If you’re Looking to diversify your investments, residential rental property ownership can provide not just additional short- and long-term income, but tax benefits as well.
But the trick’s in the buying. An error at this critical stage is one you’ll pay for again and again over the life of the property, so it’s important to be a well-informed and cautious buyer, taking the time to do the necessary research. South Florida is a great place to invest, Miami, Fort Lauderdale and West Palm Beach area, is the home of more than six million people, sun, beach, shopping, you name it, and prices are still affordable.
1. Buy at the right price
A bargain now will help you to better withstand fluctuations in property value over time so you can profit if and when you eventually sell. Whether working with a realtor or solo, you need to develop a deep understanding of what constitutes a “value” price in the neighborhood(s) you’re looking at. As an investor, you can keep making low-ball offers and wait for the deal you want, but great bargains generally get snapped up, so you need to be able to act quickly once your target’s in sight.
You also need to benchmark rental prices for comparable units in the area, getting a feel for demand. Using Zillow, Trulia or a Professional Real Estate Agent will help you.
2. Find the right neighborhood
Location, Location, Location. it’s important to buy a property in a good neighborhood with low crime rate and excellent school district, near by shopping and restaurants areas. Regardless of what neighborhood you choose, you never want your property to be the worst-looking one on the street. If you choose a property which visibly needs maintenance, you should budget to correct these issues within the first year, and ideally prior to renting it at all.
3. Be aware of the condominium rules and regulations
Before buying a property you should get the condominium rules and regulation book and make sure what are the rental restrictions. Sometimes you will find that some communities don’t allow to rent the property for more than four months, others will have pets restrictions or even age restrictions like the 55+ communities (very commons in Florida). Also in pretty much all the cases where an association is governing a community, you should be aware that “tenant approval” is required before moving, in some cases an approval process can take up to four weeks.
4. Ensure proper parking is available
Some communities can have parking restrictions and this can be an issue. If you’re buying a townhouse with no garage but with three bedrooms and three bathrooms, you should have at least two assigned parking space plus enough guess parking. If you buy a property with limitations in parking space in Florida, this can be a very important factor to keep your rental property for a longer time in the market.
5. Look out for safety issues
A licensed home inspector can help to identify potential safety and maintenance issues and even provide ballpark estimates for correcting these. I would personally never purchase an investment property without consulting one.
Radon, lead paint, asbestos and mold are four primary concerns, as they pose significant health risks and can be expensive problems, requiring specialists to remediate.
As a landlord, there are certain things you need to pay special attention to in order to prevent potential lawsuits. These include:
- Exterior stairways without handrails or where ice/snow/rain may cause a slip hazard
- Steep steps
- CO and smoke detectors (fire hazard)
- Obstructed doorways or exits (fire hazard)
- Broken windows/glass
- Cracks or unevenness in sidewalks, driveways, or walkways (trip hazard)
- Open electrical circuits, outlets or wires (electrocution hazard)
- Unfenced swimming pools (drowning hazard)
- Lack of GFI outlets near kitchen/bathroom water facilities (electrocution hazard)