Best Advice for Rental Properties in South Florida

11 Replies

What do you guys and gals typically look for when buying rental properties? I know its all about cash flow but do you also try to get a good deal as far as pricing? Also, I read about the 2% rule and I cant find a way to apply it in the South Florida market. Are Condo's and Townhome's a good idea or should I stick to Single Family Homes? Are short sales good?

@Josh Benitez

I'm not sure about Palm Beach but Broward county is very hard to find  a property using the 2% rule unless you want to own in bad neighborhoods.  I think your purchase is dependent on what you need as far as cash flow every month.  Some investors are just looking for tax shelters and will pay more for a property and receive less cash flow.  You need to decide what you want in cash flow from a property and work the numbers.

ditto @Adam Schooley . The 2% rule is hard in Broward, I would think it's the same in PBC. There's a lot of rules on condo's and townhomes, make sure you're able to rent it out as soon as you buy if you go that route. The HOA fees in some places are astronomical as well, make sure you factor that in. I did pretty well with multifamily homes within 10 mins drive to the beach. Between yacht crew and airbnb they're always in demand.

Originally posted by @Adam Schooley :

@Josh Benitez

I'm not sure about Palm Beach but Broward county is very hard to find  a property using the 2% rule unless you want to own in bad neighborhoods.  I think your purchase is dependent on what you need as far as cash flow every month.  Some investors are just looking for tax shelters and will pay more for a property and receive less cash flow.  You need to decide what you want in cash flow from a property and work the numbers.

 @Adam Schooley and where do you usually find your deals?

Originally posted by @Marc Andrew :

ditto @Adam Schooley . The 2% rule is hard in Broward, I would think it's the same in PBC. There's a lot of rules on condo's and townhomes, make sure you're able to rent it out as soon as you buy if you go that route. The HOA fees in some places are astronomical as well, make sure you factor that in. I did pretty well with multifamily homes within 10 mins drive to the beach. Between yacht crew and airbnb they're always in demand.

 @Marc Andrew where do you usually find deals?

Both of mine were owners looking to get out of the rental game. Check with some property mgt companies, realtors, etc. A lot of deals go on through word of mouth in soflo - like everything else it seems like you have to know someone. Search for the meetup someone posted here, I think it's coming up soon in laudy. That should get you into a network to get started. 

@Josh Benitez

I agree with Mark 100% on the properties by the beach. The duplex that I bought last year is 3 miles from Ft Lauderdale Beach. I managed the property for the owner and he was ready to get out of the business. You have to look under every rock to find deals. I get emails daily from my realtor, I drive neighbors, I always talk to people about real estate, you never know who owns property. I don't like HOA's but the prices of townhomes are generally a lot cheaper than SFR's. Like Mark said, you have to look at rental restrictions, HOA fees and what they cover, and also watch out for special assessments that might be coming soon like roofs, painting, driveways, that can add several hundred dollars a month to the normal HOA fees.

@Josh Benitez it's really up to each individual investor...

I have no desire in being a landlord myself at this time, but I know if I were to be in that game I would not just be worrying about cash flow, but also the cap rate. In fact, cap rate would be #1 for me. $3,000/mo in positive cash flow isn't good enough if I'm not getting a solid % return on my investment. I need to be able to compare it against other things I can invest my money in, like stocks, loans, flips, etc - that's why the cap rate is critical for me. Furthermore, a property might only bring in $100/mo in positive cash flow, but it could have a really high cap rate if you got a great deal and have a good bank lined up to for your refi.

On the flip side, I've also wholesaled properties to foreign investors with a < 5% cap rate...While it seems absurdly low to some, there are people out there who just prefer to park their money in something in the US, and that trumps all other metrics.