Most of what you've read the last couple of months has been geared to 1st time buyers because of the tax credit available. But in our Daytona Beach real estate market, we have a large percentage of investors - folks who want to buy now to use in later years, or just buyers who see the market as a great opportunity for rental property. Here are some points you should consider when you think of becoming a real estate investor:
1. Location: Invest in the very best location you can afford. You will attract better tenants, higher rents, and achieve more appreciation. You can buy golf course frontage or waterfront homes now in Ormond Beach or Daytona Beach communities for bargain prices.
2. Be cautious spending money on improvements: don't be the most luxurious rental in the building. You won't get rents to compensate, and you still will get wear and tear. Most tenants look for homes that are light, bright, and clean.
3. Go into investing for the long-haul: flipping was a strategy in previous years, but not in this real estate market. Plan on holding the property 5-10 years. Our Daytona Beach properties aren't expected to rise enough in value in the next few years for a short investment timeframe. Historically, real estate has been an excellent investment, always appreciating a few points over the rate of inflation.
4. Down payment: plan on 25-30% down for non-owner occupied homes.
5. Know your cost of ownership: include association dues, reserves for repairs, taxes, utilities you don't pass on to the tenant, reserve for vacancy, and your mortage payments. Budget for more, not less.
6. Fixers are OK: cosmetic repairs are easy and cheap, meaning paint, landscaping, light fixtures, and a thorough scrubbing. Unless you are a contractor, don't do the repairs yourself - it will be obvious. All expenses will now be tax deductible - hire professionals.
7. Always screen the tenants: even if you have personal knowledge, get a credit check, call old landlords, and verify employment.
8. Know the landlord-tenant code: know your rights and those of tenants. Be ready for an eviction and happy you don't have to go through one.
9 What type of property is best for a Daytona Beach investment: In general, buildings with 3-4 units or duplexes pencil out best, followed by single family homes with 3 bedrooms. Some investors find it works out best to buy a duplex and move into one of the units.
10. Learn about the tax advantages and whether they will be advantageous for your own situation: talk to a tax person or CPA, and make sure you can afford the investment even if it is empty.
If you do your homework, and investment property seems a good real estate strategy for you, now is the time to buy in Daytona Beach or Ormond Beach. Prices are so incredibly low! Contact me to learn what waterfront homes or condos, or golf course, or even modest properties in great communities - are selling for, and search our homes for sale on my web site. Start building your real estate portfolio in this "bargain basement" market.
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