Current estimates for home values are showing indications that they will rise by 2.6% over the next year, adding to the consistent rise of close to 3.9% year over year. With such statistics, now could be a great time to get started in Florida real estate investing. To set yourself up for success, you’ll need to get informed in order to make good decisions from the beginning. Here are some tips for getting started in Florida real estate investing.
Do an Assessment of Your Finances
Typically, it is advised to put down at least 20% of the purchase price. To avoid taking out two mortgages, many investors wait until they can pay for the property outright. This obviously takes a lot in savings, but to get rid of the lender and avoid interest rates, you might opt for a foreclosure listed below the local market price.
You should also consider living in your own investment property in order to take advantage of owner-occupant rates. It doesn’t mean you have to live there forever; typically the requirement to lock in these lower rates this is about one year. Owner-occupied interest rates are much more favorable than secondary home loans.
If your financial assessment reveals you are able to purchase several properties simultaneously, be sure to choose the correct financing. To build wealth quickly, it is recommended that Florida investors consider leveraging their investment capital using cheap 30-year fixed-rate mortgages and buy as many income-producing turnkey properties as possible.
Determine Potential Cash Flow
Do not believe everything you see on shows about house flipping; it does not always work that easily. Typically, homeowners hardly make any profit when they sell too soon after closing. Naturally, major renovation on a flipped home increases its potential for short-term profit; however, these extensive upgrades can be costly. Therefore, unless you have the finances to make extensive overhauls to the house, do not expect to make a quick profit on sale.
You can also consider renting out the house as a long-term strategy. Pricing is everything in this case, since you are looking at being able to make the mortgage repayments as well as make a small profit, though the profits will probably not be forthcoming until the mortgage is fully paid.
Decide on Your Investment Type
Many investors only think of individual direct ownership as the only way to make money in real estate. However, partnerships (both close and limited) and publicly traded investment trusts are designed specifically for those that are challenged in time and skills to run their own real estate investments. Individuals with similar investment interests but who are not prepared to venture into real estate investing alone can also benefit from partnerships. Real estate investment trusts (REITs) enable investors to pool towards multiple projects at the same time without the hassle of day-to-day management.
Successful Florida real estate investing comes down to understanding your local market, having a strong grasp on your finances and working to uncover deals that fit into your strategy.