Buying residential rental properties in South Florida

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Buying residential rental properties in South Florida

Dan G.
Fort Lauderdale, FL · Member since 2015 · 32 posts · 2 votes

Hello,

I live in South Florida and I am looking to buy a large number of properties (mostly single family homes, possibly some multi-family) that I can buy with cash and rent out to make good cash flow. I'm really not sure where to start. In looking at MLS listings, the yields/cap rates are not that strong unless you are lucky enough to stumble upon an amazing deal or look in bad neighborhoods. Are there agents out there that specialize in finding the "great deals" that will generate high yields? I want to avoid "bad" neighborhoods that will make it hard to get quality tenants. I'm hoping to find properties where I can get 15% net returns (cap rate), after expenses. For properties on the MLS, the net returns are generally 10% or less. I am not looking for major fixer uppers. I'm fine with basics like carpet and paint, and maybe patching a few holes, but not big rehab projects. I definitely don't want to take the risk of buying properties without an inspection, such as at auction. Since I will be paying all cash, hopefully that will enable me to get some great deals. But I really don't know where to start.

Thanks!

Dan

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Jamal White
Real Estate Investor · Chino, CA · Member since 2015 · 147 posts · 18 votes
10y

have you thought of finding properties though a property manager? They usually find deals before they hit the MLS? You might also want to find an agent that has access to off market deals.

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  • Adam BartomeoBusiness Member
    Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes
    10y

    Welcome to BP!

    If your finding 10% cap rates for multi family then they might not be in good areas. 

    If you are unsure on where to start you should start with the podcasts and the forums. You can type whatever search words you want and old forums will come up with the threads. There are other resources on the site that will help also.

    Good luck!

    [email protected]239-339-3969
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  • Jamal White
    Real Estate Investor · Chino, CA · Member since 2015 · 147 posts · 18 votes
    10y

    have you thought of finding properties though a property manager? They usually find deals before they hit the MLS? You might also want to find an agent that has access to off market deals.

    1Reply
  • Sterling WhitePro Member
    Rental Property Investor · Indianapolis, IN · Member since 2014 · 554 posts · 153 votes
    10y
    Originally posted by @Dan G.:

    Hello,

    I live in South Florida and I am looking to buy a large number of properties (mostly single family homes, possibly some multi-family) that I can buy with cash and rent out to make good cash flow. I'm really not sure where to start. In looking at MLS listings, the yields/cap rates are not that strong unless you are lucky enough to stumble upon an amazing deal or look in bad neighborhoods. Are there agents out there that specialize in finding the "great deals" that will generate high yields? I want to avoid "bad" neighborhoods that will make it hard to get quality tenants. I'm hoping to find properties where I can get 15% net returns (cap rate), after expenses. For properties on the MLS, the net returns are generally 10% or less. I am not looking for major fixer uppers. I'm fine with basics like carpet and paint, and maybe patching a few holes, but not big rehab projects. I definitely don't want to take the risk of buying properties without an inspection, such as at auction. Since I will be paying all cash, hopefully that will enable me to get some great deals. But I really don't know where to start.

    Thanks!

    Dan

     You may want to try and do your own marketing to acquire off market deals. Considering you are able to close with cash this will be very enticing for motivated sellers. Or work with a local wholesaler in your market to acquire deals 

    Podcast Guest on Show #308
    0Reply
  • Dan G.
    OP
    Fort Lauderdale, FL · Member since 2015 · 32 posts · 2 votes
    10y
    Originally posted by @Jamal White:

    have you thought of finding properties though a property manager? They usually find deals before they hit the MLS? You might also want to find an agent that has access to off market deals.

    Hi Jamal,

    How would I find an agent who has access to off market deals?

    Thanks!

    Dan

    0Reply
  • Dan G.
    OP
    Fort Lauderdale, FL · Member since 2015 · 32 posts · 2 votes
    10y
    Originally posted by @Sterling White:
    Originally posted by @Dan G.:

    Hello,

    I live in South Florida and I am looking to buy a large number of properties (mostly single family homes, possibly some multi-family) that I can buy with cash and rent out to make good cash flow. I'm really not sure where to start. In looking at MLS listings, the yields/cap rates are not that strong unless you are lucky enough to stumble upon an amazing deal or look in bad neighborhoods. Are there agents out there that specialize in finding the "great deals" that will generate high yields? I want to avoid "bad" neighborhoods that will make it hard to get quality tenants. I'm hoping to find properties where I can get 15% net returns (cap rate), after expenses. For properties on the MLS, the net returns are generally 10% or less. I am not looking for major fixer uppers. I'm fine with basics like carpet and paint, and maybe patching a few holes, but not big rehab projects. I definitely don't want to take the risk of buying properties without an inspection, such as at auction. Since I will be paying all cash, hopefully that will enable me to get some great deals. But I really don't know where to start.

    Thanks!

    Dan

     You may want to try and do your own marketing to acquire off market deals. Considering you are able to close with cash this will be very enticing for motivated sellers. Or work with a local wholesaler in your market to acquire deals 

    Thanks Sterling,

    I don't have a ton of time to do marketing to acquire off market deals, but I could work with a wholesaler, or with a local real estate agent who works with multiple wholesalers.   Will I be able to get the homes inspected before buying so I don't have a lot of risk of buying a lemon?  How much of a discount will a wholesaler give me below market price?  Is the discount huge, or it the discount fairly small?  What's the best way for me to locate a real estate agent that works with wholesalers?

    Thanks!

    Dan

    0Reply
  • Sterling WhitePro Member
    Rental Property Investor · Indianapolis, IN · Member since 2014 · 554 posts · 153 votes
    10y
    Originally posted by @Dan G.:
    Originally posted by @Sterling White:
    Originally posted by @Dan G.:

    Hello,

    I live in South Florida and I am looking to buy a large number of properties (mostly single family homes, possibly some multi-family) that I can buy with cash and rent out to make good cash flow. I'm really not sure where to start. In looking at MLS listings, the yields/cap rates are not that strong unless you are lucky enough to stumble upon an amazing deal or look in bad neighborhoods. Are there agents out there that specialize in finding the "great deals" that will generate high yields? I want to avoid "bad" neighborhoods that will make it hard to get quality tenants. I'm hoping to find properties where I can get 15% net returns (cap rate), after expenses. For properties on the MLS, the net returns are generally 10% or less. I am not looking for major fixer uppers. I'm fine with basics like carpet and paint, and maybe patching a few holes, but not big rehab projects. I definitely don't want to take the risk of buying properties without an inspection, such as at auction. Since I will be paying all cash, hopefully that will enable me to get some great deals. But I really don't know where to start.

    Thanks!

    Dan

     You may want to try and do your own marketing to acquire off market deals. Considering you are able to close with cash this will be very enticing for motivated sellers. Or work with a local wholesaler in your market to acquire deals 

    Thanks Sterling,

    I don't have a ton of time to do marketing to acquire off market deals, but I could work with a wholesaler, or with a local real estate agent who works with multiple wholesalers.   Will I be able to get the homes inspected before buying so I don't have a lot of risk of buying a lemon?  How much of a discount will a wholesaler give me below market price?  Is the discount huge, or it the discount fairly small?  What's the best way for me to locate a real estate agent that works with wholesalers?

    Thanks!

    Dan

     This is a great question. Wholesalers vary upon market. I do my own marketing to acquire deals so my prices are cheaper then what I would get from a wholesaler. If you are dealing with a reputable wholesaler then the deal will most likely be below market price. You can determine whether its a good deal by knowing your market or pulling recent solds in location. 

    Yes you can have the home inspected before you buy it just make sure to state it in your purchase agreement along with a clause that will enable you to back out in case it is a "lemon". 

    Podcast Guest on Show #308
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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    10y

    You're simply not going to find 15% cap rates in any kind of decent neighborhood, and the 15% caps in the rougher neighborhoods are a delusion after you deal with higher turnover vacancies, expenses and vandalism. I've found no wholesalers here with any great, or even good, deals. More than half are peddling MLS properties and auction site resales. This is not like out in the Midwest markets where you're buying $50k houses that may, or may not, have that kind of cash flow, but have have absolutely no appreciation benefits.

    1Reply
  • Dan G.
    OP
    Fort Lauderdale, FL · Member since 2015 · 32 posts · 2 votes
    10y
    Originally posted by @Wayne Brooks:

    You're simply not going to find 15% cap rates in any kind of decent neighborhood, and the 15% caps in the rougher neighborhoods are a delusion after you deal with higher turnover vacancies, expenses and vandalism. I've found no wholesalers here with any great, or even good, deals. More than half are peddling MLS properties and auction site resales. This is not like out in the Midwest markets where you're buying $50k houses that may, or may not, have that kind of cash flow, but have have absolutely no appreciation benefits.

    If a 15% cap rate is not realistic in South Florida, what is realistic?  

    Does it make sense for me to invest in properties in the Midwest and use a property manager to manage them (since I don't live there)?  Personally, I would rather have the much higher cash flow and little or no appreciation.  I'll take a bird in the hand any day.  Appreciation is speculative, kind of like the stock market.  Over time, you get good returns, but there can be big dips that can extend for years.

    Thanks!

    Dan

    0Reply
  • Account Closed
    Investor · Mississauga, Ontario · Member since 2016 · 4 posts · 1 vote
    10y

    I can help you find great deals, but you must be serious about buying. 

    0Reply
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