Truth be told, flipping houses can be a highly successful starting point for your career in real estate investing—especially in the US.
We’ve seen many investors and beginners starting their careers by searching for profitable real estate markets and making high returns by flipping distressed houses. Needless to say, success is highly dependent on location.
Suppose you’ve been following the changing trends of the real estate market in Arizona. In that case, you are well aware of this being a hotspot for house flipping projects, with home prices going up since the beginning of 2021.
With that said, if you’re interested in the idea of making money by flipping houses in Arizona, you’re likely wondering how much profit you can expect from it and what are some obstacles you may encounter.
If so, stay tuned. We’ve covered everything investors need to know in our guide.
Arizona Real Estate Predictions for 2022
The Arizona real estate market has witnessed quite a change, with home values jumping by 31.5% over the course of just one year. And the word is that it will continue to do so over the next few months as well.
In 2021, Arizona had 90,000 registered renter households, making up 36% of the total number of homes in the state.
With the evident increase in property value, flipping houses in Arizona encountered another hindrance. The obstacle we’re referring to here has to do with the average wage, leading to the fact that most buyers were no longer able to buy or invest.
The problem here comes from households spending 30% more than their average monthly income and certain neighborhoods becoming cost-burdened.
Okay, that was a brief overview of 2021.
Is anything going to change in 2022, and how is it going to affect investment strategies?
Things are looking a bit different this year, more or less.
Arizona Real Estate Market in 2022
For starters, home values are expected to see a rise of 11% in 2022, which is still less than the previous year (19.5%). According to these estimates, sales will exceed 6 million from what was seen in 2021.
For example, Arizona’s capital, Phoenix, is the 5th largest city, and in 2022, it will experience even more significant expansion regarding population growth.
A few years back, people were mainly attracted to Phoenix’s strong economy and business opportunities. And since the population has grown by 20%, it now represents a favorable spot for investors.
The steady economic climate, relatively low living costs, and favorable weather are the three primary motivators that attract potential investors to this real estate market.
Although the population has grown faster than housing options, single-family homes are still the most attractive point and opportunity for potential investors. The Arizona housing market has flourished from selling previously owned single-family homes—almost 80% of the sales.
That brings us to the next point:
Is Arizona a buyer’s or a seller’s market?
Arizona is known for being a strong seller’s market thanks to particular advantages, such as tight supplies, demographics, and low mortgage rates.
All factors considered, flipping houses in Arizona could bring long-term profits if the investors put all their hard work into the game and research particular areas.
Flipping Homes In Arizona: Simplified
If you want to be an innovative real estate flipper, you must first become familiar with the process—and the necessary paperwork—before entering this business.
So, here’s a simplified guide to flipping houses in Arizona.
You Need a License for Flipping
Applicants that are interested in obtaining a license should complete and meet the following requirements:
- Complete 90 hours of real estate education
- Pass the Arizona Salesperson Real Estate exam
- Complete a contract writing class
- Obtain a fingerprint clearance card from Arizona’s Department of Public Safety
- Go through a background check
In terms of money, this will cost you around $700, which is not cheap at all. But look at it this way: at least you’re respecting Arizona house flipping laws.
Otherwise, you could end up paying much more than $700 for legal fees.
Find Accurate Information
When you’re done obtaining your license and getting all the paperwork done, you should be on the lookout for relevant information on your potential property.
With all the benefits that the Internet has to offer us, today, real estate agents have access to more than 800 MLS sites where they can share information on properties and cooperate with other brokers in their area.
The real estate business and flipping houses in Arizona are already highly competitive; these MLS systems help facilitate transactions and relationships between real estate agents.
There’s one catch, though.
You can’t just go on the MLS site and list your property as you like; you have to be a member of a real estate association in your community or state.
If you’re the owner of multiple properties, the fees that you’ll have to pay will add up and take a toll on your potential profit. And since we’re talking about finding properties, you could use some extra help with that.
The US real estate market is enormous, and some properties might not get the chance to be listed in the MLS. Lucky for you, the Mashvisor Property Marketplace can help with that.
Our tool allows real estate investors to pinpoint great off-market deals, including foreclosure properties, rentals, and many more. You can find cheap homes that could turn into profitable rental properties or fix and flip projects.
Related: The Best Way to Find Multi Unit Properties for Sale
Ask for Support
Arizona house flipping laws—and the process itself—might come across as complicated at times. The good thing is, you’re not alone in this business.
Part of your mandatory obligations is to communicate and cooperate with brokers.
In the case of house flipping, that’s precisely what you should strive for: getting support from your colleagues. Other real estate brokers that have been in the industry slightly longer than you can bring you information of importance.
For starters, they can introduce you to buyers even before you get into the whole renovation process.
It’s a win-win situation.
Invest in the Property
Now, it’s time to buy the property you’re interested in.
And with that being the key to your real estate investment strategy, you need to ask yourself some essential questions beforehand. Most of them have to do with the actual realization of the project and the potential benefits—and difficulties—it carries.
- Will I receive the proper funding for my fix and flip project?
- Can I afford monthly payments? (In case you’re taking out a loan)
- Can I purchase the property on my own, or do I need assistance from other real estate brokers?
- What are the current property value trends in that area?
Take a moment to think about these issues before you decide to invest in the property you initially wanted.
Renovate the Property
After you’ve purchased the property, it’s time to renovate it. During your planning stages, it’s essential to stick to a budget so that you don’t lose money when you sell it.
If you’re feeling unsure about this, here are some things to keep in mind:
- Create a budget, and try to stick to it.
- Use your credit card to gain points on business purchases.
- Recycle. For example, you can use materials that were used by other house flippers.
- Examine the bids from your contractors thoroughly.
The last step involved in flipping houses in Arizona is selling the actual property and earning a commission.
In Arizona—as well as in most other places—you are obliged to pay the agent that brings you the buyer anywhere from 2-3% commission. However, you have obtained the license, so you should know that you can do it yourself.
For instance, you have brokers that let their agents eliminate commissions on sales involving agent-owner properties. Act as your own listing agent, and, in the best-case scenario, you’ll save up to $7,000.
Ways of Funding Your Project: Loans or Cash?
Once you’ve settled on your decision to flip a house in Arizona, you’ll require some financial resources to support your investment.
Whether investors are new to the game or not, there are a couple of proven ways to finance your project. These involve:
Home Equity Loan (HEL)
Also known as an equity loan or second mortgage, a home equity loan lets homeowners borrow against the equity in their homes.
Before you agree on this loan, be sure to go through the terms and interest rates first.
Still, many investors decide to go with this option since it doesn’t require a lump sum, and it’s good for repair costs.
Home Equity Line Of Credit (HELOC)
The second option would be a home equity line of credit, which is essentially a line of credit that’s secured by your home. It gives homeowners a revolving credit line that they could use for large expenses.
It’s a popular choice for investors interested in flipping houses because it is characterized by low-interest rates. With this type of loan, you could borrow up to 85% of the current value of your home minus what you owe.
Although loans and credit lines might be attractive to most investors, cash is still the safest option. If you have some funds saved up and you’re confident in your real estate investment strategy, go for it.
The danger with loans and banks is that they could either add to your financial burden (if the estimated expenses go over your budget) or you can have a hard time qualifying for these loans in the first place.
Top 5 Places to Invest in Arizona
It’s time to focus on the more specific matters of flipping houses in Arizona and answer one crucial question:
Where to invest?
Here are the top 5 Arizona hotspots for investing in 2022.
1. Phoenix, AZ
- Airbnb Rental Income: $3,810
- Listings for Sale: 1,169
- Airbnb Listings: 1,204
- Occupancy Rate: 65%
- Airbnb Daily Rate: $242
- Traditional Rental Income: $1,962
- Airbnb Cash on Cash Return: 3.97%
- Median Property Price: $638,582
- Property Price per Square Foot: $730
- Days on the Market: 40
There’s no dilemma here: flipping houses in Phoenix is bound to pop up somewhere. After all, this city is home to almost 5 million people and has a stable economic situation—a real treat for potential investors.
2. Tucson, AZ
- Airbnb Rental Income: $2,958
- Listings for Sale: 790
- Airbnb Listings: 1,603
- Occupancy Rate: 67%
- Airbnb Daily Rate: $121
- Traditional Rental Income: $1,350
- Airbnb Cash on Cash Return: 5.90%
- Median Property Price: $396,130
- Property Price per Square Foot: $237
- Days on the Market: 61
The emergence of single-family homes is fantastic news for flipping houses in Tucson. It’s arguably one of Arizona’s best cities to invest in due to its public schools and all the new construction opportunities.
3. Scottsdale, AZ
- Airbnb Rental Income: $3,590
- Listings for Sale: 574
- Airbnb Listings: 470
- Occupancy Rate: 65%
- Airbnb Daily Rate: $156
- Traditional Rental Income: $2,705
- Airbnb Cash on Cash Return: 2.24%
- Median Property Price: $768,804
- Property Price per Square Foot: $509
- Days on the Market: 83
Next on our roundup when it comes to flipping houses in Arizona is the city of Scottsdale—known for its high employment rates and nightlife. This Arizona market was even able to avoid the 2008 market crash.
4. Tempe, AZ
- Airbnb Rental Income: $3,671
- Listings for Sale: 97
- Airbnb Listings: 1,062
- Occupancy Rate: 60%
- Airbnb Daily Rate: $206
- Traditional Rental Income: $1,928
- Airbnb Cash on Cash Return: 4.11%
- Median Property Price: $515,583
- Property Price Per Square Foot: $329
- Days On The Market: 29
Moving down to number four on the list for flipping houses in Arizona is Tempe.
This real estate hotspot isn’t far from our previous choice, Tucson, and it’s a famous college location expected to grow in interest in 2022.
5. Prescott, AZ
- Airbnb Rental Income: $3,688
- Listings for Sale: 319
- Airbnb Listings: 289
- Occupancy Rate: 61%
- Airbnb Daily Rate: $140
- Traditional Rental Income: $2,143
- Airbnb Cash on Cash Return: 3,45%
- Median Property Price: $718,854
- Property Price per Square Foot: $326
- Days on the Market: 26
The top 5 cities for flipping houses in Arizona end with Prescott. Although the population here is about 43,000, this city can still be proud of the fact that nearly 80% of its residents report having rewarding jobs.
Flipping Houses in Arizona in 2022: Summing Up
The market keeps changing, and investors must remain on top of their game. That means doing constant research and finding new hotspots where they could invest their money and attain the highest profit.
Even though the Arizona housing market wasn’t resilient to the 2008 real estate crisis, it still managed to give investors a chance to thrive off flipping houses.
The important step to house flipping in Arizona is obtaining a real estate license and accessing MLS sites that will bring you in touch with other brokers. As far as funding is concerned, you can qualify for loans, but cash is still the safest option—especially with these types of projects.
And if you’re serious about flipping homes in Arizona, look into Tucson, Phoenix, Scottsdale, Prescott, and Tempe.
Mashvisor can help make your search for profitable investment properties in Arizona easier and faster. Expand your real estate portfolio with the help of our tools. Sign up for Mashvisor now and get 15% off.
If there’s anything you’d like to ask, you may reach out to our sales representatives and schedule a demo.