Owning rental property is often hailed as an important part of a diversified investment portfolio; however, many don’t think becoming a landlord makes you an investor. But it does! If you’re just starting out, you may be unsure how to buy your first investment property in the Orlando area. Did you know a property manager can walk you through the process?
House Hunting with a Property Manager
When you start looking for a prime rental property, it helps to house hunt with a property manager. A real estate agent will want to make the sale (that’s how they earn a living afterall). But a property manager will manage the property moving forward so they have a vested interest in you finding the right investment property.
So while the real estate agent is incentivised to sell you a $750k house, a property manager will steer you away from it. That’s because they know an expensive house with a high mortgage won’t support a rental rate to make it profitable.
Property managers also have a better understanding of the rental market in Central Florida than most real estate agents. They know which areas have a strong renter demand and which amenities fetch the highest rent rates. So, they’ll steer you towards upcoming areas with low crime rates in highly populated areas… basically where people want to live.
When considering amenities, property managers know homes with a pool yield higher rent income and attract more attention on the open market.
A Word of Caution on Fixer-Uppers
Cheap doesn’t always equal a good deal. If you find a place with tons of deferred maintenance, know what you’re getting into.
Unless you plan to use the BRRRR Method or have all the right contractors in your family, stay away from cheap housing. The long-term costs will bite you in the end and you’ll end up losing money.
That said, regardless of the shape of your investment property, you need to have a budget in place for inevitable repairs.
Loan Stipulation Considerations
If you plan to take out a mortgage, you’ll need to consider the types of loans available for investment properties.
For example, when you buy a primary residence, you can apply for an FHA loan. This makes homeownership possible for many because you only need 3.5% of the sale price as a down payment.
With investment properties, however, you can only apply for a conventional loan. That means you must come up with at least 5% of the sale price for down payment. Of course a variety of alternative forms of financing exist if the numbers work out.
Making a House Rent-Ready
Speaking of numbers working out, a property manager can guide you on which repairs and upgrades make the most sense.
For example, a major bathroom remodel using high-end materials might only yield a few extra dollars in rent income. It could take you years to recoup the costs (if ever), when a basic yet functional remodel would have sufficed. The same goes for solar panel installation.
To make a house “rent ready” means you’ve complied with all applicable codes, housing laws and ordinances. Not only that, but you’d feel comfortable living in the property because it’s clean and safe.
Some landlords will only want to do the bare minimum updates to adhere to legal requirements. However, a property manager will guide you on which rehabs will boost your rent rate and maximize your ROI.
Ready to get started on your investment property journey in the greater Orlando and Central Florida area? Reach out to one of our expert property managers before you start looking at homes. Call us at 321-947-7653 or complete our online form to get started.