Central Florida Real Estate Investing For Beginners
Central Florida Real Estate Investing for Beginners
Florida is more popular than ever for both locals and tourists.
Learn all about commercial real estate for sale in Central FL, and investing for beginners to start earning income.
People enter into real estate investing for different reasons. For some, it's a passion. For others, it's a way to supplement their retirement income, or even grow retirement funds!
Whether you're new to the world of real estate investing or you're just looking to learn more, one of the first things you'll want to do is find an area to focus on. There are a number of factors to consider when it comes to determining which location(s) will provide you with the best returns.
Let's take a look at what you should consider when it comes to finding the best real estate investment opportunities and commercial real estate for sale in Orlando, FL.
Benefits of Real Estate Investing
No matter what trends arise in the investment world, real estate will always be a go-to choice for savvy investors. The only challenges are finding the right market, saving for a down payment, and choosing the type of investment you want.
However, there are simply so many real estate options to choose from that, no matter what your goals are, there's something for you. Large payouts, steady income, or whatever you want. If that's the first major benefit, here are some others that you may enjoy!
No matter how much the media talks about crypto or stocks, millionaires still say that real estate is the best investment of the age. It makes sense when you consider that it's a tangible asset that people will always need, unlike other commodities.
For example, cars can become obsolete for a significant portion of the population if public transportation takes off in the US. Even precious metals may lose favor over time. However, everybody needs a place to live.
Yes, there are many things that can go wrong with a house, but they are typically small investments that you make over time. If you're earning income from renting out the property, then you'll have the extra cash available to pay for these expenses. Not only that, but you'll always have a tangible item to resell, potentially for a profit.
Some people choose to "flip" properties for profit, and some choose to rent them out. We'll go into these in more detail soon, but think about this idea for a moment; nobody said you have to do one or the other. If you're holding onto the property and earning semi-passive income from rent, you can make improvements over time and still resell for a profit whenever you want, making it a win-win!
Again, everyone needs somewhere to live, but that doesn't mean that every housing unit is guaranteed to be occupied. However, you can easily maximize your building's potential with a little groundwork. By finding the right location, you'll never have to worry about filling vacancies.
By choosing a location with quick access to highways, downtown areas, schools, or public transportation stops, you're essentially securing your long-term investment. In Central Florida, you can even choose from popular amenities like beach access, pools, or whatever you can find that will help!
Whether you want a residential or commercial property, Central Florida is always bustling with tourists and residents. You'd be amazed how quickly things rent or sell.
Can you think of another type of investment that you can make for 15% down that gives you the same amount of control as real estate? We didn't think so. As a landlord, you set the:
- Rent prices
- Building policies
- Lease agreement and term
- Additional fees
- Payment system and due dates
The list goes on. As an owner, you have total control over your investment, and you only need a certain amount down to get started. In some cases, you may even get a loan to help you with the down payment, allowing nearly anybody to get into this lucrative investment!
Types of Real Estate Investments
We're not going to talk about REITs or crowdfunding in this section, only because those aren't location-specific. If you're looking to invest in real estate in the booming Florida market, then investing in a specific property is the way to go. Not only will it maximize your potential profits, but you'll get to be a part of a unique and exclusive club of Florida real estate investors.
However, there are still plenty of investments to choose from when purchasing a property. Each of them has its own pros and cons, and some may make more sense depending on your financial situation. Here are some of the best options to choose from.
Condos and Townhouses
Buying or building a complex of condos or townhouses has a potentially high-profit margin, especially if you keep control over the homeowner's association (HOA) or the complex itself. The way to make a profit is by buying or building a complex wholesale and selling each unit at retail prices. However, your profits don't have to be limited to just that.
If you hire security, offer maintenance services, or run an HOA, you could potentially earn monthly fees from each unit in the complex for the long term, even after all the sales are finalized. This is a good mix between selling for profit and renting, as you can generate large short-term gains and smaller consistent payments.
Flipping houses is a common type of real estate investment that can earn large profit margins on the backend. The goal is to buy a fixer-upper for the best deal possible, put in the necessary work, and resell it for a profit. If you're handy, you can save a lot of money on these repairs by doing them yourself.
Certain repairs like replacing doors, painting, laying carpet, or landscaping can be done by anyone. However, if you need a new roof or major structural repair, you can expect to spend thousands on labor and materials. As long as you account for it in your potential profit margin, this won't be an issue, but the more you can do yourself, the better!
Just remember to always get the house thoroughly inspected and to get a quote from a construction crew on renovations. After that, subtract any labor costs that you can do yourself, and then add another $10,000 to $20,000 for unexpected expenses. From there, look at the estimated value for the area and determine your potential profit margin before making a decision!
The only serious risk is buying in the wrong market, as housing market fluctuations can harm your investment. However, since the turnover is typically less than one year, the chances of a substantial fluctuation are slim.
Let's talk primarily about turnkey rental properties, where all you have to do is "turn the key". This is a popular type of real estate investment where you purchase a building with existing tenants and immediately begin earning.
Using a rental property calculator, you can determine just how much you would earn based on the local rental prices, maintenance costs, mortgage, taxes, and insurance. In many cases, a three-unit home could net an investor well over $20,000 a year, and even more once the mortgage is paid off!
Again, you can always resell for a profit later on, but this is a great way to earn semi-passive income, as most landlords only work a few hours a month! Also, if you hire a property manager for a certain portion of the rental income, you can earn entirely passive income from anywhere you want!
To maximize the profitability of your rental property, always get a thorough inspection to minimize repair costs. Also, choose the right location, as access to highways or public transportation could be a major selling point!
Vacation homes are big in Central Florida, so don't count this one out. Florida is a year-round vacation destination for people all over the continent, and thanks to platforms like Airbnb, you can get in on the action, even with your own home!
However, if you're looking to make a larger investment, hotels and resorts are the way to go, especially in such a reliable area like Central Florida. Each unit can earn you hundreds a day in revenue, and you'll only need a few staff to operate.
In the Orlando area, short-term rentals rent for an average of over $250 per night. If you add a $40 cleaning fee on top of that, that means that for a one-week stay, you could earn $1,790 before expenses. That's right, for one week.
Of course, you can see why this is such an appealing option, but many investors choose long-term rentals for consistency and reliability. However, if you live in the Orlando area, especially within driving distance of tourist attractions, finding people to rent to shouldn't be difficult at any point during the year.
The BRRRR Method
BRRRR is an acronym that stands for buy, rehab, rent, refinance, repeat. Essentially, the goal is to buy a house that needs work and fix it up as if you were doing a flip. Once it's ready, you rent it out and do a cash-out refinance to get you the money you need for the next down payment.
This is a popular method of real estate investing because it's supposed to be the quickest way that virtually anyone can grow a serious real estate business from the ground up. If you apply the same principles as you would with a flip and turnkey property, you can definitely make some money.
The only challenge with this method is ensuring that you won't be left with a high mortgage. The rental income will need to be higher than the initial mortgage, property taxes, home insurance, maintenance costs, and the additional funds taken out during the cash-out refinance. If you can find properties that meet these needs, then the sky is truly the limit!
Business is booming in Florida and most businesses need an office, warehouse, or store space for operation. If you can afford them, these investments are often more lucrative and reliable, especially in a great economy like Orlando's.
Buying a diverse commercial property that has space for different types of businesses like stores, gyms, laundromats, and restaurants is typically the best type of investment. You're diversifying your portfolio with only one building, offering you a lot more security.
Conversely, if the housing market drops and more people are able to buy homes, you may not find tenants. However, a well-placed commercial building will always have businesses looking to set up shop!
Why Central Florida Is a Great Place to Invest in Real Estate
Central Florida has so much to do for families, young adults, and retirees, so you can see why it's so appealing to nearly everyone. If you're thinking of investing in real estate, here are just a few examples of why the Orlando area is one of the best markets in the country!
The housing market is going up throughout the entire country with no sign of slowing down, but there's never been a better time to invest in Florida. More and more, people are flocking to the Sunshine State for great year-round weather, entertainment, and culture. Now might be the last good chance to buy in!
Believe it or not, Florida is growing by 211,000 new residents per year, and all of them need housing. As supply goes down, demand goes up, which will get you more for your investment!
Relative to other states in the US, Florida is pretty friendly to investors when it comes to property taxes and income taxes. This is perfect for investors looking to grow their real estate portfolios over time, or those looking for steady retirement income!
Orlando and the surrounding towns have a strong economy and strong outlook for the future. They are performing far ahead of the US average for economic projections in the coming years, so for commercial real estate investors, this is a great area to choose!
Also, many investors are worried about rising temperatures and sea levels in Florida, but you can actually exempt Orlando from this. Orlando was deemed one of the most climate-safe cities in the country!
Diverse Buyer/Renter Market
Whether you're looking to flip or rent out your property, there are few markets in the country where it will be so easy to do so. During "snowbird season" and beyond, people from up north move to Florida and will need a place to live for six months out of the year, and Central Florida is one of their favorite destinations for this. Think of all the attractions!
Orlando is home to some of the biggest tourist attractions in the world, which attracts people for short-term rentals, timeshares, full-year rentals, and home purchases. Whatever type of investment you choose, finding someone to pay buy or rent will be a walk in the park.
A lot of people buy or rent their homes based on the amenities on the property or in the area. Finding the best locations near local swimming holes, beaches, or downtown areas could increase the profitability of your investment substantially.
Luckily, they're easy to find in the Sunshine State, especially around Orlando, which is full of tourists throughout the year. Few cities have the same infrastructure and amenities as Central Florida.
How to Invest in Real Estate
Now that you understand the different types of investments to choose from and why Central Florida is a good place to invest, you're probably wondering how you can get started. Luckily, it's easier than you think if you're willing to put in a little work! Here's how to get into real estate investing and make it successful!
Choose the Right Properties
Amenities, home features, and location are the biggest selling points for your home. Always look for homes with sought-after features like swimming pools that are in good condition. This will help with marketing and resale value later on!
Also, you need to ensure that the home is a decent investment and not likely to fall apart any time soon. If you'll need a new roof in ten years, then this isn't a big deal, as you can easily save up for that from your rental income. However, if you'll need a new roof in six months, you may not have time to recover from closing costs.
For that reason, you should always pay for a thorough inspection before making any decisions and ensure that the property itself is manageable. If it's in the right neighborhood and the building is in good standing, then it's probably a wise investment!
Increase Curb Appeal
Whether you're trying to rent out the house or resell it for profit, curb appeal is essential. The exterior is the first thing potential buyers will see in pictures and in person, so a little work goes a long way! Luckily, it's one of the easiest parts of a home to improve.
Do some basic landscaping and keep the exterior clean as best as you can. Improving curb appeal can increase the value of your home by an average of 7%, so get to work!
If you choose to rent your property to tenants, remember that location and amenities aren't the only risks to your investments. A bad tenant can cause serious damage to your property or destroy your rental income for a significant period.
For this reason, it's important to check potential tenants' rental, credit, and criminal history. Verifying their income can also help ensure that you won't face any challenges, especially with the current eviction moratorium!
Hire the Right Help
If you're investing in Central Florida because of the great market but the area is too hot for you, that's perfectly fine! You can easily invest remotely by hiring a property manager for your short-term or long-term rental property. For a small portion of the income, they'll handle all of the work, potentially with some additional fees for cleaning or maintenance.
However, they'll find the right tenants, balance the budget, and so much more. You can just sit back and collect the checks!
Find Commercial Real Estate For Sale In Florida
In the beginning, we made the point that the biggest decision of your investment is which property you buy, so get it right. Yes, it is expensive, but if you use the right buying platforms, agents, and lenders, then you may be able to find a good deal on commercial real estate in Florida.
Finding the right property is essential, and it requires time and thought to get it right. Talk to a professional agent before making any decisions, especially one with experience in investment properties!
Find the Right Loans
Another factor that's important to your investment is your loan rates, especially with interest rates set to rise throughout 2022. Most of us don't have enough cash lying around to buy a house in full, so shop around and try to find the best rates before purchasing.
If you're flipping properties, you may want to choose a bridge loan, as some mortgage lenders will have hefty fees for paying off your loan too early. Bridge loans will come with higher interest rates, but you'll be able to pay them off much quicker without penalties, so see if the math works out in your favor!
Bridge loans or construction loans may also help with new properties, especially if you're building condos or anything else. This way, you can pay it off once you sell the units without worrying about fees.
Start Investing Today
Now that you know how to find commercial real estate for sale in Orlando, FL, and get the most out of your investment, choose the type of investment that's right for you and get started right away! Real estate is one of the best investments of all time.
Stay up to date with our latest real estate news and feel free to contact us with any questions or for help finding your next investment!