There are two aspects to consider when looking into the purchase of an investment property; the return on revenue you can reasonable expect based on the purchase price and the location and how it might be affected by future price appreciation.
When looking at project returns you need to carefully evaluate the purchase price and ongoing expenses like association fees, property taxes, insurance, etc. You also need to thoroughly investigate the current rental climate in the area surrounding the property. What are similar properties renting for, how quickly are the renting, how many similar properties are out there for rent, etc.
You also need to carefully evaluate the condition of the property and determine what expenses may be incurred in getting the property into rental condition. Many of my clients prefer to put hard surface flooring throughout as it stands up to wear and tear better than soft goods. One thing many investors overlook is if you are in an association will they accepts pets. Many pet lovers have a difficult time finding home that will accept their pets and this can be a huge benefit to investors. If you find a pet friendly situation it will make it easier in most locations to find tenants willing to pay a little more.
Future appreciation is hard to put a precise number on but the better the location the higher that appreciation will probably be. You can expect a little lower up front returns (in my area from 6% to 8% cash on cash returns) compared with up to 15% in less desirable areas and product types. I have a great current opportunity in a Class A constructed building that I would consider an amazing deal in the $120,000 range so if you would like information on what those numbers look like please let me know.
The best thing you can do is locate a qualified Realtor who can properly assist you in locating good opportunities and be ready to act quickly when the right opportunities present themselves. If your search brings you to Palm Beach or Martin Counties I would be very happy to work with you towards meeting your goals. The current market is really a perfect storm and in my opinion Florida real estate in the right location is one of the absolute best investment opportunities we will see in our lifetimes. But investors have been flocking here for well over 18 months so getting deals is more and more difficult.
Best of luck and if I can offer anything additional please let me know.
Always at Your Service,
Tom Priester e-PRO
"Results Driven Real Estate"
Keller Williams Realty
There's money to be made in all the ways you mention. You can invest in single family houses where there are no Homeowner's fees to pay. Homeowner fees will reduce your profit. The same goes for condos or townhouses. Keep in mind that if you rent the property you will be responsible for the homeowner/condo fees in addition to property taxes and assessments. Condo and homeowner associations do however have rules that your tenants must follow to keep the neighborhood neat and clean, and they include most of the exterior maintenance of the properties.
In a single family house with no HOA, you would need to make sure that either your tenant is taking good care of the lawn and/or pool, or hire a garden/pool company or management company to oversee the exterior maintenance.
If you buy something and hold the mortgage for an individual, you want to make sure to get a substantial deposit. You will need a good real estate attorney to write up the mortgage contracts so if the buyer defaults, and you have to foreclose, things can be done more to your benefit. If you hold the mortgage your accountant will guide you regarding taxes and reporting income. I would still recommend you hold an insurance policy should the property be destroyed by something like a fire or hurricane.
There is a lot to be considered no matter what way you choose to go.
Please contact me directly, and I will be happy to help.
If your are intersted in investor lending programs, I would be glad to help
You have certainly identified an arena of great financial opportunity. The nature of your questions suggest to me that you are not well prepared to enter into the complexities of investment real estate.
Based on your skills and resources you need to evaluate exactly what your strategy is or when each of these following would apply to what properties:
1. Identify and sell
2. Acquire and sell
3. Acquire, pre-hab and sell
4. Acquire, re-hab and sell
5. Acquire and create income (rent)
6. Acquire and hold (equity growth)
7. Collaborative hold/sell
Your best interest may be best served by investing time and energy in understanding the dynamics and intricacies of real estate investment and the critically associated financing issues. Such an investment will reduce the potential of you becoming a statistical wounded rather than wealthier from your effort.
Best of success to you.