8 things to think about when buying your first Florida rental property.Terry Riffe | April 21, 2016
If you are considering investing, here are 8 things to think about when buying your first Florida rental property.
Central Florida’s economy is booming, the tourism industry breaking attendance records, and new homes being built every month, there might not be a better time for a foreign investor to start thinking about the value of purchasing one of those pre-construction homes in the Orlando area. If you are considering buying a Florida rental property, there are certain things for you to think about.
That purchase could turn out to be the smartest investment they ever made. Florida remains one of the fastest growing states in the U.S., and the housing market continues to thrive.
But before starting a search for just the right property, smart investors should first seek out the guidance of a Realtor who knows the Central Florida market, and can help them make the best choice, noted An Flamand, the owner and broker at Orlando Vacation Realty.
An, who specializes in marketing pre-construction homes and investment properties in Central Florida to foreign investors, noted that before starting their search, buyers should first consider eight things to think about when buying your first Florida rental property. Doing so will enable them to maximize their potential for the best investment possible. So these are the most important questions to ask yourself.
1) Who can help me with the purchase of my home, and will this cost me money to be represented by a Real Estate agent?
As An noted, Real Estate Agents are paid by the sellers, so there is really no good reason not to be represented by an expert in the field. The expertise a licensed real estate professional brings should give buyers more protection and security and could as well save them thousands of dollars. Experienced Realtors, An noted, will be able to guide the buyer to the exact kind of property they want — from a single family home with the potential to be rented out long-term or as a vacation home, a condominium or a townhouse, for example — in the most desirable location. Experienced Realtors can also assist the buyers with a CPA or local attorney when needing further assistance when investing in Florida. Orlando Real Estate specialist An Flamand stated that a good REALTOR will assist his/her clients from the beginning till the end.
2) What is the best use of the investment property: short or long term rental?
There are advantages to making your new property available as either a long term or short term rental. The Orlando area alone has been attracting nearly 1,000 new residents each week, many of them looking for a home to rent. Vacancies in desirable locations are often low, making your new property a sure bet to attract quality tenants.
It’s also worth noting, however, that Central Florida with its theme parks and other attractions remains one of the most vibrant vacation home markets in the state. These are fully furnished houses that are rented on a short term basis to tourists, business travelers, and others looking to spend their time in this region in a house rather than a hotel room. Vacation homes are particularly appealing to families looking for the amenities they offer: a kitchen, multiple bedrooms, a game room for the kids and a private pool, for example. Some vacation homes remain booked months in advance if they are close to the theme parks. Both market are really good at this time, however if you are thinking of utilizing the home for your own stays or vacations, then short term rental is definitely the way to go. If you do not have any intentions in doing this, then long term might be the better way to go.
The bottom line is this: long term residential (lease) rental, has a bit more steady secure income, short term, van be great one month slow another. I always compare it to the stock market, short term has more potential of more profit however a higher risk, long term steady secure income lower risk.
3) Location, location, location.
In Central Florida, the key to location is often summed up in two words: theme parks. Many of the most desirable vacation homes and long-term rental properties as well are in Osceola, Lake and Polk county, which are both a short drive to Walt Disney World, Universal Studios and SeaWorld Orlando. This enables tourists staying in vacation homes to easily access the parks they came here to visit; and for many tenants looking for a long-term rentals, many of the jobs they came here for are also at the theme parks or in the tourism areas.
4) Should I pay in cash, or obtain a loan abroad? Do I have the deposit?
Experienced Realtors, An noted, can guide a buyer through the pros and cons of paying for their property in cash, knowing how much to put down as a deposit, and if needed, securing a mortgage through a U.S. financial institution. The Realtor, An noted, can walk the buyer through every step of this often complex process.
5) Who will manage my home? Can they provide me with the return I need or want?
Just as Central Florida has a thriving vacation home and rental market, there are also plenty of property management firms in the region that can take on the routine tasks of maintaining a property owned by a foreign investor from finding the tenants (and doing the necessary background checks) to collecting the rent, to maintaining the property, paying property taxes on time and ensuring the property meets all local codes. It is however that the management company is a licensed and insured business, has an office and has the marketing funds to promote your home. Orlando estate agent An Flamand states that very often we see that sellers/ owners are renting out their home and don’t even have a license, they have never paid the sales taxes as they were never informed they should by their management company. This will cause a problem when selling and let’s not even talk liability. Important to remember is, look for a professional company who is licensed and insured and offers the services you need and would expect from a business.
6) Price, what can I get for the money I have, and does it include furniture?
Vacation homes are often sold furnished as An noted, however a Realtor can assist a buyer to find the right furniture experts in Central Florida incase needed.
Prices across Central Florida vary, depending on location. Realtors can match the buyer to a property in a desirable location that is also within their price range. Make sure to pay for the value of the home however if you are buying a home and are obtaining a mortgage, the home will automatically be appraised. If the home is sold above market value the buyer will have a problem obtaining a loan. The easiest way, which will avoid later disappointments, is to find out what the property value is, ask your REALTOR or Real Estate Agent to prepare a CMA (Comparative Market Analysis) for you on the home. This should give you a rough idea that what you are planning on buying the home for is actually the value of that home.