Florida Buy and Hold Investment Property Suggestions

[Bob Ritner]

I am interested in Southern Florida and a planning a scouting trip for a week in January. I was quite active in Southern California between 2009 and 2012, but the pickings here are getting too slim. I have been heavily researching cities on the loop from Orlando to over to the east cost, down to Ft Lauderdale and Miami, west to Cape Coral, to Port Charlotte and up to Clearwater. I know this is kind of like saying I am researching properties somewhere between San Diego and San Francisco, but other than researching demographics, recent listings and sales, current rents and crunching some seemingly favorable numbers (compared to Southern California these days) , I am not very intimately familiar with this area. I am very interested in the thoughts of those who know these various areas.

My general criteria that has served me well in the past is:

1. Buy and hold SFR or condo with 7.5% to 8% minimum NET return after all costs, reserve and property management fees (not interested in vacation rentals)

2. Growing area with comparatively low vacancy rates and potential appreciation

3. Within 8 to 10 miles from the beach

4. Class B or C working class neighborhood, with plenty of kids, but close to areas with educated upper middle class and higher end jobs.

5. Unemployment rate equal or less than the national average (tends to keep people out of mischief and able to pay rent).

6. Buying for cash, less than $150k

My numbers and demographic research tell me one thing, but without boots on the ground and a sense of the neighborhood vibes it is difficult to know where to concentrate my scouting trip. Any suggestions from Florida Vets?

MODERATOR:  NO DEALMAKING IN THIS FORUM, PLEASE. PLEASE DO NOT POST ADS FOR YOUR SERVICES OR PROPERTIES HERE.  SUCH ADS ARE ALLOWED ONLY IN THE MARKETPLACE.

[Michael Seeker]

Originally posted by @Jerry Poon:

@Michael Seeker @Mike D'Arrigo 

For Louisville and Indianapolis, what range of properties should I shoot for if I want cashflow? Is it better to get a few lower priced properties or to get one or two nicer ones?

I'm personally a fan of nicer properties.  The returns don't look as good on paper, but here are some reasons to go higher end instead of low-income:

-Liquidation - you can sell a nice property in good location pretty easily, the low-income ones are difficult and you can easily have to take a loss to unload.

-Expenses - nice properties don't sit vacant, the tenants typically care about their credit scores and pay on time and don't tear up the units.  Management costs will be lower on nice properties because the PM will get less phone calls (the one PM I used for ~1 month charged a minimum of $32.50 labor, even for changing a light bulb...that adds up if you get a lot of calls).

-Value - the nicer properties will go up in value.  Lower end ones tend to hover around the same value.

-Headaches - even if you have a PM, you have to manage them.  If they have fewer headaches with a property, then there are fewer that get passed along to you.

If you poke around the forum, there are people making money in the ghetto or gated communities.  It really comes down to your personal preferences.  The more money you want to make, the more work it's going to take (at least initially).