property as a vacation rental for a longer time than in the northern states.
Attractive Estimated ROI
All of the above factors combined lead to a simple financial calculation. Return on investment and estimated rental income in the Scottsdale area are rather high. A third of households are renters in the area. In relation to the new developments and the population growth, the ratio is not likely to change.
The estimated cash on cash return on traditional rentals is 2.42%, and while the rate is not on the higher end, it’s compensated by the large estimated income. It’s around $2,800.
Since the number of sunny days in the state is higher than the national average, short-term rentals are also a great strategy in Scottsdale. The cash on cash return is even higher at 3.14%, with the estimated return at $4,300.
The only reason one would choose not to invest in the city is the rather high cost of homes for sale in Scottsdale. The average price is $931,120, which may require a large upfront payment.
Check out more Scottsdale real estate market statistics below:
- Median Property Price: $931,120
- Average Price per Square Foot: $500
- Days on Market: 112
- Monthly Traditional Rental Income: $2,813
- Traditional Cash on Cash Return: 2.42%
- Traditional Cap Rate: 2.46%
- Price to Rent Ratio: 28
- Monthly Airbnb Rental Income: $4,332
- Airbnb Cash on Cash Return: 3.14%
- Airbnb Cap Rate: 3.18%
- Airbnb Daily Rate: $278
- Airbnb Occupancy Rate: 55%
- Walk Score: 34
What’s the Best Investment Strategy in Scottsdale?
Different investors prefer different strategies. But what would suit the area best? Let’s take a look at all the ways of making money on real estate that may be profitable in Scottsdale, Arizona.
Traditional Rental
Traditional rent will bring you substantial profits in the city. Depending on the property, you can expect upwards of $3,000 per month in rental income. Not ideal if you’re chasing after ROI numbers, but if you want to generate a cash flow, it’s a good investment.
Airbnb
Airbnb rentals may be the most profitable strategy in Scottsdale. The tourism numbers are high, and even if your rental experiences a low occupancy rate on Airbnb, the warm season is long enough to compensate for that.
The Airbnb income estimate reflects that, as it’s around $1,500 higher than renting out the unit traditionally. However, there’s a downside to such a rental strategy, too.
Apart from the need to manage and maintain the property, you need to register for a license in Arizona. Landlords must also deal with a lodging tax that adds to the expenses, and the state is quite strict on various quality of housing regulations.
So, don’t think the additional $1,500 will be easy to get. If that kind of additional work is worth it for you, though, Scottsdale may be one of the best cities for Airbnb.
With potentially lucrative returns from short-term rentals, Scottsdale may be one of the best cities for Airbnb.
House Flipping
House flipping is big in Arizona, and that’s exactly why you may want to stay away from it. When the market is so hot everyone flips houses, you know it’s a little bit overdue for investment. In fact, the recent data shows profit margins are dropping in Phoenix home flipping deals.
Homes for sale in Scottsdale are on the higher end, approaching a million dollars per house. It means there isn’t much room for improvement regarding the standard home flipping strategy. There simply aren’t that many undervalued homes that can be quickly made to appreciate in price with a renovation.
However, the lack of supply shouldn’t discourage you if you’re a professional home flipper. A professional will always find a cheap home to flip. However, if you’re only starting out, Scottsdale and Phoenix area, in general, are not the best choice.
Investors who are serious about getting into the Scottsdale area can try the BRRRR strategy instead of house flipping. It involves buying an undervalued home with the intention to rent it out and refinance the home to buy another property.
Wholesaling
Wholesaling is a lot like being a real estate broker, but it does not require a license. The money is made on the difference between the price the homeowner asks for and the price a buyer is willing to pay. You essentially collect a finder’s fee.
It can be a great strategy in Scottsdale as the market is hot, new investments are moving in, and property prices are rather high. If you find a buyer for a million-dollar home, it’s possible to make $10,000 on the deal as a finder’s fee.
However, it’s in no way a form of investment as it requires a lot of work to generate profit.
REIG
Since the price of properties in Scottsdale is higher than average in the US, investors without a lot of money on their hands may want to join a real estate investment group. Such a type of investment strategy, essentially, spreads out the costs and the profits among a group of investors.
If you manage to find a group willing to let you in and invest in Scottsdale properties together, it may be a good start to a real estate investment journey.
How to Find the Best Scottsdale Investment Properties
Now that you know the pros and cons of investing in the city, let’s take a look at how you can find Scottsdale investment property for sale.
Hire a Real Estate Agent
The first option you have is hiring a real estate agent. As is the case with plenty of hot markets, there are a lot of agents in the area, and working with one can get you a decent home within several weeks.
On the plus side, you don’t have to spend too much time looking for properties and making decisions. All you need to do is wait a bit for the real estate agent to find a couple of Scottsdale AZ homes for sale that fit your needs and visit them with your agent.
The downside is that you lack the full choice capacity. You can’t see every house in the neighborhood before you make the final decision. Analyzing every financial aspect of the purchase is usually a problem, as well.
Related: The 9 Best Real Estate Agent Directories
Use Mashvisor to Find Scottsdale Homes for Sale
Real estate investors who prefer to explore houses for sale in Arizona on their own may benefit from using a real estate app like Mashvisor. The platform maintains a database of properties for sale from all over the US and lets its users discover investment opportunities in a very efficient way.
You can easily filter the properties in the Phoenix area by zip code, price, or any other search factor. You can also see the neighborhood on the interactive heatmap with the search factor of your choice highlighted.
What’s even more important for a savvy investor, Mashvisor gathers statistics on every property and zip code so that you can calculate the estimated revenue from it. It includes both traditional and Airbnb rental income estimates, cash on cash return, cap rate, and more.
With the price of a home and estimated rental income, you can calculate the profits in an ROI calculator using your mortgage conditions and not rely on Mashvisor estimates solely.
When you do find the right rental for sale, you can close the deal right on the platform. It stores seller contact information and lets users communicate and conduct deals in the special messaging portal.
Using any good rental platform will do the trick if you don’t want to use a real estate agent. Mashvisor stands out among the rest because this platform pulls data from multiple MLS databases and provides extensive analytics capabilities.
Is Scottsdale AZ a Good Investment in 2022?
All things considered, Scottsdale is one of the most promising areas for real estate investment this year. It’s a part of a rapidly growing metropolitan area that combines the comfort and luxury of living in a big city with close proximity to multiple national parks. Whether it’s a traditional rental for new arrivals to the city or an Airbnb unit for avid golfers and hikers, you’re likely to turn a profit.
The only thing that may stop an investor looking for Scottsdale homes for sale is rather the high property prices in the area. An average house would set you back up to a million dollars in the long run. A mortgage would require a large upfront payment.
If you want to find your perfect investment property in Scottsdale, try Mashvisor. Click here to start a 7-day free trial and a 15% discount after your trial ends.