The Five Most Optimal Real Estate Investment Markets In Arizona


Photo by Gayatri Malhotra on Unsplash

Photo : Gayatri Malhotra on Unsplash

Arizona's strong economy, sunny weather, and relatively affordable prices make it an attractive choice for real estate investors. If you want to invest in real estate in this state, check out the five best Arizona real estate markets to invest in. After reading these valuable ideas, you can turn to the qualified services of real estate agents in Scottsdale and purchase a profitable investment property in Arizona.

Overview of current real estate trends in Arizona

From 2010 to 2020, Arizona's population grew by approximately 750,000 people, and it was one of the fastest-growing states in 2022. Major corporations such as Tesla and Oracle have also moved their headquarters to Arizona, fueling the state's growth with new workers who moved here with their families. According to the 2020 census, the average price-to-rent ratio in Arizona is about 19. This means that for most residents, renting is a better option than owning an apartment. This is good news for investors, regardless of whether they are investing in apartments for resale or buying an apartment to rent out. Despite the high demand for housing, average housing prices are relatively low compared to other states, so many people turn to real estate agents in Arizona to purchase real estate for investment purposes.

Five Optimum Arizona Real Estate Markets in 2023

Deciding which investment market is right for you depends on your personal goals. When you're looking to renovate a home, you probably aren't looking for the same requirements as a vacation rental investor. Some investors focus on the property's potential appreciation so that they have annual capital growth, while others prefer a steady stream of long-term rental income. Optimum investment markets are determined using a few key strategies, but you can also use a rental property calculator to estimate your potential ROI. Before investing, familiarize yourself with accurate real estate ratios, affordability based on median income, and profitability based on home purchase and rental costs. 

Phoenix: the best opportunities for profitable investments

Home values in Phoenix have increased by an average of 17.43% year-over-year, and the rent-to-mortgage ratio is 75.8%, the highest in the state. Arizona's fastest-growing city welcomes thousands of tourists each year. This makes it a viable option for all types of investors. Market experts assume that real estate prices will continue to rise in the coming years. Investors should take advantage of the opportunity to purchase real estate in Phoenix while the market is still relatively cheap.

Lake Havasu City: perfect for vacationers

Known as "Arizona's playground," Lake Havasu City is perfect for a sunny vacation. Located near historic Route 66, this resort attracts everyone from hikers to fishermen to those wondering why London Bridge ends in the Mojave Desert. In addition to the entertainment events that are regularly held here, there are also exciting opportunities for investors. The rent-to-mortgage ratio is 75.2%. However, the city's median age (52.3 years) is higher than Phoenix's (36.9 years), so the demographics are slightly different. According to the 2020 US Census, the population is also much smaller, at just 55,463. With a wide variety of visitor attractions, Lake Havasu City is a great place to invest in vacation rental properties to ensure a steady flow of tourists and renters.

Safford: Perfect for homeowners

Safford has the lowest rental rate in the state at just 17.8%. However, landlords looking to purchase an apartment or house for a long-term rental will find many financially secure tenants here. With a population of about 10,000, Safford is a quiet town that attracts permanent residents. The city has public schools, lots of parks, hiking trails, and a low crime rate. This makes Safford very attractive to young families and those who prefer the quieter countryside.

Payson: Perfect for people who like a homey atmosphere

Payson has the highest annual real estate appreciation rate in Arizona at 34.01%. Many investors can buy affordable homes right here in central Arizona and sell them later for a great profit. Payson has more owners than renters, so if your key objective is to buy, resell, or rent out a home, you should consider investing in this area. In addition, the average age of the city is 50 years. This means that people are more likely to want to move to smaller houses or single-story apartments.

Flagstaff: Ideal for maximizing returns on your real estate investment

Located in northern Arizona, Flagstaff is perfect for those who enjoy all four seasons. This hidden gem is one of the snowiest cities in the United States, averaging over 80 inches of snow each year. Flagstaff's median home price of about $631,745 is one of the highest in the state. Additionally, Flagstaff real estate values have increased significantly by approximately 23.14% year over year. Rents in this city are the highest of all Arizona markets studied but are more affordable than the national average. With its urban atmosphere and plenty of entertainment, Flagstaff attracts young renters with an average age of about 31. With high rental rates and high real estate appraisal rates, investing in Flagstaff can pay off quickly and bring big returns to investors.

Effective ways to find undervalued real estate in Arizona

The best deals in Arizona tend to be on homes that need only cosmetic repairs or have enthusiastic sellers. Types of homes that sell well include foreclosures, short sales, and abandoned properties. Here's how to find great deals.

Method 1: Use real estate investment software

One of the biggest challenges when living in Arizona or looking for a rental property is finding great deals, but DealMachine is one tool that helps. DealMachine real estate software helps Arizona investors find distressed homes (foreclosures, short sales, etc.) and connect with owners. The DealMachine app is fast and easy to use. If you come across a quality (abandoned or derelict) house while walking around town, you can email the owner directly from the app, saving you a lot of precious time. Download the DealMachine app and find the best Arizona real estate deals in the least amount of time. DealMachine offers a 7-day free trial and a free $15 credit for marketing purposes (such as direct mail to potential property owners). Other popular real estate software or websites to consider for finding good investment properties in Arizona:

  • Flipster: This application is primarily designed to help users efficiently find potential sellers of affordable real estate for sale in Arizona. Flipster also provides valuable information on properties of comparable value so you can assess the market value of an apartment or house before bidding;

  • Flipperforce: This software effectively helps BRRRR investors analyze housing prices and calculate the maximum price of a property before the final purchase;

  • Stessa: Provides the ability to easily track the performance and financial health of all your properties in one convenient application. Stessa generates regular real estate profitability reports and provides financial accounts for automatic updates.

Method 2: Find an FSBO Home

Investing in FSBO (For Sale by Owner) real estate can result in a better deal because you're dealing directly with the seller, not an agent. Many FSBO sellers are more interested in making a quick sale than a profit. Zillow is one of the best resources for finding bank-owned properties in your area. However, unlike DealMachine's non-marketable properties and other software, most Zillow properties are publicly available. This means that you may face strong competition from other investors. Use the real estate rental calculator to estimate off-market deals.

Method 3: Partner friendliness with investor-friendly agents

Working with an experienced real estate agent is the most optimal and effective way to make buying a home affordable and easy. A qualified real estate agent is intimately familiar with Arizona's diverse investment markets, the relevant real estate laws, and access to lesser-known areas so that you can put your investment funds into the real estate of your dreams. Let real estate agents educate you about the Arizona real estate market and make it easy to find your perfect home that meets all of your investment needs.

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