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We are from MA and are considering buying a single family house on the east coast of the central part of Florida to rent out. We are pre-approved for a mortgage. Would a short term or long term be more profitable. We would have to rent short term at least 26 weeks to break even after all the fees; is this possible in that area? It would be a pool house not waterfront. As for long term, are there enough quality renters out there for the amount of houses for rent at this time? Either way we will be long distance landlords. We plan on selling in 6-10 years depending on the market.
1) Location! Location! Location - this is what is important!
Something away from major emloyment zones/ good schools/ major universities might be hard to rent.
In the area I live in right now most houses are off rantal market within few days, but I have a friend of mine who had to do short sale since he had to relocate to job and wasn't able to rent his house at all. And his house is only 2 hours aways...
2) Depending on the house price and size, it might be very difficult to buy a house using mortgage. Most houses under $150K in my area were purchased by cash buyers and nobody with mortgage had a chance to get it. Most out of state investors were from California, and paid cash.
About 50% houses priced under $250K went as cash transactions within last 6 months.. Buying more expensive house might not be ideal since rent should be higher and less people will be willing to pay more for rent if less expensive houses could be rent way cheaper.
3) I hope you are considering HOA and CDD fees. In my area HOA being around $1200 considered reasonable and most CDD fees are added to property taxes and range from $1000 to $4000 per year. Our fees are over $300 per months for example.
4) Make sure you will educate yourself regarding HOA rules prior to purchasing a house. In my area most HOA communities are trying to avoid investors and have rental rules in places - for example, you cannot rent your house for first year after purchase.
I'm from the central east coast of Florida. Put down the pen and step away from the checkbook. The demand for short term rentals in a non-waterfront house is close to non-existent even if the municipality would allow it which most in my area will not. Long term rent isn't enough to make this kind of investment attractive enough to a long distance landlord in my humble opinion. Keep saving.
We are from MA and are considering buying a single family house on the east coast of the central part of Florida to rent out. We are pre-approved for a mortgage. Would a short term or long term be more profitable. We would have to rent short term at least 26 weeks to break even after all the fees; is this possible in that area? It would be a pool house not waterfront. As for long term, are there enough quality renters out there for the amount of houses for rent at this time? Either way we will be long distance landlords. We plan on selling in 6-10 years depending on the market.
Have you ever been a landlord?
If you have, a long distance landlord?
Think locally first if you want to get into the RE rentals.
Unless you are very near the Orlando area (Like 20-30 minutes from Disney/Universal) or on some waterway ie Atlantic Ocean or 1 mile or bigger lake, you would not have much chance with short term rentals.
If you ARE, then getting 26 weeks of rentals would be difficult. Most people should go with 18-22 weeks of rentals and if you get more, great!
longterm: Renting is better now as rent prices are higher. (Generally cheaper to buy than rent in Orlando area) But long distance is NOT fun. ( I have done from 1000 to 2000 miles away) If you have a GREAT company to find you renters, this can be doable.
Can you sustain paying for the mortgage, taxes, utilities, etc. with NO income?
I'm from the central east coast of Florida. Put down the pen and step away from the checkbook. The demand for short term rentals in a non-waterfront house is close to non-existent even if the municipality would allow it which most in my area will not. Long term rent isn't enough to make this kind of investment attractive enough to a long distance landlord in my humble opinion. Keep saving.
BEST ADVICE. Take your money and put it into an IRA. You'll do much better.
Quote:
Originally Posted by qdogfball
Can you sustain paying for the mortgage, taxes, utilities, etc. with NO income?
Of course they can't. That's why they said they needed 26 weeks rented to break even (and I bet they didn't include the property manager fees, maintenance of the house, gardener, utilities when the house is empty, HOA dues, cleaning fees, replacement of appliances, etc. etc. etc.)
Sorry to burst your bubble, and I don't mean to be negative, but really, don't do this!
We are from MA and are considering buying a single family house on the east coast of the central part of Florida to rent out. We are pre-approved for a mortgage. Would a short term or long term be more profitable. We would have to rent short term at least 26 weeks to break even after all the fees; is this possible in that area? It would be a pool house not waterfront. As for long term, are there enough quality renters out there for the amount of houses for rent at this time? Either way we will be long distance landlords. We plan on selling in 6-10 years depending on the market.
1. Do you plan to manage it from 1200 miles away or pay a local management company?
2. Short term means like vacation rental? Look on VRBO.com at what/how many are out there and at what price point.
3. 6-10 years to sell? Why that time frame? If it is profitable why sell? If it is not profitable then why start?
Too many folks have landlord fantasies from afar.....Buy a house in the Bahamas and rent it/ then use it for free when it isn't rented. Up north: Buy a house in Florida, rent it and use it for free a few weeks in the winter.
Ever since VRBO.com popped up, I would rent from afar and pass on the landlord dream/nightmare!
Thanks for all your opinions & advice, it really makes us think about this even more than we already did.
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Are you crazy?
