Making the Right Choice for Your Central Florida Investment Property
Having the money to purchase residential rental property doesn’t automatically mean you’re going to make a profit from your investment. The success formula lies in a few main factors, actually finding a profitable rental property is key. As simple as that might sound, when you decide to invest in real estate, you need to put your heart and soul into it and a lot of research. For first time investors, this can prove to be a daunting task. In this post, we’ll take a look at the top 10 factors to help you make this a little easier for you. Read on to find out more.
1 – Neighborhood
The location of your rental property is the most important feature in real estate. The quality of your neighborhood will influence the longevity of leases and the type of tenants you are likely to attract. Therefore, before you buy a rental property in a certain location, investigate it and get to know it well. This will help you choose an area that will easily entice your future renters.
2 – Property Taxes
Before investing in a rental property in Central Florida, do some homework on the area’s property taxes. This is because property taxes aren’t standard across the board, and different factors influence an area’s tax percentage. As an investor, you need to be aware of the amount of money you will be paying in taxes.
3 – Area Schools
A low-quality school always reflects negatively on your rental property. This is because tenants that have children lookout for some of the best schools in the area they are living in. For instance, if a nearby school has a poor reputation, your property is likely to be lowly valued. Here are some high rated schools in a few key areas around Orlando: Orlando, Kissimmee, and Winter Park.
4 – Crime Rate
Who would wish to live in a neighborhood with a high rate of crime? Although it’s not obvious to tell if the real estate property you want to buy is in a safe neighborhood, conducting some investigation or contacting a local property management company can help you avoid a crime-ridden area. Even if some tenants may be willing to live in such areas, they may not pay rent above a certain amount and are forced to make sacrifices. You, of course, will get a better rental income and tenant in an area with a low crime rate so do your homework for sure.
5 – Job Market
A location with increasing job opportunities will ultimately lead to an increase in future tenants. It’s a common thing to find workers moving to a neighborhood that is likely to be a major source of their employment. However, the presence of some employers or companies can also bring down the price of your rental property. If you can see yourself liking a certain company in your backyard, it’s a good bet your renters will too.
6 – Nearby Amenities
Put yourself in the mind of your tenants and figure out nearby amenities that are likely to entice your renters. Places to go and things to do in the surrounding areas will go a long way in adding value to your tenants’ lives. Some amenities that tenants enjoy include theaters, state parks, art gallery, and regular festivals. For instance, investing in areas such as Orlando is a smart move since it has many fun surroundings, restaurants, and places to work.
7 – Future Development
It’s vital to know if other properties are likely to come up in your neighborhood in the future. Whenever malls and condos are built in your surroundings, the number of future tenants is likely to increase. However, some properties can negatively affect your investment property by reducing its value.
8 – Listings and Vacancies
Researching on listing and vacancies might be the best thing to do for your future rental property. Getting to know the potential vacancies in the neighborhood will give you an idea if the area is good or bad for investment. For instance, if there is a growing vacancy is a given location, do some more research before buying a rental property to determine why.
9 – Average Rents
Obviously, your rental income is a major concern with your investment property. Evaluating rental rates of similar rental properties can help in decision-making during investment. You will need to make sure the property will warrant enough rent to cover your mortgage, taxes, expenses, and surprise maintenance issues. It’s also a good idea, when you are financing your property, that you make sure you can withstand some “bad” months just in case.
10 – Natural Disasters
Florida is beautiful and, as we know, can come with some surprising weather from time to time. As the rental property owner, it’s important to insure your property against potential damage. Without preparation for natural disasters in a given location, you will be causing more harm to your investment. Here is a great resource from Florida’s Chief Financial Officer.
Going through these ten steps and doing your research will make all the difference in finding a money-making investment property and staying clear of a money pit.