Looking to invest in Real Estate in FL (Miami, Tampa: for sale, foreclosures)

canuck76 · 02-01-2010, 09:09 AM

I am looking to invest in real estate in FL. (around $150K) I would like some advice in the following areas:

1. What are the best areas to consider that will give us good and stable rental income year round? Miami? Orlando? Tampa?

2. Should I buy a condo or a house?

3. Since I do not live in FL, I would need the help of a property management company. I have heard horror stories of 'rogue' property management companies taking advantage of their non-resident clients and running enormous bills on repairs etc. How can this be avoided?

Many thanks!

Broker Dave · 02-01-2010, 10:36 AM

Orlando of course, a small 3/2 in a neighborhood with good schools is always a top priority when investing as you doesn’t have as high a monthly association fee as condos.

Condo's are a safe bet by offering a more involved property management company (suppose to be?) for the community not individual units. You also get a level of grounds and outside building maintained, but there again it depends on the strength of the association.

Maitland, Lake Mary, Winter Springs, Downtown area for the urban crowd.

Condo on back side of Disney for the workers or around UCF for Full Sail University students.

Property management will be about 10 to 15%; there are large companies and smaller ones like myself.

Hope this helps,

SoFLGal · 02-01-2010, 12:19 PM

I think that one of the best deals going right now is multifamily. You have one expense for any repairs-roof, painting, etc. And if one side is vacant you always have the other side.

I just sold two duplexes a few weeks ago. One for $27K and the other for $28,500. They are 3/1's on each side and they are getting $650 per month for rent. That's a pretty good ROI.

I manage all of my own rentals so I don't an outside company but there are severals good ones in town. Ask around and see what their reputation is. You might want to check up with some of their clients and see how satisfied they are with them.

Good luck with it!

apkesh · 02-02-2010, 02:03 PM

I've heard getting insurance for houses that you don't plan to live in (rental units) can be a nightmare in FL. Can someone tell me how true this is please?

Retiredcoach · 02-02-2010, 03:19 PM

I hate to be so blunt, but aren't there charities everywhere waiting to accept the money that you are planning to give away? There would be a whole lot less aggravation for you that way! The first of many issues that you will face will be obtaining a loan for this rental property. It would be hard enough to secure a loan, but if you find a bank willing to underwrite the mortgage, prepare yourself for a huge down payment and higher interest rates.

With an unemployment rate higher than 10% throughout most of Florida and the traditionally lower wages , what do you suppose your tenant pool looks like? Why do you think that the state of Florida is one of the leaders in foreclosures throughout the country? Those who cannot afford their mortgages will most likely have difficulty paying your rent.

The worst part of all with the idea of buying a Florida rental will be the outrageous expenses. You will pay nearly twice as much as your neighbors in property taxes. There will be sales taxes levied upon your rental, dependent upon how you rent the property. Homeowners insurance, HOA fees, management and maintenance costs all will have a pronounced adverse effect upon your bottom line. To top it all off, no one is really sure when the housing market will begin to show signs of recovery.... what you pay today may be much more than what the property is worth tomorrow.

housingcrashsurvivor · 02-02-2010, 04:34 PM

I recently purchased a property with two houses (one grandfathered-in) in a very rentable & respectable area of Tampa. I got the place at a 1993/1994 price. Based upon sillyzillow I paid about 50% below peak value which I believe is underestimated because based on the long term (15-year) rent : price ratio for the area, this property should have sold currently for about 2.4 x's what I paid, never mind what it should have gotten at peak though I don't believe this area peaked as much as Florida coastal homes (though it sure did drop right alongside them). The county appraisal upon which taxes are based is now about 11% below my purchase price which I hope will come down more next year. So taxes are not as very out of wack in regard to many neighbors as they had gotten during the bubble. With prices down 50%, afterall, I don't know why people are still holding onto that complaint. Insurance is not terrible as I'm on an elevated site not near beach. I pay less in insurance for the two houses in Tampa than for the one I have in south Florida. So you've some control over that cost based on where you buy.

I haven't decided where I'll be living and starting a new career yet, but I've two nice choices. If I decide to remain in south Florida for now, then I can rent Tampa and, figuring only 10 months rent (leaving off 1 month for transitions and 1 month for an agent to handle the property), after taxes and insurance, I figure I'll clear about 9%/annual on my investment. Not too shabby in today's economy.

So, done right, rental property now could be a good idea. Not for short term capital gains, of course, but for providing a current income stream. And if inflation kicks in as many expect, then hard assets might play well to that too.

Coconut1 · 02-02-2010, 05:04 PM

Quote:

Originally Posted by SoFLGal

I think that one of the best deals going right now is multifamily. You have one expense for any repairs-roof, painting, etc. And if one side is vacant you always have the other side.

I just sold two duplexes a few weeks ago. One for $27K and the other for $28,500. They are 3/1's on each side and they are getting $650 per month for rent. That's a pretty good ROI.

I manage all of my own rentals so I don't an outside company but there are severals good ones in town. Ask around and see what their reputation is. You might want to check up with some of their clients and see how satisfied they are with them.

Good luck with it!

Are these in more slum type areas with high drug use, etc. or a family friendly area? I can't imagine for $27K you would get a very nice place, but I'm not familiar with the northern part of SW FL.

What about repairs? Did the homes require a lot of repair? Short sale, foreclosure or regular sale?

housingcrashsurvivor · 02-02-2010, 06:32 PM

Not SoFLGal here, obviously. I not only got what I considered to be a good buy but I've seen them pass by as I've got enough to deal with now. Here's one I had noticed when it was for sale http://tinyurl.com/ylq3val, a great example of what can be had. This is an end-unit, 1,159-sq-ft, 2/2.5 just blocks from USF in a very nice & safe residential neighborhood. The complex is very well maintained. It is an excellent rental because there is student demand. It is very convenient to the university with access to recreation and highways. Here is the google streets view 5207 PINE MILL CT,, TAMPA, FL - Google Maps (http://tinyurl.com/yf8wwn2 - broken link).

This was a HUD owned condo unit so probably there were some hoops to jump & repairs to make. But someone got quite the deal, as I see it closed in December for $47,500. This very same unit sold in 1988 for $57,500. The current county assessed value is about $63k so taxes might be about $1200/year. Association fees run $310. Don't know individual unit insurance cost. Say another $1000/year? So if you pay cash you've got expenses of 6k. Rents in the area for a 2/2 probably average around $900. Lets say you just get 8. So you've got potential (no agent, rented year-round) net income of 3600 on $47,500 invested or 7.5%. Sure beats the money market.

PS, the long term Tampa price : rent factor is about 15 so by that, if there was such a thing as fundamentals anymore, this place should have gotten $140k.

PPS, just dug a little more. The govt was offering this little gem for $100 down. Sillyzillow shows the current value of these units in the $90s having peaked in the 130s. So if that's even nearly correct, then this unit went for about 65% off peak price. Oh, wait, I got that all wrong. That unit must be in Japan.

PPPS. In case no one noticed, I like to play with numbers. (I play with my food too; don't tell anyone.) According to the govt's dubious cpi figures, that 1988 purchase price of $57,500 would translate to $104,275 in 2009 dollars so if the new owner ever loses money on this deal, duck, something has hit the fan.

Retiredcoach · 02-02-2010, 07:52 PM

Quote:

Originally Posted by housingcrashsurvivor

Not SoFLGal here, obviously. I not only got what I considered to be a good buy but I've seen them pass by as I've got enough to deal with now. Here's one I had noticed when it was for sale http://tinyurl.com/ylq3val, a great example of what can be had. This is an end-unit, 1,159-sq-ft, 2/2.5 just blocks from USF in a very nice & safe residential neighborhood. The complex is very well maintained. It is an excellent rental because there is student demand. It is very convenient to the university with access to recreation and highways. Here is the google streets view 5207 PINE MILL CT,, TAMPA, FL - Google Maps (http://tinyurl.com/yf8wwn2 - broken link).

This was a HUD owned condo unit so probably there were some hoops to jump & repairs to make. But someone got quite the deal, as I see it closed in December for $47,500. This very same unit sold in 1988 for $57,500. The current county assessed value is about $63k so taxes might be about $1200/year. Association fees run $310. Don't know individual unit insurance cost. Say another $1000/year? So if you pay cash you've got expenses of 6k. Rents in the area for a 2/2 probably average around $900. Lets say you just get 8. So you've got potential (no agent, rented year-round) net income of 3600 on $47,500 invested or 7.5%. Sure beats the money market.

PS, the long term Tampa price : rent factor is about 15 so by that, if there was such a thing as fundamentals anymore, this place should have gotten $140k.

PPS, just dug a little more. The govt was offering this little gem for $100 down. Sillyzillow shows the current value of these units in the $90s having peaked in the 130s. So if that's even nearly correct, then this unit went for about 65% off peak price. Oh, wait, I got that all wrong. That unit must be in Japan.

If something sounds too good to be true, it probably is. This post sounds more like a sales pitch from a guy trying to sell you a shiny new car with the engine about to die. "Investing" in Florida real estate with the intention of renting the property (as an out of state owner) is loaded with significant risk of losing money. One needs to always ask why a property sells for the price that it does, especially when it has depreciated in value of approximately of 20% through 20 years. If he paid $57000 cash for a home two decades ago and it is now worth $47000, he sure did not get much of a return on his investment..... a loss even more pronounced when adjustments for inflation have not been calculated.

housingcrashsurvivor · 02-02-2010, 08:42 PM

Quote:

Originally Posted by Retiredcoach

This post sounds more like a sales pitch from a guy trying to sell you a shiny new car with the engine about to die....If he paid $57000 cash for a home two decades ago and it is now worth $47000, he sure did not get much of a return on his investment

Perhaps when you are not working on your social skills you might care to see that there is, for comparison, currently only one unit for sale in that complex on realtor.com http://tinyurl.com/ycfmmct , a 2/2 asking $112k.

And if you were not so quick to judge others, making me suspicious as to how much time you've devoted examining your own self, you might have noticed that I did not say this guy held this one property for 22 years, but rather that it was owned for a period by HUD, thus creating such an amazing deal for the new owner who rightfully pounced on that.

As to why it sold so low? Perhaps you've heard, we had a housing crash.