So Frustrated! Seeking good places to invest down south

Member since 2022 · 14 posts · 7 votes

We want to invest in a waterfront property in Crystal River/Homosassa, FL area as a STR but now with interest rates, it's not panning out and making it impossible to purchase something sustainable as I'm not confident the rent will cover the mortgage, taxes and insurance, let alone the utilities. Are there any good up and coming areas in the south that will guarantee a return on investment (that will at least cover the mortgage, insurance, taxes and utilities)?!

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Josef Hardi

Investor · Member since 2021 · 73 posts · 48 votes

Hi Christie,

I plan to raise rent annually, nothing too crazy (3-5%), to get it closer to market rate.

But yes, if you are not comfortable with the negative cash flow, then don't even spend any more time on it. I find that it's too emotionally taxing trying to make certain property work. Since we are trying to run a marathon, I try to be really conscious with the effort I spent analyzing each property.

I do revisit my strategy after about a month or so. If it hasn't been successful, then I tweak it a little bit. I went from:

1. Wanting to invest out of state (in Detroit, Indiana, Chicago)

2. To looking for SFH to BRRR

3. To looking for SFH to ADU (need to add kitchen, bathroom, partition)

4. To eventually finding a duplex

Just gotta keep finding a strategy that works best for you. You got this!

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Josef Hardi
Investor · Member since 2021 · 73 posts · 48 votes
4y
Hi Christie,
I don't have any knowledge of FL, but I feel the same pain over in So. Cal. It's hard to find a property that will cash flow from the first year. However, properties in So Cal can easily appreciate 5-10%, so I am okay with having a negative cash flow for the first year. For example, first year cash flow will be -$3k, but appreciation is $40k.
But this works for me only because I can afford the negative cash flow. Just another perspective to consider.
All the best! Stay patient and don't give up.
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Christie Speciale
OP
Member since 2022 · 14 posts · 7 votes
4y
Thanks Josef! I like that perspective but the problem is although your house is appreciating, your rent really isn't so I think it would be more than just a first year loss, ya know?! Also, the properties I'm looking at are more like a potential -$6k -$12k a year.. that's quite significant..ugh!
0 Reply
Josef Hardi
Investor · Member since 2021 · 73 posts · 48 votes
4y
Hi Christie,
I plan to raise rent annually, nothing too crazy (3-5%), to get it closer to market rate.
But yes, if you are not comfortable with the negative cash flow, then don't even spend any more time on it. I find that it's too emotionally taxing trying to make certain property work. Since we are trying to run a marathon, I try to be really conscious with the effort I spent analyzing each property.
I do revisit my strategy after about a month or so. If it hasn't been successful, then I tweak it a little bit. I went from:
1. Wanting to invest out of state (in Detroit, Indiana, Chicago)
2. To looking for SFH to BRRR
3. To looking for SFH to ADU (need to add kitchen, bathroom, partition)
4. To eventually finding a duplex
Just gotta keep finding a strategy that works best for you. You got this!
2 Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
4y
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1 Reply
Nick Robinson
Rental Property Investor · Murrieta, CA · Member since 2020 · 338 posts · 344 votes
4y
@Christie Speciale
There is no such thing as a "guarantee" on any investment. I suggest never taking on a property that you think going in will have a negative cash flow. Especially if this is your first property, I guarantee everything will not go as planned. That is why you want positive cash flow and a reserve account. I personally have never done a STR, but I would run my numbers conservatively and be very cautious with a vacation rental going into a recession. Long term rentals will be more stable long term, but I understand the potential for more money in the STR. Just make sure you assess your risk just like you would for any decision. Good Luck
1 Reply
Christie Speciale
OP
Member since 2022 · 14 posts · 7 votes
4y
Quote from @Nick Robinson:

@Christie Speciale
There is no such thing as a "guarantee" on any investment. I suggest never taking on a property that you think going in will have a negative cash flow. Especially if this is your first property, I guarantee everything will not go as planned. That is why you want positive cash flow and a reserve account. I personally have never done a STR, but I would run my numbers conservatively and be very cautious with a vacation rental going into a recession. Long term rentals will be more stable long term, but I understand the potential for more money in the STR. Just make sure you assess your risk just like you would for any decision. Good Luck

I know there is no guarantee but we need to find an area that matches numbers better as waterfront properties in Florida aren't doing it for us right now. This is our 5th property (first outside of NY and first STR).. With this said, we are re-evaluating as our STR rental numbers aren't aligning with where they need to be between the prices of homes on the water, interest rates, flood insurance, etc.. The interest rates just pushed us out of me being confident with making a decision. People really aren't paying those prices for LTR's on the water year round. Now we are exploring TN for LTR's.
0 Reply
Christie Speciale
OP
Member since 2022 · 14 posts · 7 votes
4y
Quote from @Josef Hardi:

Hi Christie,
I plan to raise rent annually, nothing too crazy (3-5%), to get it closer to market rate.
But yes, if you are not comfortable with the negative cash flow, then don't even spend any more time on it. I find that it's too emotionally taxing trying to make certain property work. Since we are trying to run a marathon, I try to be really conscious with the effort I spent analyzing each property.
I do revisit my strategy after about a month or so. If it hasn't been successful, then I tweak it a little bit. I went from:
1. Wanting to invest out of state (in Detroit, Indiana, Chicago)
2. To looking for SFH to BRRR
3. To looking for SFH to ADU (need to add kitchen, bathroom, partition)
4. To eventually finding a duplex
Just gotta keep finding a strategy that works best for you. You got this!

I'm on to long term duplex/triplex rentals in TN right now-lol.. My head is spinning!
1 Reply
Michael Weigum
Real Estate Agent · Santa Rosa Beach, FL · Member since 2019 · 112 posts · 116 votes
4y
Hi @Christie Speciale
Have you looked in South Carolina? Myrtle Beach still has good cash flow opportunities for STR's
0 Reply
Christie Speciale
OP
Member since 2022 · 14 posts · 7 votes
4y
Quote from @Michael Weigum:

Hi @Christie Speciale
Have you looked in South Carolina? Myrtle Beach still has good cash flow opportunities for STR's
I have not.. I’d assume the inflation on those homes is astronomical (as in many other parts of the US-lol)?!
0 Reply
Cole Simpson
Rental Property Investor · Columbia, SC · Member since 2020 · 302 posts · 186 votes
4y
We do short term rentals in NC and SC and depending on the market are cash flowing between 15-25%. Don't love Florida because of the taxes and insurance personally, maybe look at the Carolina beaches, more affordable and less competition.
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