Best rental area with 170k max?

[Said Manar]

Hello,
I am a foreigner investor from Switzerland and i want to buy a rental property in Orlando.
Max 170k for first investment.
What kind of product and What area should i buy?
Maybe a 3 bedroom condo not very far from downtown or maybe a single family home in south (kissimmee, Davenport, Dr Philip?).
I only want To invest for classic rental with no vacancy area.
I will Come To Orlando in January.
Best regards.
Mr Manar

[Russell Holmes]

@Said Manar to piggyback on what some others have said, "Greater Orlando" is an excellent market, but that phrase encompasses many towns and cities that are not technically Orlando. It is at the outskirts of the growth that you'll find the best deals.  Currently there are a handful of potential rental homes on the market in Longwood, Apopka, and Mount Dora that are 'in the path of progress' so to speak and priced below $180k.  For that price it'll be smaller 900-1100sf 2/2, 3/1, 3/1.5, and 3/2 homes.  They often won't have garages or be built within the last 40 years, but with recent updates and maintenance they can still be very solid low-maintenance homes.  

What I'm seeing currently is an approximate 0.8%  monthly rent to purchase price ratio ($170k house with $1300-1350/mo market rents).  While it isn't quite the 1% many are looking for, these homes are often in areas with brand new infrastructure, new commercial projects, and relatively stable future outlooks for growth that will continue the strong renter demand.  Paired with low availability of homes to rent and buy, these prices keep climbing.  Even if values flatten out or dip in coming years, if you plan to hold long term that won't be an issue.  I can almost guarantee we won't see another crash like we did in 2008. Housing is more stable, average equity is higher, and appreciation has slowed to more reasonable levels in the last 2-3 years. Unemployment is very low and prices have just recently climbed above 2007 levels in many areas, meaning wages have had 13 years to catch up to what folks were paying for homes at the height of the bubble.  That's not to say it may not 'correct' or 'level off' for a short period of time sometime in the next few years, but I don't believe there is a major recession in housing prices on the horizon for Florida.  With 300k+ people per year moving to Florida, while several Northern states are seeing population decline, buying to hold anywhere around Orlando or Tampa is bound to be a strong long term move as long as the numbers work at purchase time.  Rents have been climbing for years, inventory is at all time lows, and people keep coming to our area.  I don't ever advise buying a deal that is ONLY good when factoring future appreciation, but something that is a decent or good deal now will get significantly better in years to come.

If you're looking for a 1500sf 3/2 home with a two car garage for $170k, you won't find that anywhere near Orlando, but smaller entry-level homes are still available in that price range within a 30-40 min drive of Orlando in all directions.  Not everyone works in "Orlando proper" either. Sure there are lots of jobs in Downtown Orlando, but there are plenty of blue-collar and white-collar jobs in Lake Mary, Maitland, Altamonte Springs, Longwood, St. Cloud, Sanford, Clermont, etc.  I notice lots of out of state investors assume that all workers must commute to Orlando so they are opposed to buy something 45 minutes from downtown, but as prices have risen, many businesses have moved out of Orlando to newer commercial development years ago.  Renters are likely instead looking at commute times to locations that are not downtown Orlando.  Part of the reason I'm very focused on areas Northwest of Orlando is due to this new toll road that is nearing completion: http://www.wekivaparkway.com/. It puts a huge quadrant of NW Orange County and Northern Lake County into play for lots of folks who would have considered it too far away for them before toll roads made for easy commutes.  My own home in Apopka has appreciated nearly 60% since 2009 while homes in more established areas of Altamonte Springs and Longwood have only appreciated maybe 40-45% since they were only recovering from the recession, not developing along at the same time.  Progress and development happens too slow to make a big difference in short term flips, but if you plan to hold your properties 5-10 years or more, 'path of progress' becomes a huge point to pay attention to.