Orlando Property Management Teams Continue to See Rent Rates Rise

Florida is known worldwide as a destination for picturesque beaches, warm and humid weather, exciting nightlife, and real estate investing. Known as the Sunshine State, it shines in all areas, especially in real estate. The Orlando housing market proves to be hot as housing prices are expected to increase by 3.2 percent in 2020. Redfin found that the average price for a single home over the past month in Orlando is $255K, which is an increase of 6.3 percent since last year. If you are already a property owner or investor, you are lucky. If not, now is the time to purchase an investment property as Zillow reports that 20.4 percent of properties for sale in September of 2019 had a price cut. This data suggests that sellers are willing to negotiate the list price. In this post, investors will learn how to purchase a positive cash flowing property and how you can enlist the help of Orlando property management experts at Specialized Property Management Orlando to assist you in getting the highest return on your investment. 

Current Rent Costs and Trends

Even though housing prices are expected to increase into 2020, property investors are still making money off of investment properties that have a buy-and-hold strategy. Zillow data shows that the average rental rate as of October 2019 is $1,648 in Orlando, above the national average of $1,588. Single family homes in Orlando bring in an average of $1,726 each month. According to multiple studies and data, Florida has an average vacancy rate of 9.4 percent as of 2019. This percentage may startle investors at first glance because this average vacancy rate is higher than the national average, but Lending Tree studied the market area and discovered an explanation for this higher than average vacancy rate in Orlando property management. “Florida is a popular destination for homeowners to buy secondary residences. These types of residences often remain unused throughout most of the year, with their owners only living in them during select times, like winter. This means they count as vacant in our data,” says the study. Orlando, Miami, and Tampa are tipping the vacancy rate for the entire state due to the amount of vacation and secondary homes. However, if investors are seeking to purchase a property for the purpose of long term rentals, they can expect a much lower vacancy rate than the state average of 9.4 percent. In addition, investors can rest assured knowing that the percentage of people that make up the rental market in Orlando, Florida is a whopping 65.3 percent, according to Neighborhood Scout. Only 34.7 percent of homes are owner-occupied. This means that investors have a large pool of renters to choose from, which increases the chance of Orlando property management experts finding a highly qualified tenant. 

Calculating Return on Investment

The first steps in real estate investing are the same as any other task. One must take the time and energy to research and study data to see which type of property best suits their needs, budget, and long term strategy. This includes studying neighborhoods, schools, parks, shopping, transportation routes, homeowners association rules, taxes, mortgage rates, and more. It is important to define the strategy of the investment. Is the strategy to make the property a cash flowing investment, or to gain property appreciation? Neighborhood Scout found that Orlando, Florida has an appreciation rate of 29.42 percent over the last ten years. That is an average annual appreciation rate of 2.61 percent, ranking Orlando in the top 30 percent nationwide. If your long term strategy for investing in real estate is appreciation, Orlando is a wise place to do it. This is not to say that positive cash flow must be nixed – it is not a one-or-the-other type of deal. You can have both in Orlando property management. However, when calculating return-on-investment rates, it often is a one-or-the-other. To calculate the ROI for a cash flowing property, investors must take the gross rental income minus operating expenses. A cash flowing property is the way to go if the grand plan is to quit your day job and relax on a white sandy beach. Below is an example of how to calculate your investment property to determine if it is bringing in positive cash flow:

  • Monthly Rental Income: $1,600
  • Monthly Mortgage: $900
  • Monthly Property Taxes: $240
  • Insurance: $45
  • Property Management Fee: $80
  • Vacancy safety net: $80
  • Maintenance reserves: $150
  • Total operating costs: $1,495
  • Cash Flow: $1,600 – $1,495 = $105 positive cash flow per month

If you can afford to pay cash for a property and can eliminate a monthly mortgage payment to a bank, do so. This will create an even bigger return on investment for a cash flowing property. If you are in it for the long haul and the end goal is property appreciation, here are some important factors to look at when choosing a property for Orlando property management:

  • Population growth
  • Infrastructure development
  • City and Community amenities
  • Job growth
  • High occupancy rates
  • Low maintenance, newer property, or one that has been updated and repaired regularly

Finding the Right Property for Your Investment Strategy

At Specialized Property Management Orlando, a locally owned and operated Orlando property management company, we dedicate our services to single family properties. This is due to the fact that single family homes are generally the most popular choice amongst individual investors due to affordability. It is more affordable to purchase a single family residence than a multi-unit property that has four or more apartments. Appreciation is also higher on single family homes than on multifamily housing. A benefit to single family homes that investors also see is that long term tenancies are streamlined. A single family residence usually occupies a family with children. Children are enrolled in the local school system, they build and develop friendships, plant roots, the parents are in secure employment roles, and the family starts to develop a sense of home. This reduces the turnover rate when compared to multifamily housing, and in turn, saves property owners the expenses of turnover and getting an apartment or house rent ready for the next tenant. Orlando property management experts also recognize that single family homes offer more exit strategies than multifamily properties. The pool of prospective buyers is expanded exponentially when compared to selling a multifamily complex. Single family homes are in high demand for not only real estate investors, but also for families relocating to the area, or for want-to-be owners who can choose the option of renting-to-own. This allows for a quick sale of the property if you choose to put your money elsewhere.

How to Market and Find the Right Tenant

Depending on the property type, it is imperative that property owners and investors know how to reach the target audience for their rental property. Investors looking to fill a vacancy for a single family home should market to families with children, advertise the highlights of the schools, neighborhood safety, convenient grocery shopping, and extracurricular activity locations and hobbies that families and children can enroll in nearby. Investors looking to fill a vacancy for multifamily housing that consists of one or two bedroom units should market to working professionals. Orlando property management teams should highlight the close proximity of business buildings, expressways and freeways, dining, and gym locations. Orlando property management companies must also hold high standards and rigorous screening practices for tenants. Always require that tenants who intend to occupy the residence and are 18 years of age or older submit an Application to Rent. Require proof of income by requesting the two most recent pay stubs. Ask for a security deposit and application fee at the time that the application is returned. Verify income, check personal references and rental history, and always run credit checks on tenants. Doing so will give you inside information knowing if your prospective tenants pay other debits and credits in full and on time. If they can pay other bills on time and in full, they are likely to pay rent on time and in full each month. 

What Does This Mean for Orlando Florida Property Owners and Orlando Property Management?

With rent rates in Orlando on the rise, property investors are seeing greater cash flow, higher appreciation of properties, high demand for rental properties, and greater returns on investments. If you do not already own an investment property in Orlando, it is not too late. Appreciation is on the rise, rent rates are on the rise, and your financial portfolio can be heading in the same direction. Buy before the market increases any more. Start researching today for the perfect property that will help you achieve financial freedom. Determine your investment strategy, whether it is for cash flow or appreciation, and take action now. Your success story is our success story. Contact the local experts at Orlando property management firm, Specialized Property Management Orlando, today by calling (407) 682-3355. 

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