What To Look For In A Single-Family Residence Investment
When buying investment properties, a single-family residence is a great option, in Pembroke Pines. Rental properties per se are a good investment in South Florida, as they tend to be in demand, attract long-term residents, and appreciate in value over time.
Like other states in the country, rental values of homes in Florida has consistently risen in the last few years. Now could be a good time for you invest in a residence in the Sunshine State!
However, when looking for a home to invest in, consider a few key factors to check carefully before making that offer. Just because a property is a bargain doesn’t always mean it is a good deal; market value is just one of the features to consider when choosing an investment property.
Price of a single-family residence
As a first step in identifying a good investment property, find a single-family residence offered below market value. However, keep in mind that the reason the home is bargain priced is just as important as the price tag. Homes in need of minor repairs or cosmetic updates might seem like a great deal. Quite often they are – just be sure that the house does not have extensive damage or require major repairs.
Buying a fixer-upper might seem like a good idea. But make sure you factor all expenses in making the property habitable into your rental margin. Look for properties that are in good shape but are underpriced. Perhaps because the sellers are in a hurry or have estimated the value of their home incorrectly.
The second most important factor in choosing an investment property is location. It may be a cliché, but the location of the home may determine whether you will be able to profit from your investment. Check out the neighborhood carefully, including the number of other rentals nearby and how much similar homes are renting for.
Areas with low crime rates, good schools, good employment, proximity to public transportation and shopping opportunities, or other appealing features are ideal. Watch out for areas with a lot of vacant rentals or low rents – both indicate potential trouble.
Your ideal location will offer single family homes that have relatively low market values but comparatively high rents.
Rate of return of a single-family investment property
Beyond the price of the home and the location, you must also crunch the numbers. A good investment offers a solid rate of return. In real estate, this rate, or capitalization rate, can vary by area, but usually ranges between 4% and 10%.
To find the capitalization rate for a potential investment property, calculate your net operating income (rents less expenses) and divide it by the home’s sales price. Be sure to include things like property taxes, Association fees and any extra insurance required if the home is in an area prone to natural disasters. On average, it’s best to keep total expenses to about 50% of the gross rents – this is known as the 50% rule.
If any property you are considering doesn’t offer a good return, shop for another property because the residential market provides a large supply of homes to choose from.
To ensure the continued profitability of your investment property, you must keep costs low. You need a trustworthy, professional property management company that understands your investment goals. Whether you have a single rental home or multiple investment properties, you can trust the professionals at Real Property Management Premier to manage your property.
Our professional guidance and rigorous processes help you get the best rental rates, with quality tenants who stay longer and take care of your property.At Real Property Management Premier, we have the expertise to reduce your costs and help keep your profits high. With our competitive pricing and guarantees, you can be confident that your real estate investment is in the right hands.
Investmenting ina single-family property in Florida is indeed a great option. Get in touch with us to find out how we can help you own your dream property in South Florida. Contact us online or call 954-800-4433 and ask our experienced property managers about our FREE market analysis.
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