Buying First Rental Property

17 Replies

Hi, everyone. I am Amy. I and my husband Ray live in Broward County, South Florida. We are looking to buy our first rental property. The house price down here has already climbed a lot. But we do see some condos are cheaper in the 55+ community. As long as the neighborhood is fine, is it good to invest in those 55+ communities? Thanks.

Hi Amy
Do you know what you are looking for?
Are you looking to buy sfr or multi famile?
Do you have a strategy for finding great deals?
What research (books, courses etc.) have you done?

I know this is a lot of questions but please understand I am trying to help you out?

Hi, Niels. We are looking for condos, or at most townhouses. The sfr here is way beyond our budget and doesn't make that much sense to buy and hold. So far, we are just looking online every day. I read some books about real estate investment and keep reading blogs on biggerpockets every day. We want to start small, being conservative and careful:) Thanks

Hey Amy, I'm in Broward as well. I am closing on a duplex in Pompano near atlantic blvd this month after a few months of trying to get a property that made sense #s wise. I personally feel that the Atlantic Blvd A1A area is going to see a lot of appreciation with all the new construction projects to include retail, restaurants, new pier etc. After 35 years Pompano is finally making moves. There are a lot of condos in that area. 

Im no expert on condos but that could be a good place to start looking. I feel that area could be the next Lauderdale by the Sea. Big flood of northern residents each year. 

Hi Amy,

Im also in south Florida (Boca) and am looking for my second property. I also considered 55+ but decided it would narrow my marker of renters too much. And even though they are cheaper, you also will get less rent in these communities from what I’ve seen.

David,

If you don’t mind me asking what was the purchase price on your duplex? I plan on buying a new property to move into and rent my current. I’ve been looking for duplex or triplex but have had difficulty finding any in my range in broward or palm beach (less than 250k)

$299k full ask site unseen lol. Ive been analyzing properties enough to know numbers made sense. Everything in this area that is a decent neighborhood to live in is $300k+. $250k maybe smaller duplex such as two 1/1s. A property the same size as the one I'm closing on just listed for $389k down the street (granted its a list price not a closed sale price). Another one just closed for $330k (3/2 x2). 

Smaller duplex at $250k west of US1 isn't unheard of. You can also consider the Oakland biz district by the brewery Funky Buddha. Very up and coming area. Can find duplexes that need work in that area and its not a bad place to live at all (Oakland Park just W of dixie N of Oakland Park Blvd). 

Hey, David. Happy for you:) The main reason we want to start with condos is that the price is not that high, and the rent can be good. We have limited funds for the down payment, doesn't want to be too tight with cash. Hope we can land and close our first deal soon, too. Thank you:)

Hi, Ashley. We are thinking the same thing, that's why we are reluctant to go with the 55+ communities. And most of those communities have high HOA. Thank you for your thought:)

David - I’ll have to check out that area. I’ve mostly been looking at Boynton, Deerfield and coconut creek. But I know exactly where you’re talking about. I had family live just south of Atlantic on A1A. If they build that area up out east it could be really nice.

Did you find the listing on MLS or are you searching other sources?

We have several meetups in Deerfield, Oakland Park & Delray, most are listed on events page on BP. The networking has been very beneficial. Hope to meet you there, welcome!

@Amy Dan It depends on your personality. The best thing to do is check out a few neighborhoods. Talk to the management in these communities. Figure out if working in these neighborhoods is a fit for you and the type of clientele it attracts. Before you buy anything, just be sure you can work with the clientele and communities. I learned the hard way the neighborhood attracts the clientele, not the other way around. Good luck!! 

@Ashley Lynn MLS. One thing I've done is get a good understanding of competitive market rents per unit in each of my target areas. Many listings have under market rents from what I've seen. So a listing at first glance may not seem like a great deal based on current rents however that may change when considering available rent increases.

So don’t get discouraged when reviewing deals where numbers don’t make sense on current rents. Instead run the numbers at what you know the property can rent for (sometimes after updates). At first it may seem like you are overpaying but once the property is operating at peak financial performance the deal makes sense. 

You may have to “over pay” at first but if the intent is long term buy and hold the deal may eventually make sense with rent increases and appreciation. In my opinion this makes sense only when in very competitive market where deals are few and far between and you know exactly where you want to buy. Over a 20 yr buy and hold period im not too concerned if it doesn’t cash flow for the first 1-2 yrs. Especially if you are buying in an up and coming area. That doesn’t mean buy anything of course. 

The deal I have under contract is currently $600 under market rent and makes no sense as is. Long term tenants and not many updates have allowed for small rent increases. I intend to make the necessary changes to bring the property to cash flow positive. The area is also going to see some nice appreciation with many new construction and city projects already breaking ground. If I did not know market rents for the area I would have passed over the property as another overpriced deal. Read between the lines. Hope that helps. 

@David Collier Jr That’s a huge help. I’ve been searching mls as well. My plan is long term hold. Hopefully several properties within the next 5-10 years. I look at it the same way, I’m in it for the long run so I’d be ok with not rolling in the cash the first few years. I figure as long as someone else is paying the expenses through rent that’s just money being put into my investment by someone else and that isn’t coming from my pocket. The cash flow will be an added bonus as the mortgage goes down. Not sure if that’s the best way to look at it as I’m new this but it’s  my mentality until I learn otherwise. 

@Ashley Lynn I think it is ok in a competitive market. The owner of the property I currently rent has been lending his advice to me throughout this process. He owns many multi families here and in Canada. His property I am renting is in a great area by the beach. He said he had to over pay for the property. The appreciation in rent but even more so value has made it a phenomenal investment for him long term. 

In my inexperienced opinion, if you can cover carrying costs and are confident in the rent/value appreciation, a deal that looks bad at first glance can make sense long term. I think this only applies to very competitive markets like S FL. If I waited for a "deal" down here id never make a move.