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What You Need To Know When Buying An Orlando Investment Property
So you’re looking to buy investment property in Orlando?
Real Estate investing is a viable investment strategy which boasts of superior advantages over any other type of investment out there.
When the housing market turns around, an Orlando real estate investor can enjoy not only a positive cash flow but also the opportunity to benefit from increased equity in the property. Moreover, you safeguard those gains from both the state and federal income tax.
It’s worth noting that for you to enjoy these benefits, you should diligently think through a few things about the Orlando property in question to eliminate any chances of making common property investment mistakes. Here are some of the things you should do.
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Study the Metrics
When getting into any property investment, you should assess its ability to generate wealth. Take the time to explore the factors that can either promote or inhibit wealth production. Such variables include historical growth trends, demographics, vacancy rates, where the residents work, the population growth rate, as well the kind of renters likely to look for property in the area.
Similarly, be on the lookout for red flags such as a dominant employer downsizing, as that can affect your tenants’ ability to pay rent.
Armed with this information, it becomes much easier for you to purchase the kind of property that people living in that community would want to lease. You’ll be able to predict the demographic that is likely to be looking for a home in Orlando – young professionals, retirees, or families – and invest in the type of home they’ll be interested in renting.
Analyze the Rent
Your primary goal for purchasing investment property is to earn rental income. Be diligent before making a decision. Conduct a rent assessment on the property to determine its realistic profit potential. To do that, calculate how much money you need to be earning from the investment, and verify whether the property in question has a realistic potential of generating that figure. In depth research on what comparable nearby units demand as rent, and surveying the prevailing occupancy rates of those houses might prove useful at this stage.
Inspect the Property
Many first time investors hardly take the time to examine the actual status of the property they want to buy. Consequently, they end up with a home that demands unending costly repairs.
Save yourself the agony and hire a competent home inspector to evaluate the property to learn its true condition. Some of the features you should review include the roof, electrical systems, plumbing, smoke and fire sensors, insulation, as well as the drainage.
Even though you can conduct the inspection by yourself, getting a pro will ensure that you only invest in a property that is safe, habitable, and complies with the local building codes. Saving you from pricey and countless property maintenance headaches.
Assemble a Team
Prosperous property investors in Orlando rarely work alone. They have a network of professionals to help with the day to day running of the investment. These professionals include a competent real estate agent well versed in the local market, a qualified appraiser for evaluating the assets, a reliable financier, and an attorney who specializes in real estate. Also, they have certified electricians, painters, plumbers, roofing experts, and service and maintenance contractors.
Having a team of reliable experts is invaluable. If you feel like the challenge of managing all these professionals is daunting, hiring a property management company might be a prudent option as the manager will handle this for you.
Critically Evaluate Cash Flow
When purchasing the rental property, it is critical that you consider all the costs likely to affect your cash flow. These include property maintenance, renovation, repairs, and management expenses. Find out what these costs are and whether the rental income will be more than enough to meet those obligations and still leave you with a desirable amount.
If you decide to hire a property manager make sure to factor in their fees when calculating your cash flow. Interviewing your property manager ahead of time and asking detailed questions about their services and fees will help avoid surprises.
Craft an Exit Strategy
Rental property investing involves more than just buying the right asset in the right neighborhood and at the right price. You also need to have the ideal exit strategy that will help you to sell or flip the property at the acceptable time and price.
Whether you choose to purchase the property for renting or flipping, you need to factor in financing and renovation costs into your exit strategy. For instance, if your mortgage has an adjustable rate or a balloon payment, the best exit strategy is to dispose of the property beforehand.
Know Your Options
At times, for one reason or another, your exit strategy might fail. It could be due to the flooding of the local rental market, or the bottom falling out of the property market just as you are about to sell. Whatever the reason, it is prudent to have in mind a few options that you can pursue.
For instance, you could offer an existing tenant a lease-purchase deal, or sell it to an interested property investor at a slightly below market rate. In both scenarios, you will have the opportunity to cut your losses and get rid of the asset promptly.
These are just a few tips to help you avoid unnecessary costs and get you going when buying Investment property in Orlando. Seeking the advice of a competent property management company can make the exercise much more rewarding. If you’re looking for guidance buying an investment property in Orlando or Central Florida give us a call today!