Developer · Santa Clara, CA · Member since 2020 · 7 posts · 2 votes
Hello BP experts.
I am new to REI and looking to invest in FL area or Pittsburgh.I would be an remote investor and would like low overhead (no fixer-upper) property to begin with. I am interested in long term rentals with positive cash-flow and a yearly rental ROI of 8-10% with value appreciation of about 3% or more if possible. I see that Ft Myers, Cape Coral, Naples are the trending area according to some posts here. In Pittsburgh, I am familiar with Alleghney County area but those areas have seen prices shoot up recently. I intend to start with an initial out of pocket investment of 30K - 40K. Any advice, pointers will be really appreciated.
I'm a broker in SW Florida and Cape Coral, Fort Myers and Naples in particular. There have been a number of stories about and accolades given to the area as far as "best places to..." for example in 2019 US News and World Report ranked Fort Myers the best place to retire (US News Story). This and other stories cite the weather, lower cost of living, beaches, art scene, area attractions, and so on. From a real estate and investment perspective I also think that housing is relatively affordable here especially compared to other Florida gulf coast metro areas like Sarasota, St Pete, and Tampa. Cape Coral, in particular is a big boating town with 400 miles of canals, many accessing the gulf. It's not ocean front but there aren't too many places where you can have your boat on a navigable waterway behind your home so affordably. The Cape also has a long way to go to complete build-out so there's a lot of land (lots) available still, on and off water. I'm bullish on the mid to long term investment prospects for the area given the relative affordability, at least right now, and the projected growth for the area as more and more baby boomers retire here. Combine that with people fleeing areas like New York and Miami who see the area as a safer haven from Covid. (Anecdotally, I'm seeing this happen now which is why Cape Coral has a two-month's supply of home inventory currently.) I'm not familiar with Pittsburgh but they have that white stuff that falls from the sky in winter, don't they? Kidding, I'm from Maine but I'll take the sunshine.
I'm a Realtor down here - with $30K-$40K you'll be looking at a property $100-200K with a traditional investment mortgage product - if you're new investor you might be asked for 30% down these days so for that price - I just did a quick search for you in
Cape Coral - 4 SFH,
Naples - 0 SFH ( you will struggle to find anything at that price point in Naples, and
Fort Myers - 6 SFH
As for Multi Families there were none at that price point .
You would get more choice in areas like Tampa, St Pete region and Bradenton.
Also ROI is a metric we normally use for when an asset is sold or to predict the final value of a propsective investment and because it needs to factor in the three Ts - time, taxes and transaction costs - it can be a less user-friendly metric to measure your prospective profitability - RE investors use various metrics to measure how well their assets are performing or might perform - one of them is Cash on Cash return - is that what you meant with the 8-10%? Another is Cap Rate but that's usually for 5+ complexes..
I'd say your appreciation of 3% is a sensible and conservative figure - we traditionally forecast 3% growth ( appreciation) as an economic yardstick - Florida property has exceeded the 3 % appreciation for several years now.
Hi Jed, Thank you for your valuable insights of the market in the area. The 8-10% yearly figure was meant for Cash on Cash. 10 % return coupled with value appreciation would be similar to stock market returns and probably a slightly safer bet too.
I'm a Realtor down here - with $30K-$40K you'll be looking at a property $100-200K with a traditional investment mortgage product - if you're new investor you might be asked for 30% down these days so for that price - I just did a quick search for you in
Cape Coral - 4 SFH,
Naples - 0 SFH ( you will struggle to find anything at that price point in Naples, and
Fort Myers - 6 SFH
As for Multi Families there were none at that price point .
You would get more choice in areas like Tampa, St Pete region and Bradenton.
Also ROI is a metric we normally use for when an asset is sold or to predict the final value of a propsective investment and because it needs to factor in the three Ts - time, taxes and transaction costs - it can be a less user-friendly metric to measure your prospective profitability - RE investors use various metrics to measure how well their assets are performing or might perform - one of them is Cash on Cash return - is that what you meant with the 8-10%? Another is Cap Rate but that's usually for 5+ complexes..
I'd say your appreciation of 3% is a sensible and conservative figure - we traditionally forecast 3% growth ( appreciation) as an economic yardstick - Florida property has exceeded the 3 % appreciation for several years now.