When it comes to buying a rental property, you have many aspects to consider, on top of the prospective yield. For example, some markets offer high yields to real estate investors, but they are in not so good neighborhoods, meaning higher risk tenants, if the property is vacant for a while you could be exposed to theft and damages, which in the long run could cost you a good portion of your rental income, if not more.
So today let’s look as a dynamic market, South Florida. It benefits from a high rental demand all year long, both from local workers and tourists. While Miami and Orlando suffered quite a bit during the last real estate downturn, it seems like things are picking up again and it might be a great time to invest in Florida real estate, find the most exclusive properties by clicking here!
If you are looking for an entry investment on a relatively low budget, the Tampa-St Petersburg-Clearwater area may be a good choice. With a median home price of $78,000, and an average market rent of $1,270, you could be looking at gross rental yields of over 20%! Bear in mind that you will have to pay property taxes, maintenance, account for vacancies and so on, but it is pretty solid countrywide.
Another interesting market if you are ready for short term rentals is Orlando, the vacation capital of the world. Many houses are zoned for short term housing, however, if you do not live nearby, you will have to hire a property manager, and that can eat up a good chunk of your profits.
The median home price in Orlando Metro is $170,500. With median rents around $1,250, you are looking at 8.7% gross rental yields. But for short term holiday rentals, you can generally ask upward of $100 a night, it is up to you to decide if the additional income is worth the turnover, the marketing and probably management budget, and the extra wear and tear caused by having the property being used by different people all the time.
As a short term rental, you will have to spend extra money on furnishing the place and replacing broken items.
Regarding Miami Metro, it is clear that the crisis is now over and property prices have been booming again. With a median sales price of $331,000 according to Zillow, Miami properties are almost back to their 2007 levels.
Doral comes strong in terms of market health, high property turnover, reasonable prices and only 4.4% of unemployment, it has seen a 14% surge in population between 2010 and 2013.
With a Zillow health score of 9.55 out of 10, Hialeah Gardens is also a solid bet, as the index means high property demand, hence strong opportunities for a quick flip.
Lauderdale-By-The-Sea, if you have a higher budget as median home prices are in the low $400s, offers great options to flip and turn a profit, as home values have increased over 6% last year and demand is still going strong.
More affordable, Ft Lauderdale offers yields close to 9% thanks to the solid rental demand of Broward College students. While tourism comes and goes with economic cycles, it is likely that the rental demand will continue to hold in a college town so Ft Lauderdale seems like a solid bet.
Investing in real estate is not a decision to be taken lightly, and neighborhoods can change quickly, so do your research, always visit yourself after selecting a few properties, try to see the place by day, by night, during the week and the weekend, to assess not only the building, but the streets around, the shops, the noise… so you can make an educated decision about buying it.
Jayson @ Monster Piggy Bank says
Right Pauline! Before entering in real estate investment, we need to weigh our decision and make the right decision so that there’s no regret later on.
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Jeff F says
Jeez, I had no idea that Florida was so cheap to live in! I feel like I could afford an entire block for what one house in California costs. This is something to consider!
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Tampa-St Petersburg-Clearwater area sounds really interesting. It is worth trying as it seems to be a busy area with good prices that any low budget investor could tap into. Thank you Pauline.
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I live in Florida and have done real estate transactions all around the state. I live north of Tampa about 1.5 hours and you can find a great 3 bedroom 2 bath home from $80,000 to $150,000. The taxes are cheap compared to where I use to live outside of Chicago. I really like your post here, you have hit the nail on the head.
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Jeez, I had no idea that Florida was so cheap to live in! I feel like I could afford an entire block for what one house in California costs.
Mathieu Lebrun says
Thank you for sharing the article. It’s very useful. Hope to hear more from you.
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Truly helpful tips. Aside from the home or space itself, checking out the community for security and safety reasons is also a must. It can seriously help you decide to invest or not.
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South Florida and the surrounding area is always a great place to invest. People are always dying to live in the area so it makes for a great investment. Thanks so much for sharing!
Laurens Hot Sheet says
Fort Lauderdale real estate started to improve the past 2 years now finally after 2008 recession. Nice guide how ever thank you.
Kimberly Gayeta says
Wow! I never knew it’s Florida is that affordable?! I think I might check it out one time this year, I’m very very curious right now, I wanna fly soon! Thanks for sharing this Pauline!
franchise financing says
Many homebuyers don’t have enough cash on hand to make a 20 percent down payment, which means that they generally are required to pay for mortgage insurance as part of their monthly mortgage payment. This insurance protects lenders when a borrower defaults on the loan.
real estate lawyer Boonton NJ says
The process of buying a house is complex, and most people find it’s easiest to get through with an agent by their side. Paperwork will be flying around like a small tornado, and it can be helpful to have someone familiar with the process to deal with it. Other parts of the transaction will be happening quickly too hiring inspectors, negotiating over who pays for needed repairs, keeping up good relations with the sellers through their agent and more.
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shantanu sinha says
Hello Pauline ,
I had no idea, that living in Florida could be that much cheap.
Indeed before buying a rental property we should weigh our decision, so that
we could not regret afterwards.
Thank you for sharing this among us.
Hope to see more from you in the future.
I am a broker in Orlando and we are seeing tremendous growth of the market spurred on by investors. I read recently that in 2015 30% of all residential properties were purchase with cash! We are getting a lot of buyers from Central and South America looking to buy in Florida. It’s a great time to buy!
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Dennis Reardon says
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Attorney NY says
The Purchase and Sales is the most important document in the transaction and will contain terms and conditions that you must be aware of and be in compliance with. Review and advise on the mortgage and finance commitment. Points, commitment, service charges, prepayment penalties and a host of other factors should be reviewed.
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