Buyers Guide

Buying Prescott Income Property and Residential Real Estate
Purchasing real estate is an effective long-term investment strategy.
There are several types of residential income-producing real estate, each offering different levels of revenue potential and carrying varying degrees of risk.The most basic of these types of real estate include:
  • Duplex (two units)
  • Triplex (three units)
  • Fourplex (four units)
  • Rooming house (many rooms with shared kitchens and bathrooms)
  • Low-rise apartment building
  • Mixed-use commercial and residential
  • Properties that need to be fixed up for resale

Whether you are an investor who is looking to purchase a property that nets you a profit each month or a home buyer who wants to find a smarter way to bear the cost of home ownership, we have the information you need.
Buying Prescott Income Property as an Absentee Investor
Why invest in prescott real estate that you will not live in?
  • Cash Flow: Rental incomes generate positive cash flow – the monthly net proceeds after all expenses and carrying costs on the property.
  • Leverage: Income properties allow for positive leveraging – a situation where the yield to an investor exceeds the overall rate of return that would have been realized on a property had no financing been put in place.
  • Return on Investment: The intention to achieve a strong R.O.I.- the dollar amount returned on an initial cash investment expressed as a percentage.
  • Capital Appreciation: The potential for capital gains if the property can be sold for more than was paid for it.
  • Tax Benefits: Potential for tax benefits by writing off mortgage interest against income. Also, capital gains on reversion may be taxed at a lower rate than other forms of income.
  • Tax Benefit Potential: Gained by writing off mortgage interest against income. When you sell, capital gains may be taxed at a lower rate than other forms of income and there may be tax exemptions if the property is the principal residence.
  • Beat Inflation: Land becomes more valuable every year. As your property appreciates, it can provide a good hedge against inflation.

Buying Owner Occupied Income Property in Prescott
Why choose to own and live in a building with tenants?
  • Cash Flow:  Rental incomes generate cash flow from other units in the building. That income can lower or completely offset property expenses and carrying costs.
  • Location:  Income properties may allow individuals to live in neighborhoods that they may otherwise not be able to afford by reducing the monthly carrying costs of mortgages.
  • Accommodations:  Inhabiting an income property may allow individuals to live in a larger or more luxurious unit that costs less than if they were renting the same unit.
  • Mortgage Eligibility:  A lender in assessing eligibility for a mortgage may use the income from a property and allow buyer to purchase a much larger property..
  • Capital Appreciation:  The potential for capital gains if the property can be sold for more than was bought.
  • Tax Benefit Potential:  Gained by writing off mortgage interest against income. When you sell, capital gains may be taxed at a lower rate than other forms of income and there may be tax exemptions if the property is the principal residence.  Also, you may be able to get a depreciation benefit on the rented portion of your property (check with you tax advisor).
  • Beat Inflation:  Land becomes more valuable every year. As your property appreciates it can provide a good hedge against inflation.
  • Gain Experience:  Managing properties and tenants in Prescott or any other place requires many skills including negotiating, background checking, advertising and marketing, contract writing, escrow management, handyman, and many more.  Starting with a property that you live in is a great start and you can be “on top” of things.