Appropriate RE Investing Strategy Clermont FL

[Khurram Humayun]

  Hello Everyone,

I am a new RE investor and wanted to know more about the best investment strategy and process to apply in my local market. Although, I find the BRRRR method interesting does it make sense for a hot market ? Orlando and Tampa are relatively close and Disney is 30 mins away. It seems like short term rentals are what everyone seems to be doing. Ideally, I want to find a low price point property in a B class area. In the end, I want my local market to dictate the what my RE investing strategy ought to be. From earlier posts in dated 2020 it seems that the BRRRR method is not a great one in certain parts of FL due to primary and secondary market price points being really high. Although, the market has softened somewhat for sellers due to higher interest rates and a soft recession which is in line with the RE market correction that typically occurs, I am not certain it is conducive for application of the BRRRR method and air bnb/short term rentals might be the play. I would really appreciate some up to date information for my local area so I can apply the best possible RE investment strategy. I am not willing to look at C/D class neighborhoods. My plan is to make money going into the deal, cash flow positively to stay above water, have enough equity to handle market corrections while getting reasonable appreciation (3-5%). I know perhaps its idealistic of me. But, I figured this would be best place to ask for guidance. As I am a new member, perhaps these are all answered somewhere. Thanks in advance for the time and energy in reading and responding to this post. Hope you all have a most wonderful new year.

 Respectfully, 

Khurram

[Kristina Kuba]

@Khurram Humayun

Khurram,

There is never a perfect time to BRRR nor is there a perfect time to buy real estate. Here is what I will tell you from being personally invested and an agent. Because sellers are in a nervous climate, I am seeing buyers get anywhere from 20-40k average off a reasonable list price on a median priced home in Tampa. If it's a fixer upper? You might be able to get more.

With a 6 month seasoning period….Here is your timeline for a proposed BRRR

Month 1 - buy property with cash/ hard money, start cosmetic rehab

Month 2 - cosmetic rehab continued

Month 3 - cosmetic rehab continues

Month 4 - put tenants in and have the rent offset the high interest hard money loan

Month 5 - continue

Month 6 - do a “complimentary deep clean” for your tenants and call an appraiser

In Tampa, I think your appreciation goal is very reachable and you will get closer to 6-8% in the urban core. Your agent should meet the appraiser and/or prepare a document outlining the upgrades and renovations you did to the home. Once you get it appraised, do a 75% cash out refi and you should have cash flow reasonably and enjoy the appreciation in the coming years. The economy is softening and you will likely see a little more of a dip in revenue as a STR, then as a LTR. LTR rates continue to hold steady in Tampa and have only dipped slightly.

Hope this helps. Happy new Year!