Analyzing the Return on Investment for Single Family Properties Banner

Investing in a single-family home is a great way to earn money in the Orlando real estate market. You’ll have the opportunity to increase your cash flow, diversify a real estate investment portfolio, and create extra equity that can’t always be found in multi-family or commercial investments.

One of the key factors in securing a strong return on investment is making sure you purchase your investment property in an area that is desirable and growing. Orlando is the perfect area to capitalize on a single-family investment property and increase both cash flow and long term ROI. Orlando offers great neighborhoods and well-maintained rental properties, and both those things are required for any kind of positive return.

How to Evaluate Whether You Have Good ROI

On average, most investment professionals agree that anything above an 8 percent gain is considered a good return on investment. In Orlando, the average return on investment for single family homes is about 10.5 percent.

Every investor is unique and so is every rental property. Your scale of success will be yours alone. As long as your real estate investment is making money and not losing money, you can feel pretty good about renting out a home that is potentially earning cash flow and growing in value.

How do I Determine my Return on Investment?

Trying to figure out how much money you are making on your rental property seems like simple math, but it can be confusing. The first step in calculating your return on investment is to calculate your annual rental income. Perhaps you’re renting out a property for $1,500 per month or $18,000 annually. That’s your income.

Next, you then want to subtract all the expenditures required of your Orlando rental property. This would include your fixed expenses like mortgage payments, taxes, insurance, and any HOA or condo fees. Then, there are other variable costs to consider like maintenance and vacancy. The number that remains gives you a general idea of what you’re earning in cash flow. That’s going to contribute to your ROI but remember what really matters is that you’re gaining equity from year to year and at the same time, your asset is appreciating in value.

Orlando Property Management: Establishing and Evaluating ROI

Understanding ROI on your single-family investment property is important when you own it, when you’re thinking of selling it, and even before you buy it. If you’ve identified an investment opportunity in Orlando, talk to a property manager so you understand the home’s potential rental income and the expenses that may be required to rent it out. This will help you estimate the ROI on a single-family home before you buy it.

An image of a well furnished living room in a houseTraditionally, single-family homes have done better for investors who are interested in long term returns. While multi-family properties might bring in more rent and protect owners against vacancy, they don’t produce the same returns as single-family properties.

If you’d like to hear more about investing in Orlando homes, please contact us at R. Russell Properties. We’d be happy to tell you more.