Buying a SFH rental where new condos are springing up - good or bad?

12 Replies

Finally, my husband and I are ready to buy our first property EVER in South Florida, Delray Beach to be exact.  We will actually be living in the property for a few years with the goal to eventually move and keep it as a rental.

The market is very hot right now, and the area we are buying is selling like crazy because the whole area is undergoing a ton of redevelopment and growth. My concern is that there are plans for several new condo buildings in the same area, and I wonder if that will only create tough competition when renting a SFH. On the other hand, the growth and demand for the area should go up, so I'm not sure whether it will be good for our future rental or not. Anyone else experience this before?

From what I understand, you should be extremely careful buying in a seller's market. Prices tend to be a bit higher than what you're looking to pay.  Also, how much are you willing to do in repairs? Is that particular area the only area you're willing to invest in, or are you willing to look for property in places nearby?

I wouldn't worry about the condos as it is a different type of property that has a different type of tenant. People usually want more privacy which SFH usually gives them.

Also when you buy make sure it would cash flow as a rental even if you ware living in it for a while. That way when you move you know it will be a good rental. Rent rarely goes down if you keep the place in nice condition.

Either way, that part of florida is going to see hyper supply in the next 2-3 years and prices will drop significantly. But a SFR is always better than a house, you can add value, flip it, and mainly, there's no HOA fees which is a huge difference.

Originally posted by @Cedric Dadaille :

From what I understand, you should be extremely careful buying in a seller's market. Prices tend to be a bit higher than what you're looking to pay.  Also, how much are you willing to do in repairs? Is that particular area the only area you're willing to invest in, or are you willing to look for property in places nearby?

 Yes, I hear you, I wish our timing was better.  But we do have to move, so since it will also be our primary residence that helps make it seem alright.  The place we are looking at should need few repairs, since we don't want to spend more than a few thousand on that at first.  Once we are down there we will mainly be looking in Delray Beach for other rentals, but possibly Boca/Deerfield/Boynton.

Originally posted by @Austin Youmans :

I wouldn't worry about the condos as it is a different type of property that has a different type of tenant. People usually want more privacy which SFH usually gives them.

Also when you buy make sure it would cash flow as a rental even if you ware living in it for a while. That way when you move you know it will be a good rental. Rent rarely goes down if you keep the place in nice condition.

 Good points, thanks.  Based on the numbers it will still cash flow once we want to rent it.  Not a huge amount, but around $100-200 depending on how much rents go up.

Originally posted by @Vincent Crane :

Either way, that part of florida is going to see hyper supply in the next 2-3 years and prices will drop significantly. But a SFR is always better than a house, you can add value, flip it, and mainly, there's no HOA fees which is a huge difference.

True, did you mean to say SFR is better than a condo? And yes, no HOA fees is huge!

I'm sorry yes, SFR's are better than condo's haha

I agree with @Austin Youmans that the condos shouldn't hurt your SFR as a rental. In fact, I bet that your renters will be coming from those condo buildings because they are ready for a change of pace. So, just make sure that it cash flow's positive and you will be fine.

Originally posted by @Stefan Augustyniak :

I agree with @Austin Youmans that the condos shouldn't hurt your SFR as a rental. In fact, I bet that your renters will be coming from those condo buildings because they are ready for a change of pace. So, just make sure that it cash flow's positive and you will be fine.

 That's good to hear, thanks!

Shopping centers do extensive research into growth areas before building, so buying nearby you piggyback on their researxh/investment bet.  i would think condo buildes use the same research.  There are no sure deals in real estate, but buying an owner occupied that you can afford is the least risky of all...not buying is a risk too.  Only thing I can add is flood insurance will go up in coastal areas.  Has to and will.

Meghan--I agree w/what Austin and others had to say. My husband and I did the same as you--bought a row house surrounded by several new highrises going up in the particular neighborhood of DC very close to the subway and tons of new restaurants & grocery stores going up. If it's located in a hot neighborhood, it shouldn't be hard at all to attract a large pool of potential tenants. As long as you price it right (even a little lower than what others around you are charging), show/maintain the property well, you will get lots of responses. Not everyone wants to live in a highrise (as you have a yard and likely bigger size) or rent from a property mgmt. co. Good luck!

Originally posted by @Sara N. :

Meghan--I agree w/what Austin and others had to say. My husband and I did the same as you--bought a row house surrounded by several new highrises going up in the particular neighborhood of DC very close to the subway and tons of new restaurants & grocery stores going up. If it's located in a hot neighborhood, it shouldn't be hard at all to attract a large pool of potential tenants. As long as you price it right (even a little lower than what others around you are charging), show/maintain the property well, you will get lots of responses. Not everyone wants to live in a highrise (as you have a yard and likely bigger size) or rent from a property mgmt. co. Good luck!

 Thank you!

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