Explore the most important factors to consider before purchasing a rental property
Buying an investment property is a big decision that can offer exciting rewards, such as offering a strong return through passive income. On average, landlords in the United States earn $73,659 annually, and landlords in Florida earn $68,110 each year. [1,2]
However, there are also many factors that are important to consider before making such a big investment.
Continue reading to learn more about what you should consider before purchasing an investment property.
Location
The location of your investment property can be just as important as the property itself. You should choose an area where tenants will want to live, ideally according to projected growth.
For example, the Orlando area is projected to add 1,500 people per week to reach a population of 5.2 million people by 2030. [3]
Safety and curb appeal are also very important to consider before buying an investment property because tenants want to live somewhere safe that looks well-kept.
Additionally, it’s a good idea to take a look at the local school district to help your property appeal to families as well.
Property management
Some investors may choose to be the landlord of their rental property and personally oversee daily operations. However, this is a lot of responsibility for one person to take on.
Consider hiring a quality property management company to help you handle many of the responsibilities that come with owning an investment property, such as collecting rent, setting prices, marketing the property, and maintenance.
Learn more:
What is multifamily property management?
Look at local rental laws
It’s important that you are up to date on the local rules and regulations of the area before you purchase an investment property.
Rental laws usually cover any regulations on rent control, evictions, late fees, and more. Some states’ rental laws favor landlords, while others have laws that favor renters. Florida, Georgia, and Texas are landlord-friendly states, while California, New Jersey, and Oregon are more renter-friendly.
Read more:
Our guide to buying an Orlando investment property
The 1% rule
The common consensus among many investors is that your income from your investment property should abide by the 1% rule. The 1% rule means that each month you should charge renters no less than 1% of the price you paid for it, including any renovations and repairs.
For example, if you buy your investment property for $100,000 and spend $10,000 on renovations, your total investment is $110,000, meaning you will want to charge your tenants at least $1,110 each month.
The 1% rule is important to consider because it will give you an idea of whether the potential property will provide you with an adequate return on your investment.
Fixed and variable expenses
Along with the initial expense of buying an investment property, there will be occasional expenses that you need to be prepared for when purchasing.
Some fixed expenses you can expect include HOA fees, property taxes, and property management expenses. Variable expenses are harder to plan for, but you should account for some unexpected expenses to arise, such as repairs.
Learn more:
What is a Homeowners Association fee, and what does it cover?
Looking for a property management company for your Orlando investment property?
At Rental Heroes, we are property investors, just like you! We understand what’s most important—a well-managed property that generates a steady, reliable source of income.
Our local knowledge helps us to proudly manage hundreds of units across Central Florida, and we’re committed to doing everything to keep your tenants happy by handling maintenance requests quickly and responding to potential tenant issues.
Ready to learn more?
Contact us today!
Source:
1: ZipRecruiter | Landlord Salary
2: ZipRecruiter | Landlord Salary in Florida
3: Orlando Economic Partnership | 7 Forecasts for the Orlando Region in 2030