With a population of about 2.8 million people, massive vacation/service industry, strong work force and amazing weather... South Florida is one of the most transient, popular areas on the planet. What does this mean for rental property investing? There are thousands of tenants at all times of the year looking to rent. There is a constant flow of real estate properties for sale and for rent in most every area, and within most every price range. These factors, coupled with higher than average rental rates means landlords, when using smart strategy, will win with rental property investing in South Florida.
Current Challenges in the South Florida real estate market?
1. Property values have been rising steadily over the past few years
2. Interest rates have been rising steadily with more small hikes predicted
3. Both factors cannot coexist successfully.
What does this mean??
1) Many property values have reached their peak already, for 2019.
If you are a property owner and were thinking of selling within the next 1-2 years, now may be your perfect time to sell. Is your property currently rented? Don't worry... there are always ways to work out early terminations, make sure tenants are cooperating and the property is looking it's best.
Looking to buy? Now's a GREAT time!! Interest rates are STILL at historic lows!! Now might just be your perfect time to find a good deal for an investment property or your perfect new home.
Rental investors should remember, interest rates for 2nd homes (investment properties) will be slightly more than you see quoted in most places. This means you need to have your best credit score possible, and you'll need cash on hand. For rental property investing, you'll need to have about 6 months of "reserves". So, if you're looking to buy your first investment property 1) work to achieve your highest credit score possible (don't take out a car loan or buy a new TV on credit anytime soon!) and 2) save up cash to have sitting in a bank account, about 6 month's worth of future mortgage payments/expenses. The bank will want to see that if your property is vacant for any period of time, you'll have enough money to cover expenses without the income.
Looking to rent? Make sure to use the help of an experienced real estate agent! Why? Rents are high, competition is fierce. You'll need help putting together your best Rental Offer Package, and finding the best property to fit what you're looking for.
If you are new to rental property investing, need to become a landlord because you aren't able to sell right now, or you tried flipping and got stuck with a property you aren't able to sell... it's crucial that you take the time to learn the ins and outs of landlording, all the potential pitfalls, and equip yourself with the knowledge (and professional help) to set up and run everything legally and SMARTLY!
For instance, how much will you charge for security deposits? Will that amount cover potential damage or eviction costs? And what about maintenance: will your tenants be responsible for the yard or paying all utilities, and how will you enforce it without costing yourself extra money? Who will prepare your lease, and will that lease be tailored to your property and needs? What about bookkeeping of all the expenses and income, and 1099 tax prep needed? While it's all definitely doable by anyone... it takes a lot of research and education to make sure you set everything up for success. It's VERY easy to lose money in the real estate/rentals niche. And what if you DO have losses? Are you documenting them to be able to take the right losses on your tax returns? Real estate losses can, in some circumstances, SAVE you money!
We have many years of experience with rental property investing, and all the management challenges that come with each different property and tenancy. We like to share our experiences so sign up for our newsletter and bookmark this site and visit us often!
Tenants are having the most difficulty in the 2019 South Florida market. Finding affordable rentals in most areas within South Florida can be very difficult. Renewals are now commonly jumping $100 a month or more to remain for another year. Oftentimes there are multiple offers on the same rental property, so anyone with less than stellar credit scores or less than 3:1 income/rent ratio need a longer time frame to secure a new rental property as well as lots of patience. Because South Florida is very transient (lots of people move in and out, more in... all the time) rental rates remain well above the national average and continue to rise.
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