Investor · Pleasanton, CA · Member since 2014 · 9 posts · 1 vote
Hi everyone, I'm new to BP and have been reading and learning. But I didn't find a direct answer for the "action" I'm going to take.
I'm looking to purchase a rental property in the price range of $100K to $200K. I narrowed my area to Cape Coral and Orlando after some homework. I plan to buy a SFH for the reason of better appreciation and easier management (I'm out of ares so would need a PM). Now for a house on the water in Cape Coral of 20-year old, 1800sf; and a new construction in Orlando, 2500sf; they are both around $200K, rents for $1500/month. Can somebody give me some suggestion on which area is better in terms of appreciation / maintenance cost/ taxes and insurance fees?
Or those numbers don't make sense at all that I need to replan the whole thing?
BP is such a warm community that I'm even not afraid to bring out my "low return" investment plan. My goal is to slowly build a stable income. Am I looking at the right areas/houses?
We are buy and hold investors. It looks like we both invest in the same class A properties, with an eye towards appreciation. While I can't answer your question about those houses I can comment on your needing a pm due to being out of the area. We live over 3,000 miles from our rentals and travel frequently. While it has had some "Stress" moments, we have been very successful. It has allowed us to save alot of property management fee.
This is an amazing place because the only thing everyone agree with is real estate. Other than that everyone has their own niche. So look around the blogs, forums and listen to the podcasts. If you see a post you enjoy check out the persons signature. Many of us including myself talk about our strategies, styles, niches and business model on our website. So definitely check that out as it is an amazing additional resource. For example, my blog is about while working full time, buy and hold investing, 0% Down Rentals, Personal Properties turned rentals, Long distancing investing, self-managing 3,000+ miles away. Definitely list your blog or website in your signature, if you have one. Its a great additional networking source.
Look forward to seeing you around! Let me know if I can help!
Your insurance costs will be higher when you are with in a few miles from the coast, I can't remember if it is 5 or 10. Also, if you can get a home built after 2003 and has good wind mitigation, there is a chance you will have options besides Citizens insurance (the state sponsored insurance program).
@Michelle Gao Orlando would give you the better rates in taxes and insurance as the properties in south florida pay higher taxes and cape coral being by the beach would have a higher insurance policy.
As for your strategy are you wanting only appreciation or some equity with a return? I ask because with a $1,500/month rent for a property that cost almost $200k it will be a 9% gross return. Once you deduct taxes, insurance, 10% property management fee you will have around a net of 3% a year. Will you have a mortgage also? But if your strategy is strictly appreciation then the return won't be as important. Just be careful you take into account vacancies and your expenses don't exceed the income.
Hey @Michelle Gao - I recently moved to Cape Coral and looked at a lot of property here and in Orlando. I'm curious what you mean by "on the water" in Cape Coral? The canal lots (no house) are around $160-170K. I'm also not sure you'd really want something "on the water" for a rental property. These properties command a premium in price when purchasing (think double) and offer much more liability.
Orlando is a great area for vacation rentals, but I can't really comment on standard SFR rentals in either area as my primary focus was on a primary residence, not rental. I will say you get a lot more bang for your buck in Cape, and the market has been very hot down here and I've seen prices going up even since we looked 3-4 months ago.
Your insurance costs will be higher when you are with in a few miles from the coast, I can't remember if it is 5 or 10. Also, if you can get a home built after 2003 and has good wind mitigation, there is a chance you will have options besides Citizens insurance (the state sponsored insurance program).
Thanks for the information, especially on the houses after 2003, will definitely look into that
We are buy and hold investors. It looks like we both invest in the same class A properties, with an eye towards appreciation. While I can't answer your question about those houses I can comment on your needing a pm due to being out of the area. We live over 3,000 miles from our rentals and travel frequently. While it has had some "Stress" moments, we have been very successful. It has allowed us to save alot of property management fee.
This is an amazing place because the only thing everyone agree with is real estate. Other than that everyone has their own niche. So look around the blogs, forums and listen to the podcasts. If you see a post you enjoy check out the persons signature. Many of us including myself talk about our strategies, styles, niches and business model on our website. So definitely check that out as it is an amazing additional resource. For example, my blog is about while working full time, buy and hold investing, 0% Down Rentals, Personal Properties turned rentals, Long distancing investing, self-managing 3,000+ miles away. Definitely list your blog or website in your signature, if you have one. Its a great additional networking source.
Look forward to seeing you around! Let me know if I can help!
As for your strategy are you wanting only appreciation or some equity with a return? I ask because with a $1,500/month rent for a property that cost almost $200k it will be a 9% gross return. Once you deduct taxes, insurance, 10% property management fee you will have around a net of 3% a year. Will you have a mortgage also? But if your strategy is strictly appreciation then the return won't be as important. Just be careful you take into account vacancies and your expenses don't exceed the income.
I'm using a HELOC to make the purchase. So there is a monthly payment I need to make. I think I wanted both cash flow and appreciation (am I asking too much since the market is already heated no long like 1 or 2 years ago? ) . That's why I looked at SFH so far. I think SFH appreciate more than muilti-units. But if I have to choose, I think cash flow is more important than appreciation. So should I look duplexes?
Hey @Michelle Gao - I recently moved to Cape Coral and looked at a lot of property here and in Orlando. I'm curious what you mean by "on the water" in Cape Coral? The canal lots (no house) are around $160-170K. I'm also not sure you'd really want something "on the water" for a rental property. These properties command a premium in price when purchasing (think double) and offer much more liability.
That's the term I borrow from my realtor there. I think he means the houses by the canal. For example: 2105 SE 2ND TER, CAPE CORAL, FL 33990. I also thought of liability issue but he says unless it's a broken deck it's no issue.
We are buy and hold investors. It looks like we both invest in the same class A properties, with an eye towards appreciation. While I can't answer your question about those houses I can comment on your needing a pm due to being out of the area. We live over 3,000 miles from our rentals and travel frequently. While it has had some "Stress" moments, we have been very successful. It has allowed us to save alot of property management fee.
This is an amazing place because the only thing everyone agree with is real estate. Other than that everyone has their own niche. So look around the blogs, forums and listen to the podcasts. If you see a post you enjoy check out the persons signature. Many of us including myself talk about our strategies, styles, niches and business model on our website. So definitely check that out as it is an amazing additional resource. For example, my blog is about while working full time, buy and hold investing, 0% Down Rentals, Personal Properties turned rentals, Long distancing investing, self-managing 3,000+ miles away. Definitely list your blog or website in your signature, if you have one. Its a great additional networking source.
Look forward to seeing you around! Let me know if I can help!
Thanks so much for the input! Your telling me about "self-managing 3,000+ miles away" is really valuable and encouraging. I never thought that would be possible. But it makes a big difference, as for some properties, the monthly profit is only between $100 to $200 which is about the PM fee (1-month leasing fee prorated + 8% monthly rental). I will also check out the signatures more which I didn't have a chance to really pay attention!
I'm a Realtor in Cape Coral but used to live in Los Angeles, for 15 years, and still own rental units there.
There is strong demand here in Cape Coral for SFR rentals, and there's not a lot of inventory so in turn the rental rates are solid. Home values have increased double digits annually for the last several years, but are slowing down. You can buy a nice 3/2 home "off water"- not on the river or a canal, for under $150K. Depending on whether or not you finance the purchase, you may need flood insurance on top of your homeowners.
Hi Peter, per your view, what's the best use for a $200K budget that generates more cash flow? A house on the water, off the water or a duplex? Thanks!
Thanks for your message. Can you give me some suggestion as what's best investment strategy for a budget of $200K, and what's the best option for a $400K budget in Orlando?
Orlando is big and diversified. I don't know what I should look for best cash flow. SFH, duplex? New construction, resale? Hope to get some insights.