Investing in Florida property can be a desirable and rewarding endeavor, especially when you consider that it is one of the best markets from an investment standpoint. While property investing can be very lucrative, there are several questions that must be answered before getting started such as:
- What are the benefits of buying investment property here in Florida?
- What does the future hold for the housing market in Florida?
- What should you consider before purchasing a Florida investment property?
- Where should you purchase an investment property in Florida?
There are three primary benefits to purchasing investment property in this state, namely 1) there are numerous development opportunities, 2) property prices are still relatively affordable, and 3) when the market is growing, you’ll see a significant ROI. Here are 5 things you want to consider before investing in Florida rental properties:
- Anticipated rental income – are you going to get a good return on your investment or will the property be a bottomless money pit? You can determine how much to charge your tenants by finding out what a similar home in that area rents for. If the rent won’t cover your mortgage payment and related expenses, you should consider purchasing a different property.
- Costs and expenses – will you have the funds required to open an additional expense account to cover and emergencies or problems that arise in the future? These things are unpredictable at best. You never know when an appliance is going to quit working or when the HVAC system is going to break down. So, you must always be prepared to pay for these repairs whenever they arise.
- Down payment – be prepared to make a larger down payment than you would if you were purchasing the home for yourself – anywhere from 15% up to 25%. You should also expect to pay a slightly higher interest rate and may be subjected to more stringent and restrictive guidelines.
- Property management – are you prepared to manage the property yourself, in other words, be a landlord? Or would it be best to hire a property management company? Remember, landlords are on duty 24/7. If a tenant calls with an emergency repair in the middle of the night or while you’re vacationing with your family, you’re responsible for finding a solution and taking care of the issue.
- Risks involved with renting – will you have sufficient to make your mortgage payment if you don’t have a tenant for two months or longer? What if your current tenants do considerable damage? Will you be able to afford the repairs? What if your tenants move out in the middle of the night? You have to be prepared to cope with these variables.
For more information regarding rental property investing, contact Florida State Mortgage Group, Inc. today at (954) 359-3000.