Todays blog post comes to us by guest author Alan Davis. Below, Alan describes why right now is a good time to buy a second home for investment purposes.
The Seasonal Rental business for investors is back! Why? The 2004/2005 price run up has retreated by at least 50% in some areas and its now possible to cash flow, or nearly cash flow in this business. While the seasonal rental rates in Scottsdale are the highest, other areas such as Anthem, Arrowhead Ranch, Sunridge Canyon in Fountain Hills are a close second. Purchasing real estate for seasonal rental always depends on your goals, such as cash flow or appreciation or having a trophy property. A trophy property is a single family home in a golf subdivision, with golf views, and/or mountain views, and/or city light views, which is single level and is 3 bedrooms, or more with a pool, preferably a heated pool.
Remember, one thing I have learned about seasonal renters is that once they really like a place, they will come back again and again and again. Another factor is making a seasonal rental successful is getting a summer renter in the property for a 4-6 month period of time. Yes, the rental amount will be far less than in the season, but its good to have someone in the rental and to have SOME cash flow. So, I suggest locating a seasonal rental property not too far from infrastructure and jobs, such as the Scottsdale Airpark, where many white collar jobs exist.
If one chooses to finance, single family homes are much easier to finance. However, if one chooses to finance a condo, it is much harder and in some condo complexes, not possible due to a high amount of HOA deliquencies or foreclosures. As such, a number of condo complexes have become “cash only”, which can be a great option for cash buyers who can create a solid cash flow scenario and can potentially pay for their investment in 7-10 years, or less. All in all, its a GREAT time to invest and to be in the seasonal rental business.