Real estate investors have different talents, time constraints, and goals, and properties aren’t one-size-fits-all. Reviewing the types of rental properties you can invest in can help you decide on your next move.
This is the most common type of property, and it contains a number of subcategories—townhomes, apartments, luxury homes, and so on. Single-family homes are ideal for first-time investors because they’re less expensive, and banks are usually willing to finance them. Depending on your location, they’re more likely to attract tenants who will sign on for longer leases. It’s a good bet that the property will appreciate in value, and when it’s time to let go, it should be easier to sell.
Condos and Co-Ops
T Again, these are umbrella terms that refer to properties that fall under the management of a Home Owners Association. It can include apartment buildings, villas, and units in larger complexes. HOAs simplify ownership because they handle maintenance and other considerations for tenants. As such, landlords don’t have to commit as much of their time. Then again, HOAs aren’t free. You’ll have to figure in significant fees that can limit your cash flow. HOAs can also set restrictions for the property’s use and can change the rules at any time.
Small Multifamily Buildings
This type of property includes duplexes, triplexes, and fourplexes. There are fewer of these buildings on the market to buy, but there’s less competition for them, too. Banks are more hesitant to finance these because the mortgage will be larger, and cash flow depends on more than one tenant. In general, these renters tend to move more often, so after each yearlong lease, you’ll be screening tenant candidates again.
It’s worth breaking down these properties because they’re very common in Florida and have unique challenges for landlords. In many cases, a vacation rental will only be occupied a few months out of the year. While the rent might not be coming in every month, the mortgage bills will, so be ready to charge appropriately during high seasonal demand. Vacationers don’t stay long, so there will be expenses that other properties don’t have. More turnover means more professional cleaning fees, replacement costs, and attention-getting advertising.
With so many types of rental properties you can invest in, you’re sure to have options that will fit with your long-term plans. If you’re thinking of diversifying your property portfolio—collect them all!—a property management company can help you navigate the variables. If you’re looking for Longwood property management or other central Florida areas, R. Russell Properties can offer the guidance and service to get you to your financial goals. Contact us to learn more about how we can make your investment work for you.