Investing in rental property can be a smart move, especially in the Orlando market, which is strong and growing. If you’re going to invest successfully, you need to make smart decisions about what you buy, where you buy it, and how you structure the acquisition. Mistakes are easy to make, even for experienced investors who have a large portfolio of real estate assets.
Remember that the decisions you make today will determine how you must manage the property tomorrow. If you’re still in the purchasing process or you’ve just started looking around at potential investments, you have time to make and execute plans will result in a profitable and successful experience for you. Make the decisions that will reduce your vacancy, increase your rental income, and attract the best possible tenants to your rental property.
Your goal, as a real estate investor, is to purchase a property that will bring you a lot of applications quickly so you can get a tenant in place as soon as you list the home. This is the best way to maximize your rental income and your long term ROI.
With over 35 years in the Orlando property management business, Specialized Property Management understands the effect that successful leasing and managing can have on your investment. We also know that good management starts with a smart buying decision. There are key considerations to look at when you’re preparing to invest in rental property.
Consider Location with an Orlando Investment Property
Location will play a critical role in the success of your investment and the amount of effort that will be required to manage the home. There are different areas that smart investors will consider when they are buying new properties.
Examine vacancy rates across Orlando and its different neighborhoods. You’ll want to focus on areas with lower vacancy rates and where rent values are high and climbing even higher. Investing in these types of areas will deliver a higher return on your investment. You’ll have less trouble earning cash flow, and you won’t have to worry about long periods where you’re not earning any rental income at all.
Local expertise is particularly important when you’re thinking about location and deciding where to invest. You need a property manager who can tell you what each neighborhood is like, what types of tenants are in place, and whether there is a lot of turnover. Tenant turnover is expensive for investors. If you’re changing tenants every year, you’re going to spend a lot of money preparing the home for someone new, advertising and marketing the property, and waiting for someone to be placed so you can start collecting rent again.
The best rental property location is an established neighborhood that’s a good mix of owner/occupant homes and rental properties. You want to buy in an area where people tend to stay, or where rental values are appreciating. It doesn’t make any financial sense to invest in an area where rental rates have steadily been declining. Even if you find the perfect property and sink a lot of money into upgrades and updates, you’re still in a neighborhood where rents are low.
Talk to your property manager about the demographics and data that defines the neighborhood you’re thinking about investing in. You can examine average rental rates and length of residence. Remember that it’s the market that will dictate how much you’re able to charge in rent. It doesn’t matter how much you think your home is worth, and it doesn’t matter how much you need to collect in order to break even with your mortgage, taxes, and other expenses. Rental amount depends on the market demands, and a major part of your market influence comes from your location.
The location equation includes a number of things such as schools, transportation, recreation, commuter routes and times, and the availability of shopping, grocery stores, etc. Check out how good the schools are before you buy a property in Orlando. Families with school-aged children will be looking for a good place to send their kids. You can discuss the well-rated local schools with prospective tenants when they come to see the property.
Public transportation is also important. Walkable neighborhoods are becoming more and more desirable, especially among millennials. Quality residents are always looking for homes that make their lives easier and more enjoyable.
Check for Municipal Regulations and HOA Codes
Before you buy an investment property, make sure you check out the laws, regulations, and HOA codes that may affect you and your tenants. Each community has different ordinances and requirements for landlords. It’s important that you know what these are because you can end up paying heavy fines for violations. Other communities have rules that are less strict, and those might be better places to buy. Some condos and HOAs have limits on how many units can be used as rentals.
You’ll want to investigate all the potential limits and restrictions before you buy. While this might seem like extra time, cost, and hassle during the buying process, it’s much better to learn these things before you close on your deal. You don’t want to buy a rental property in an HOA and later find out that you’re not allowed to rent out your home for two years or more. You’ll need to know what the pet restrictions are, if there’s a limit to how many cars can be parked in a driveway, and other details.
Everything will have to be communicated with your future tenants, so make sure you have a good understanding of requirements and expectations before you buy a property in an association or in a small town in the Orlando area. You need as much information as possible before you buy. This will help you avoid potential violations and fines.
Investing in Different Types of Property
As you’re considering various locations, you also have to think about the details of the property itself. This can also play a major role in the success of your Orlando rental investment. These days, more and more families are looking for long-term properties. They don’t want to move every year. Instead, they want to settle into a place that they can call home. This is great news for you, because it means you’ll have stable and reliable tenants who takes care of your property as if it belonged to them.
With more families seeking the perfect long-term rentals, you’ll want to consider seeking single-family homes when you’re looking for property to buy. The ideal investment in Orlando may be a single-family home that supports a family lifestyle. This should include three bedrooms or more, a fenced yard, and an open floor plan that allows for space where the family can gather.
You’ll also need to consider potential maintenance costs. Old homes are charming, but you’re not buying a property for its charm, you’re buying a property for its investment potential. So, it’s a better idea to look for a newer home that has been built in the last 10 years. This will enable you to keep your maintenance costs down. While all rental properties will require regular and emergency maintenance, you won’t have to fix something new every month when you buy a new property. You also won’t have to spend a lot of money on renovations before you rent it out, and the newer homes are likely to be more attractive to good tenants.
Avoid buying strange layouts that don’t have a lot of flow. This will turn off tenants who are looking for a reliable, appealing home that fits their lifestyle. Large yards are great, but tenants will want fences to keep in children and pets. A busy street can be a concern for renters, especially those who have kids and animals
Working with Professionals Before you Buy
Before you select your investment property, talk to a local Orlando property manager. You’ll need access to a lot of rental information, and you’ll want to know how much work it will take to prepare the property, attract a tenant, and maintain the home. Property managers do this every day, and they have the most information that you need.
Consider our perspective when you’re getting ready to purchase a home. We can visit the property with you and assess whether it will make a sound real estate investment. A good property manager can tell you what you’ll pay in maintenance costs, how quickly it will take you to rent the home out, and what types of rental income you can expect. You’ll be glad you got this advice before you buy. Great property managers can keep you from making costly mistakes now, and when you have tenants in place.
We love working with new and experienced investors. If you have any questions about the Orlando rental market or the type of property you should invest in, please don’t hesitate to contact us at Specialized Property Management in Orlando. We’d be happy to tell you more.