How do experienced investors identify property in Florida?
In a previous blog, I wrote about why experienced investors will often pay more for a property with a lower yield. The reason they do this is because they prefer stable yields, well maintained communities and happy tenants with a high disposable income. Now, I´m going to show you how they identify these properties.
Firstly, in property, as in everything else, you get what you pay for.
Secondly, the adverts and the glossy brochures generally don´t tell you anything about the stability of the rental returns, the financial health of the community or the disposable income of the tenants.
You have to do a lot of digging to find a property in Florida (or anywhere for that matter) that will supply a steady income stream and can be sold for a premium in the future. Torcana has a checklist the length of your arm that needs to be ticked once a potential deal clears the first few due diligence hurdles.
However, you´ll avoid the majority of mistakes and nasty surprises first time investors experience if you can locate properties with the following characteristics:
1. FHA approved financing available (or likely to be available soon) to owner occupiers
2. Low foreclosure levels
3. High owner occupancy and low vacancy levels
4. Low levels of unpaid HOA fees
5. Little or no evidence of deferred community maintenance
6. An adequate HOA reserve to cover future maintenance work (i.e. those new roofs)
7. Located close to quality schools, major employers and important infrastructure
If your seller can satisfactorily answer the questions above, you may located a very solid deal. If they are reluctant or unable to provide this information, and instead keep referring you to the great purchase price and the great yield, then the property is unlikely to match the key criteria that experienced investors look for (see first paragraph above).
Conclusion
Imagine for a moment that you are buying a second hand car. Sure, the price tag and the mileage are important considerations, but most of us would also get a qualified mechanic examine the brakes, the engine, the tyres, the paintwork, the battery, the ignition etc.
The point I´m trying to make is that buying a property solely based on its price and current monthly rental yield is a bit like buying a car because it looks nice. In both scenarios, there´s a high possibility you´ll get ripped off.
Purchasing a property is right up there with the most important financial decisions a person has to make. At Torcana, we take that responsibility very seriously indeed when promoting products to our clients.
The subject headings on our promotions might not be as flashy as some of our competitors (14% yields! Guaranteed Finance! From $30,000!) but our aim is to sell great properties with a real income stream and genuine resale potential.
If you like the sound of that, then we´d really love to talk to you.
Kind Regards
Colin Murphy
For full details on the real estate offered by Torcana Ltd please visit www.torcana.com