It is tough to tell where to get started in today’s Arkansas real estate market. With growth associated with Walmart and suppliers, rental investment property is booming, but also requires direct management.
In Arkansas, growth in the multi-family and single-family rental areas is expected to boom in the corridors discussed below. Make sure you have enough cash and a commercial appraiser who understands the area, the law, and the commercial appraisal process.
Types of Real Estate Investment
The main types of income-producing real estate are offices, retail, industrial, and leased residential buildings. They all have pros and cons, with retail being one of the most stable and low maintenance and offices being the least stable because of shorter leases. Industrial facilities tend to require greater knowledge of city codes, liability and compliance issues, and other factors. Leased residential is one of the easier real estate investments to break into, but requires greater, continued hands-on involvement over time.
For Arkansas, single family or multi-family rental makes the most economic sense, given current economic trends.
Things to Consider
Here are some things to consider in preparation for rental property investments.
- Gather information from other investors, real estate and mortgage brokers, and anyone with experience in this sector.
- Be willing to shoulder the responsibilities of being a landlord.
- Crunch every number regarding upkeep and costs to evaluate if you can make a profit.
- Have enough cash to get started for initial outlays, such as down payments and reserves.
- Consider a live-in property where you will be close to tenants (for smaller investors).
- Plan to spend a lot of time managing tenants and repairs if you choose not to hire a management company.
Real Estate Investment in Arkansas
Because investing in commercial real estate does not usually give a large, immediate pay-off but rather develops over time, you have the opportunity for long-term growth with a relatively low risk, according to a recent real estate market study. Key geographical regions for investment opportunities revolve around the expansion of Walmart and the influx of suppliers wishing to orbit closer to the retail giant. With home prices low, it is fairly easy to buy single-family homes with the intention to rent them out. The best bang for your buck is property near colleges or universities, because they appeal to students and young families.
Benton County (Bentonville, Rogers)
Population growth here is twice the national pace. This is also due to job growth associated with the Walmart expansion and suppliers who relocated to be closer to the source. There is an expected 24 percent increase in the price of homes over the next three years. Construction is also booming, with 6,000 single-family and 4,000 rentals expected to pop up. Due to the rapid growth, there is a stronger demand for construction and mortgage loans, so expect competition to be heavier in this area.
Washington County (Fayetteville)
As in Benton County, Walmart-related population and job growth are twice the national average. This area has an even higher percentage of renters. Home prices could rise by 22 percent rise over the next three years, making this a great place to invest. Construction is healthy with a projection of 3,000 new single-family homes and 3,000 new rentals units.
Saline County (Little Rock)
Home prices here are projected to rise by 16 percent in the next three years. Construction is strong, with an estimated 2,500 new single-family homes and 1,500 new rentals likely to crop up.
Looking to invest in some property? At Ferstl Valuation Services, we want to help you wade through real estate investments and appraisals in Arkansas. Our Little Rock office is located at 5905 Forest Place, Suite 100, Little Rock, AR 72207. Please feel free to get in touch with us and call our headquarters at 501-313-0641 to get started today.