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Real Estate Tips: Articles on the Flagstaff Real Estate Market

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Buying Investment Real Estate in 2008

While there is much talk about how the real estate market is in disarray, the climate for investing may be just right. As the stock market continues to go south, and with money market/CD investments paying minimal interest, it may be time that you consider moving your money into real estate investments.

There are a number of issues to consider before buying investment properties. Are you interested in commercial, land, or residential property speculation? Land is generally a growth investment while residential and commercial rentals are considered growth and income. Each of these investment types has its own pitfalls and rewards. However if you plan accordingly you should see a decent return on your dollar. First consider the type of real estate that you would like to have and the impact ownership may have on your life.

Once you have found a property that may suit your needs you can conduct a quick financial analysis to see if it is a worthy investment. First calculate the capitalization rate or CAP rate. The CAP rate is the rate of return or yield from a property that you expect as an investor. The rate is determined by dividing a property’s net income by its sales price. You should also consider the rate of return on your down payment. Comparing these rates to your return from a bank, stocks or other investments will give you a good idea if you want to continue with the purchase of a particular property.  If you are planning for growth, look at historical trends in the type and location of the real estate that you are interested in.  History is no guarantee of the future however it does give you a basis from which to make your decision.

Real Estate investing is not for the faint of heart or the short term investor. It takes time for real estate values to appreciate. As with any investment you must consider the risks.

If the past is any indication of the future, real estate in Flagstaff and Northern Arizona will continue to be a good investment. Talk to your realtor and accountant before making a purchase. Your realtor will have the facts about the market and your accountant can advise you on the tax implications of owning real property.

Finally; remember, location, location, location.

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