We have been getting calls from investors that are looking to purchase investment property. They want to take advantage of our low prices and interest rates. Some want to buy a beautiful home in a beautiful neighborhood, with top of the line appliances and amenities. The feeling is that the nicer the property, the better clientele will be attracted to the property, so the more money they will collect in rent, thus the more money they will make.
There are many fallacies to real estate investing, and owning the nicest and biggest house on the block is one of them.
Real estate is local in nature. And, each market across the country is different. So, I can only speak about and from my experience with Brevard County Florida real estate.
Real estate investing is all about the numbers. If the figures don’t work on paper, forget it. The property should bring you positive cash flow today. Not tomorrow. Don’t buy with the thought that, ‘I’ll hold it, and make a bundle when I sell.’ Look where that thinking got investors in 2005. Stuck. Remember, tomorrow doesn’t always come in investing.
Houses in the $1000 a month price range and over are difficult to rent. Often they sit empty for months, awaiting that “perfect” tenant. The taxes and insurance are high. Often they have association fees. But, what is a perfect tenant? Some owners have told me that they want only tenants with no children (we aren’t allowed to discriminate, unless it is an adult only community), no pets, non smokers and perfect credit. In my opinion these qualities don’t make a perfect tenant. People with perfect credit don’t need to rent for an extended period of time, and will quickly move to buy a house. Then, a vacancy will gobble up your cash flow.
Today, many of the calls we get come from prospective tenants with blemished credit, due to an unforeseen short sale or foreclosure. Often times these people make exceptional tenants.
For me, I prefer smaller properties in the $650.00 to $850.00 price range. Smaller houses rent for more money per square foot than larger houses do. Currently, this range is where a high percentage of tenant calls originate. There are a larger number of tenants that qualify for these properties, as the rent is affordable. They stay rented for longer than larger properties and the taxes and insurance are less than on a larger property, often with no association fees.
It’s a great time to invest in Brevard County Florida real estate. But, do your homework first. Make sure the numbers work on paper before you go out and and start looking. And remember, not everyone is cut out to be a landlord.
This article is authored by
I buy, sell, rent, own and manage Brevard County real estate.