How Does the Scottsdale Real Estate Market Look for Investors?
Scottsdale is a beautiful, cosmopolitan city in the State of Arizona, known for its beautiful weather, high-end shopping, fine dining, beautiful scenery and beautiful homes. Scottsdale is essentially a high-end suburb east of the state capital-Phoenix, with a population of about 247,000. Scottsdale's per capita income is approximately $53,000 or nearly double the national average level of $28,000.
The median household income in Scottsdale is OVER $73,000; significantly above the national average.
These attractive financial figures are explained by the dominant employment sectors including healthcare, technology, retail, and finance, which are all well paying economic sectors. Scottsdale success and beauty was not without planning. Scottsdale has a very active business community and political structure promoting the city to select businesses across the US. Scottsdale's planning has made it an easy sell. It has beautiful scenery, well-maintained streets, parks, recreation facilities and some of the most beautiful affordable homes in the US.
Scottsdale is also home to some of the best hospitals and care facilities in the US. Combine those factors with a significantly lower crime rate in Scottsdale than other cities in Arizona and in the US as a whole. These positive factors make Scottsdale a 'win-win' for those living in and buying a home in Scottsdale. This is also positive information for any real estate investor looking to buy a rental property in the Scottsdale real estate market. Both short-term tenants & long-term tenants are likely to prefer Scottsdale as home. This translates into less 'tenant turn over'; meaning 'vacancy factor" is less a consideration than in other parts of the Phoenix area.
The Scottsdale real estate market is medium-sized with a total number of approximately 105,000 residential real estate homes. Since 2000, the total real estate appreciation in property prices in the Scottsdale real estate market has been 95% or an average annual real estate appreciation rate of 3.9%. About 35% of those living in Scottsdale, live in residential rental units, which translates into a significant demand for traditional rentals.
The Scottsdale housing market is dominated by single-family homes, followed by apartment complexes and then Scottsdale townhomes and Scottsdale condos. Two-thirds of all Scottsdale residential real estate properties were built between 1969 and 1999. Since the latest real estate boom, beginning in earnest in 2016, hundreds of new apartment units and condos have been built in Scottsdale. This investor frenzy has also affected older rental units. High demand from savvy investors and newly minted investors have driven prices for small and large complexes alike to new highs. The high prices trend is true of commercial properties within Scottsdale City limits, as well.
What is the Return on investment in the Scottsdale Real Estate Market
The most important factor to decide, as a real estate investor, when considering buying a rental property in the Scottsdale real estate market is profitability or the return on investment for income property(s). Every investor has their personal profit formula and many calculation tools are available on the internet. However, as of this writing, profitability is still created when buying and now the market is in "High demand" which means new investors beware. Deals are few and far between. However, there is still opportunity. Please feel free to call me to discuss what the best second home options are to buy in Scottsdale and WHERE to buy homes in Scottsdale for maximum income return and pleasure. Patience is currently key.
As of this writing, return on investment in Scottsdale was approximately 4.5.% which can be considered a marginal cash on cash return and only a decent cap rate, but it is far below what residential property investment would yield in other parts of the US. Does that mean not to invest in Scottsdale? Not in thisRealtor'ss opinion. Just make sure you buy right and do not buy simply as a short-term investment. Call me and I can explain in greater detail. 480-450-4632
What Are the Best Neighborhoods to invest in the Scottsdale Real Estate Market
There are several communities within Scottsdale that offer better home investment opportunities than others.
#1. Near the Old Town Scottsdale. Homes for sale in South Scottsdale offer the most affordable property price point, which in turn will generate the highest return on investment .
#2 Non-gated communities or non HOA restrictive communities in Central Scottsdale allowing flexibility short term rental through VRBO. VRBO rentals and other short-term vacation rental options have helped many home owners not only pay for their vacation home in Scottsdale but make a substantial profit. Again, experienced counsel is required. Call me. You can either make money or lose money based on several key factors.
#3 Luxury homes for sale in North Scottsdale (in non-restrictive communities) also offer attractive income potential. Rates for these home in winter can range from $3000.00 per week to well over $25,000 per month. Buying a home in North Scottsdale as a second home or as an investment BE CAREFUL.. Call me. Most real estate agents do NOT have the experience to evaluate the investment potential of a luxury Scottsdale home.
#4 Paradise Valley an elite suburb near Scottsdale. Paradise Valley is considered the Beverly Hills of Arizona. Even older home in this community are in high demand as vacation rentals and many of these older homes can literally be purchased for land value. Interesting proposition. Buyers looking for second homes to purchase in Paradise Valley may come out for only 1 month of the year and rent the home for the other 11 months. Scottsdale and Paradise Valley have one of the strongest vacation rental markets in the US.
In conclusion, while the Scottsdale real estate market is not the only city yielding the highest return on investment, it is still worth serious consideration by real estate investors, especially those interested in owning property in one of the most beautiful, fun cities in the US, whether you are 4 or 100. The quality of living in Scottsdale is second to none.
Looking for more information on Scottsdale, it's history and statistics - click this link BELOW .
For information on Real Estate in Scottsdale,
Please Call REALTOR - Michael Chaisson
RL Sotheby's International Realty
Scottsdale 1- 480-450-4632