(Please leave feedback in the comments ; )
As Realtors- It doesn't matter what part of the country or world you live in- you will be dealing with properties that will be purchased for the purpose of income producing or investment.
In my market (South Florida) it's makes up a pretty good part of the total inventory (especially because we have so many condos in South Florida- which are ideal for investors as long as the returns make sense.
When comparing Condos VS. Single family investment properties- there can be various pros and cons to both- but at the end of the day what usually makes or breaks a deal for an Investor is the CAP rate on any particular property.
We should also know that CAP Rate alone does not make a good investment and there are lots of other factors that will make an investment property a solid- long term investment along with adequate short and near term cash flows.
THE SOUTH FLORIDA MARKET:
Just to give you an idea how it works here in South Florida- finding out the most accurate "NET" Cap Rate is important. This includes Property taxes (which in Florida- change after the sale is made and often increase- based on what the previous owner was paying) Insurance- which also can vary and generally should include a flood insurance policy as well. Any HOA fees that may be due to an association (including special assessments that may be current). Any any other lawn or pool maintenance or other misc costs.
(If you're working with a buyer- you'll also at least want to estimate how long you expect it to take to find a tenant (if it is currently vacant) and also factor in any brokerage commissions as well.
Failure to account for all of these things could leave your buyer with a less than desirable rate of return and possibly buyers remorse.
Here in Miami- anything above a 5% "net" is very solid and you have to dig for. Mostly you'll find opportunities in the 3% net range as a general Rule.
WHAT IS YOUR MARKET LIKE?
I'm curious to know in other markets around the US and Globe -right now in 2019-20, what would you consider the "acceptable" cap rate that can be found in your market for a residential property - that you would advise your client to buy?
Please share your market's cap rate for investment property in the comments- so we can all get a better idea of how each market is performing!
If the rates are good in your area- Maybe I can bring you a buyer!!!
(Rates Should Be For CONDO or SINGLE FAMILY ONLY- Not Multifamily building, duplex etc...)
Thanks for Sharing and your comments!!!
WILLIAM B MCCLAIN, P.A.
BROKER ASSOCIATE, MBA
CERTIFIED LUXURY HOME MARKETING SPECIALIST®
MILLION DOLLAR GUILD®