Rentals are always a great idea for investors as they are constantly making money without that much maintenance, creating the perfect deal for anyone looking for some extra cash flow! So if you’re currently thinking of investing in a rental, now it’s the time, however do keep in mind some facts that could potentially damage your income from it!
Let’s go over some statistics, shall we?! First let’s dive into the Gross Rent, which by definition is “a contract rent plus the estimated average monthly cost of utilities (electricity, gas, water, and sewer) and fuel (oil, coal, kerosene, wood, etc.). Because some rentals include utilities and others don’t, gross rent is a way of normalizing the variability.” In Florida, said Gross Rent is valued in 2015 on an average $1,078, and it grew around +4.29% in one year, so for a 3-year change is estimated to grow +9.64%, this means there’s going to be a potential growth in payment in this Real Estate asset, creating a future better cash flow!
However, there’s another game-changing fact, the Rental Vacancy Rate, which is a calculation “computed by dividing the number of vacant units for rent by the sum of the renter-occupied units, vacant units that are for rent, and vacant units that have been rented but not yet occupied.”, this one is going down bit by bit, being on 2015 at 7.79%, at 2016 it descended to -0.87% and it’s promised to continue going down for the next 3 years to -1.58%, meaning there are more properties vacant, which could mean a decline in the market, or it can create a more competitive market, getting the prices higher.
Knowing all of this can give you a different perspective of this market, however, here are some tips on what to do in this market to get the best profit!
– Check your surroundings:
While there are many places that are thriving in the rental market, you should also be very aware of which one can be in getting hotter and hotter, so be in the lookout for some of the best signs of a great rental spot: The job market going up, school districts getting better and better, and local rental properties’ cap-rate! If there’s a growth in the community people are going to be more interested in renting in it, if there are jobs there will be tenants, if the students are scoring better grades in the area, it means the schools are good and people would be more inclined to stay around for a bit, and most importantly, the average cap-rate! Ask around for it and see if the property would actually give you the best results!
– Find the right partners!
If you are a first time investor or a real estate agent, you should always partner with the right people who follow your vision! If you are investing in a place out of your comfort zone, ask to the locals about the area, partner up with a local agent, they know the market better and will tell you right away if the deal you’re looking to do is good or not! If you want to invest in South Florida, for example, you can always contact us, as we have experience in the area!
– Location, Location!
As we discussed previously, location is key for everything Real Estate related! While I do advice you to stay away from rural areas without tons of citizens and a small pool of potential renters, you do need to keep your eyes peeled for up and coming cities with a potential for a high-rent! Is the place central? Does it have public transportation? Can you get from and to places easily? The answers to those questions are the ones to determine if you should be purchasing the property for a rental or not!
– Manager? Right away!
One of the best ideas to come up with when you have a multi-units rental property is to have a manager living in it, a person who will take care of the maintenance of the place in every single aspect, calling the right people to take care of specifics issues and be on top of things, from cleaning the common areas, to repairs of the building, among many other things! This person will have to be always aware of everything that goes on the property to keep it working properly! You can pay them with a lower rent and minimum wage! It’s definitely a win-win situation, and it will keep your rental looking fantastic!
This kind of properties tend to pay themselves, so whether you made the payment out of pocket or with financial aid, as long as you keep it occupied it will be paying itself overtime, so the key is to always keep it occupied, you can also save up a ton of money to invest in the property to keep it running perfectly! The worst that can happen to a rental is being vacant for long periods of time, so try to keep it occupied at all times and from there, is just an easy ride!
I wish you the best of lucks in your investment adventures! If you want more posts like this, check, you can check them out! Here are our latest!
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