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Why Buying a Vacation Rental is a Good Investment in Scottsdale, AZ

by Karen Picarello

Buying real estate can be a lucrative business, but it is risky. The market fluctuates, tenants may not pay dependably, and cash flow can be a struggle. First time real estate investors may want to go big with their investment, but many of us would struggle to make multiple mortgage payments. This risk is lessened when buying a vacation rental in Scottsdale, AZ.

Why Buy a Vacation Rental?

  • The best reason to buy a vacation rental instead of a long-term rental property is because you can use it! It can also be your second home you visit when you need to get away from the toils of life.
  • It’s a side hustle! Yes, you can have a second home and have other people pay for it. You aren’t going to use it all the time, so why not have it make its own money on the side?
  • The property will likely appreciate. Over time, most properties do become more valuable. Add any improvements, and it will appreciate that much more. This way, if you have to sell it, you’ll end up with a profit.
  • Options. There are many options for managing vacation rentals. If you don’t want to do it yourself, you can hire a vacations rental management service. This allows you to do practically nothing and watch your mortgage, insurance, and repairs pay for themselves through rental income.

Why Buy a Vacation Rental in Scottsdale?

It is important to buy a vacation rental in an area that is rated highly for the tourism industry. Scottsdale is definitely rated as a good place for vacation rentals. The hiking opportunities, proximity to Phoenix, Old Town, clubs, spas, and swimming pools (not to mention the weather!) make this one hot spot for tourism.

According to Mashvisor, Scottsdale had 4.5 million tourists there for overnight visits bringing 2.4 billion dollars for the city in 2017. Rental rates averaged $2,788 but were much higher at $3,308 in South Scottsdale.

Vacation rentals are good investments in Scottsdale because of the tourism, but they are also good investments because they make a good amount of money for the investor without a lot of work or risk. Tourism isn’t leaving the Scottsdale market, and many people enjoy the comfort of staying in a home rather than a hotel, so they can truly have the luxury of a home during vacation without the upkeep. Hire a vacation rental management service, and when it comes time for your vacation, you won’t even know they were there.

Long-term Upkeep for the Buyer and Seller

by Karen Picarello

For the Buyer

When a buyer is looking at a home, there are multiple things they should consider that involve the long-term upkeep of the home. These are things in the home that are inevitably going to cost money…it is just a matter of when.

Windows

Single-paned windows are not going to be efficient, and any home buyer will see them as a thing that will need to be changed in the future. If the windows are updated, consider the quality of the multi-pane. Updates on flipped homes are rarely done in quality fashion, so make sure they didn’t cut corners on the windows, or you’ll be in for a hefty bill in your future.

Roof

Most home buyers look at the roof when considering the purchase of a home, and the inspector will definitely comment on the quality of the roof. However, some roof materials last longer than others. Standard asphalt shingles last about 15 to 20 years, but tile roofs may last a lifetime. A tile roof should be considered a long-term savings when it comes to purchasing a home.

Flooring

Don’t be fooled by new flooring when you purchase a new home. If it isn’t quality, it won’t last. Even “hardwood” may be manufactured, which means it can be refinished but only a few times before it has to be replaced. If new laminate flooring has been installed, make sure it is water resistant. You don’t want to include new flooring in your long-term upkeep of the home.

For the Seller

As a home seller, you should be aware of what prospective home buyers are considering and do your best to eliminate fears of long-term upkeep. That doesn’t mean install a tile roof, expensive windows, and solid hardwood floors. What it does mean is make sure your home looks well-maintained. A roof with lifted shingles is going to be a turn-off that will be pointed out by the inspector. Clean flooring with no lifted edges will look well-taken-care-of no matter what the quality. Clean windows will let potential buyers know that the sills aren’t filled with dirt and junk that will decrease their opening and closing capabilities.

For the seller, long-term upkeep is making the home look as if it has been handled correctly, so long-term problems don’t start to creep in. This is hard to do when simultaneously planning a move, so make sure you continue to keep up your home during the hubbub of the moving process.  

Buying a Home in a New Area

by Karen Picarello

If you are buying a home outside of your current town, you may be flying blind. If you aren’t familiar with the region, you could accidentally end up in a bad neighborhood or simply with bad neighbors. Don’t be sold on a home just because it fits your idea of a nice-looking residence. Scrutinize a little bit, and dig up the dirt on the neighborhood.

1. Research the Area

Look up statistics about the area. Things like the quality of schools, businesses, and services will help you to get an idea of the area you are considering. If there is a country club, it may be upper end….but visit the country club. It may be a doozy that is on its last leg and has a poorly maintained golf course. Make sure your information is updated. Communities change over time, so don’t rely on old info. Another thing you cannot rely on is social media, but at the same time, it can give you some really good dirt on local drama. If there are any major red flags, research it deeper to see if it’s real.

2. Talk to the Neighbors

There’s no better source than a primary source, and neighbors are just that. Ask them about the neighborhood, and while you’re at it, give them the onceover. Could you live next to them? This does not mean you have to be future besties, but you also need to tolerate one another. It may sound a little intrusive to barge in on the neighbors, but it will actually help break the ice. Who knows? Maybe they’ll help you move.

3. Get an Inspection

You also don’t really know what the last homeowners did. That’s a nice new paint job, but what is it covering up? New floor? Prior water damage? None of these things necessarily mean the other, but an inspection should weed out any major cover-ups. Inspectors will notice things that the potential home buyer may miss, such as a faulty water heater or a termite problem.

4. Check Utilities

Lastly, it is good to check the utilities. Is the home an energy hog? How much is the gas compared to other homes with electric heat? How much more in water does it cost to maintain a full-size swimming pool? This information will help you to determine if it is a home you can truly afford.

Pre-approval Equals Seller Confidence

by Karen Picarello

With the Fed keeping interest rates stagnate, there could be more buyers in the market while interest rates remain low. However, predictions vary in whether or not the current seller’s market will continue. Many believe there is a shift on the horizon, but it is too soon to tell. For home buyers who are not cash buyers in any market, you can get the ball rolling by getting your loan pre-approved and increasing the seller’s confidence in you.

Why does a seller need confidence?

Cash buyers are a sure thing, and the mortgage process is not going to hinder the sale. On the other hand, if a buyer is going to use a mortgage to purchase the home, there are a number of things that can stall the sale. Proving income from self-employment, unknown liens against a property, and debt problems can stall or stop the mortgage process. Additionally, you must figure out how much you can afford and how much banks are willing to dole out. This is a complex process that may take a week or many months. Sellers want to know that you are ready to start the buying process, so they don’t have to wait for their house to close. Many home sellers are picking up a new mortgage, so they may not want to wait until you are pre-approved to sell their home.

How do you get pre-approved?

1. Check your credit:

If you need help getting your credit score increased, start with the basics. Make sure you are making payments on time, and make sure you don’t have too much debt compared to your assets. If you have debt problems, speak to creditors about your options. They may be able to lower your interest rates or give you a lower pay-off amount provided you pay in full.

2. Choose a lender:

There are many lenders from which to choose. Once you know you have your credit rating up to par, and you are ready to look for a lender, make sure you check out a few. Compare their rates and read their contracts, and choose a lender who you feel you can trust. You may want to refer to the advice of friends and family.

3. Provide the information needed:

You’ll have to give your potential lender your financial information in order for them to pre-approve. This means income information, debt information, credit scores, etc. The lender will go over everything and evaluate you as a financial risk. Then, they will pre-approve you for a certain amount. This is not the amount you must spend on a house, but it is the amount they feel that you can afford and the amount they are willing to provide.

Once you are pre-approved, you will still have more work involved in securing the mortgage, but your seller will know that you’ve already covered the basics, and it is likely that they will be paid in a timely manner.

Selling and Buying a Home at the Same Time

by Karen Picarello

When a person sells a home, they must find another. These transactions will occur in a market that is better for either buyers or sellers…but not both. The seller becomes the buyer, and they are only benefited by the market in one position. This is why many people end up renting for a short time while they wait for the market to change. They sell in a seller’s market and buy in a buyer’s.

In addition to the markets, it is difficult to make an offer on a new home when your old home is still in escrow. While waiting for your home to close, you will not have that money available for a down payment. If you find your next home before you even have an offer on your old house, you may have to give it up. This just complicates the search. Thankfully, there are contingent offers that sellers may accept while you are waiting for your previous home to sell.

What is a seller’s market?

If there are more buyers than homes in the market, it is a seller’s market. Cash offers may win out over mortgages with more closing costs, and buyers must be ready to offer as soon as they find a home they desire. Sellers, on the other hand, will sell their homes quickly while having more difficulty buying. One solution for this problem (which is sort of a good problem) is to ask to do a rent-back, where the seller rents their previous home after it is sold while buying his or her next house. You can also request an extended closing. Loans may be taken out against your home’s equity to avoid delays in purchasing your next home.

What is a buyer’s market?

In a buyer’s market, there are many homes available. Because there are more homes than buyers, the buyers get the power to wheel and deal a bit. This is when contingency offers are more likely to be accepted. Homeowners are more likely to accept less-than-perfect offers to do what it take to get the home sold.

It is easy to see why it is difficult to be a buyer and a seller at the same time. The markets simple don’t support both at the same time. If you end up renting in order to find a better market, you can end up spending a lot more money in rent and storage, but sometimes it is the best option.

The best thing to do when you are buying and selling at the same time is to be organized and educated. Know the options that are available, and don’t rush into decisions that you are not comfortable with.

Searching for Dog Friendly Communities

by Karen Picarello

According to SmartAsset, almost 70 percent of homeowners own pets, and the most popular pet they own is a dog. Dogs have been labelled man’s best friend for many reasons. They can be loyal, they are easily trained, they’re fairly smart, and they are simply lovable. For many people a dog is shoulder to cry on, a confidant to sit on the couch with, and sometimes the cuddliest bed partner one could ask for. However, owning a dog is a responsibility, and aside from the dog not being a nuisance to neighbors, dog owners must also provide a good home for their loyal companion. Arizona has some of the best cities for dog owners because they have good weather, which is suitable for getting dogs out into the fresh air. They also have many communities that have amenities for dogs that make it easy for you and your dog to have fun.  

5 Features of Dog Friendly Communities

1. Sidewalks:

Dog walking is one of the most important parts of ownership, but life gets busy, and having access to walkable paths is key to making sure your furry pal gets outside. Seeks communities with well-made sidewalks, so when time is tight, all you have to do is walk out the front door. Lighting should also be a consideration, and well-lit sidewalks are a bonus.

2. Dog parks:

Dogs can be social creatures, and dog parks create a friendly area for dogs to meet and greet or simply play catch in an open area…without a leash. Dog parks used to be reserved for larger cities where many homes had little or no yard. Not anymore. Dog parks are in many rural communities today.

3. Runnable parks and trails:

While dog parks are nice, some owners wish to run alongside their furry friend, and runnable parks and trails give owners a chance to get out their running shoes and get some exercise in a safe area free from traffic.

4. Dog friendly businesses:

Dog friendly shopping centers allow your dog to come with you on each shopping excursion, and they won’t be a surprise or a nuisance to other shoppers or shopkeepers.

5. Dog friendly restaurants:

Like dog friendly businesses, dog friendly restaurants allow you to keep your dog nearby at all times, and in places like Arizona, where it can be very hot, this can be key to being able to get dogs out of the house.

SmartAsset ranked Tuscon, AZ as the most dog-friendly place for 2018, but there’s more to it than that. If you have a large dog, and you are in a less dog-friendly community, make sure you find a big yard. If you have a dog who barks, then it may be better to make sure there is plenty of room inside for the dog to stay and not annoy neighbors. Each dog has unique requirements, but it is important to remember that communities have a lot to offer when it comes to quality of life for your pet.



 

Selling with Solar in the Sunny Arizona South

by Karen Picarello

Parts of Arizona get approximately 300 days of sunshine a year, so it is no wonder that solar panels are becoming popular in this Southern state. Selling a home with solar panels is not a problem, and statistics indicate that the number of homes sold that have solar panels is constantly increasing.

However, whether or not solar power will increase the value of your home is dependent on multiple variables, and in some cases, it does not amount to enough of an increase for it to be worth it. Solar panels can save a homeowner a lot of money in electricity over the years, but home sellers and buyers must be armed with knowledge in order to consider adding panels to sell a home or consider buying a home with solar panels.

5 Things to Know about Solar

1. Value added diminishes with the length of warranty.

The value of solar panels is calculated by using the amount a homeowner will save in energy consumption and multiplying that by the years left on the warranty. If there is very little time left on the warranty, then that value added to a home price will be reduced drastically.

2. Leased panels do not add value.

If the panels have not been purchased, then they do not add any value to the home because they are not owned. A buyer can take over the contract however, so leased panels may improve that salability of a home.

3. The home may still be dependent on the grid.

Some solar panels don’t make quite enough electricity to fully power the home, which means they still rely on the grid for constant electricity, which means there is still an electricity bill. This can be a deterrent to some home buyers, but it can also provide comfort in knowing there is a backup option for power if needed.

4. If the roof is in disrepair, solar panels are expensive to remove to reroof.

Obviously, a roof that is in poor condition is going to be a factor in a home sale anyway. However, if the roof is okay but will probably need replaced in five years, buyers may be turned off by the added expense in their future.

5. Some energy companies will buy your excess energy.

There are tax credits and energy credits that power companies will provide if you are able to create excess energy and export it to the grid. Since Arizona is the sunniest state in America, there is a good possibility that a residential home could produce excess power, in which case the homeowner would benefit.

When Should You Look for a Starter Home?

by Karen Picarello

Many millennials dream of owning a home, but worry about economic instability, and their own financial solubility. Many millennials were in a great position to observe the housing crash  a decade ago, and are therefore somewhat gun shy at the idea of jumping into the world of home ownership.

If you are trying to determine if a home purchase is on the horizon, here are a few tips to help put your mind at ease.

First, your decision about whether to purchase a home should largely be based on two factors. First, your creditworthiness and financial situation, and second, your future plans. If you want to purchase a home, a large part of the process will depend on things like your credit score and income. Saving up money for a down payment can be daunting but can help you to get the stability you need to forge ahead confidently. If your credit is poor, you may not be in a great position to look for home ownership. However, still do your homework. Talk to an agent and determine if there are options for you available.

The reasons that purchasing a home can be better than renting is that a home is one of the best investments you can make. With that said, you need to remember that homes are a long term investment. It is incredibly difficult to predict how a market might develop in 1, 5, or 15 years. With that said, the longer a period of time that passes, the better chances you have of making your investment pay off. So, if you are planning on staying in the area for at least 5 years, owning a home is a great choice.

This is also a great way to prepare you for your future. If you are looking to purchase your first home, you likely are just starting your career. You will learn what types of property you like, and what you want to avoid. Look for a property in a good area that fits your needs.

If you have questions, don’t hesitate to call today to talk to an experienced agent. Finding a home which fits you is the most important thing, and this is best done with the help of a professional. If you want to start a family, career, or simply want to invest, look into buying your first starter home today.

 

Beware of Termites

by Karen Picarello

I have talked often about things potential buyers need to keep an eye out for, but one thing which has not been discussed here much is the importance of avoiding termites and other wood boring pests. There are a few reasons why these pests in particular are dangerous to homeowners.

First, damages caused by termites and other pests are often not covered by homeowners insurance. This means that you could one day discover that your house needs tens of thousands of dollars worth of work in order to be structurally safe, but your insurance wont pay a dime.

Additionally, spotting termites and termite damage can be difficult. While some damage can be visible, there can often be cases where they are almost impossible to detect without proper training and tools. This means that while visible damage is a good sign that there are termites, a lack of visible damage does not indicate a lack of termites. If you are seriously considering a property, do your own inspection to look for termite damage, but also don’t forget to hire a professional. A professional pest inspector is your best bet, and this can be done in addition to the normal inspection.

But what if termites are found? If you do end up finding damage, it does not mean that you will have to give up on your plans to buy the house. If there is a moderate amount of damage, the current owner may agree to doing repairs before selling or lowering the price of the property. Just make sure that the lowered cost is enough that you will still be happy paying for damages on top of the purchase. Follow up, and make sure that the work has been done. Demand records and proof.

Finally, as a homeowner, you should make sure that your property is not being damaged. Keep your property sealed off, avoid storing wood next to the house, and inspect areas that are visible for signs of termites. Finally, every few years you should hire a professional. If termites are ever found, act immediately. It will not get cheaper to deal with the problem, and every day they live will mean more repair work which needs to be done. Eventually, they can make a house structurally unsound and dangerous to live within. If you suspect that you might have an infestation, act immediately.

Avoiding Poorly Maintained Properties

by Karen Picarello

A major worry of prospective home buyers is that they will purchase a property with some unexpected caveats to its livability. A home is a major purchase, and unexpected maintenance problems can put easily put you out tens of thousands of dollars. Shelling out a few hundred dollars for an experienced and skilled home inspector is some of the best money you will ever spend.

However, no home inspectors are not perfect, and paying a home inspector every time you are considering a property can quickly put you out a significant amount of money. Thankfully, you can learn a few tips which can help you to make an educated guess about the quality of the house.

Sizing up the seller is one of the bets things you can do when looking to understand if a house was well taken care of. While you may not meet them, you will almost certainly see some things which will allow you to begin to get an idea of their tendencies and character. Are they clearly meticulous and conscientious? Do they have the financial wherewithal to maintain the property? If the seller appears to be unreliable, they may not have been particularly reliable in their efforts to maintain the property.

Second, do a brief inspection of the home features. It is probable that everything has been recently been made over in the attempt to sell. So there shouldn’t be things like chipping paint or dirt anywhere. However, other things are more difficult to fix. Put the house through its paces. If you are seriously considering buying the house, take the time to run water from every spigot, check things like electrical outlets, and open doors and windows fully. Doors that don’t open smoothly, or bathroom fixtures which are too loose or too tight could be a major sign that the owner does not put much effort into maintaining the property. When running the spigots, flush the toilet and run several at once. See if the water pressure drops.

Finally, ask the seller for a log of maintenance done. If they have a well-documented history of frequent maintenance, the house is likely in great condition. However, if they have sparse documentation, or their documentation is all very recent, it is likely that the house may have been poorly maintained. Don’t use any of these things to make a final judgement, but if you believe that a house was poorly maintained, it might be better to save your money on the inspection.

Displaying blog entries 1-10 of 19

Contact Information

Photo of Team Picarello Real Estate
Team Picarello
RE/MAX Fine Properties North Scottsdale
21000 N. Pima Road, Suite 100
Scottsdale AZ 85255
Office: (480)860-8733
888-548-8713
Fax: (480)860-8755