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.