There’s never been a better time to invest in South Florida rental property. Average sale prices are down, options are up and interest rates are low, which makes it easy for you to choose an investment property that will yield the best ROI. But how do you know which property will help you achieve your ROI goals? Consider these factors.
Loan, Cash or Both
You must decide how you will be paying for the property. If you’re going to use a loan, consider the interest rate you’re paying for that loan because that will decrease your ROI. Of course, cash is the best way to make the most money faster, but just because you can’t pay cash doesn’t mean you can’t make money. You can always use a loan AND cash to curtail some of the money the interest rate will take from your profit. Experts predict that in 2020, rates are expected to remain mostly stable, not straying too much higher or lower from the 4 percent mark.
The more money you invest, the more money you’ll make for your rental (in most cases). The market will dictate how much you pay for the investment property in just the same way it will dictate how much you can rent it for. What you should consider are properties that are in areas that are up and coming. Those properties will sell for less now, but in a year or two, you may be able to charge much more for rent because of the developments in the area.
ROI Expectations and Goals
Come up with a goal or expectation for your return on investment. Do you want to make an 8% ROI? If so, do research to identify how much you’re spending on the property and how much you’re bringing in to see if you’ll be able to get an 8% return on it. Be sure to include expenses like HOA, insurance, maintenance, taxes, etc. to generate an accurate calculation.
Most investors looking for an ROI of around 8% are best suited for residential property investment, as it can produce that return on investment quite easily and quickly.
Long or Short Term Investment
You should also consider how long you want to hold on to the property. Do you want to resell it in a few years or use it as a rental property for 10 years or more? Some long term property investment benefits include consistent income, tenant paid utilities and fewer maintenance concerns. Advantages of short term investment property include higher income potential, ability to adjust pricing, and personal use.
Both options strongly benefit when you hire a property manager like AIO Property Management & Realty because it makes the term of the investment hassle-free and provides investors with peace of mind.
Another consideration in choosing the best investment property in South Florida is the type of property. Condos, apartments, homes, multifamily non-commercial or commercial non-residential are some of the types of property you can choose from for your investment and each come with its own set of benefits and challenges.
Residential -Residential structures include properties like condos, apartments, townhouses, single family homes and multifamily non-commercial (four units or less, i.e. duplex, triplex, fourplex). Residential properties can be leased as long term rentals, vacation rentals or short-term rentals, and/or a combination, especially if the property is located in a highly seasonal area.
Commercial -Commercial properties consist of multifamilies (five units or more), office buildings, industrial, retail and mixed use properties. Commercial structures typically involve multi-year leases.
Which option is best for you?
There is no one size fits all answer when it comes to investment decisions. AIO Property Management & Realty manages diverse portfolios of successful property rentals for investors, from vacation homes on AirBNB with high turnover to long term residential properties and more.
Deciding which one you should invest in really depends on your budget, overall strategy and ROI goals.
Contact Us for South Florida Investment Help
We’ve helped many investors purchase and manage investment property that delivers the ROI they desire, and we can help you do the same. Contact us today.