Don’t just consider the price, make sure you know the metrics of the property you plan on investing in. Some variables to consider are:
It’s ability to generate revenueHow much you can rent it out for to touristsHow quickly you can rent it during busy seasonsWhat the average rent is where the home/condo is locatedIf the home’s in a residential or tourist area (to determine if you’ll set up an airbnb or try to find a lease/long term renter)
Knowing how easy it is to rent in the area, and how quickly you’ll start profiting from your investment, is important. So, don’t buy blindly, make sure you know what the local figures say.
It’s not as easy as buying a property for $100K and renting it out for $2K a month, to break even after X-amount of years. If it were, everyone would be investing, and banks/lenders would be handing out money to everyone. You have to know what the rental rates are in the local area. This is more important for lease type properties, but also for those in tourist areas. For example, during the peak season for Disney parks, if your investment property is one mile from the parks, you can likely get by with charging $500/day (obviously, given the amenities, features, luxuries, etc), vs a property that’s 10 miles from the park. People won’t pay the premium.
You’ll also want to calculate how much you’ll need to charge in rent, to avoid losing money. So, your analysis has to be detailed and really delve into local figures (for at least the past 5 years, more if possible).
Have an Exit Strategy in Place
What? You’re considering buying, not getting out? But, it’s never too early to have an exit strategy in place. Are you going to
Flip the property after a couple of months?Rent it out to local tourists until the local market figures drop?Eventually keep the home for family/relatives to live in (and how much will you charge rent in that case)
You never know what the market’s going to do. Therefore, you need to know what you’re going to do in the event it crashes, your rental isn’t renting anymore, or it’s a prime time to sell. Having a strategy in place is imperative for your ability to turn a huge profit, or at a minimum, avoid a huge loss.
Do your research, take your time, and don’t jump into it blindly. Consider these tips when the time comes to invest in real estate in Orlando, FL.