Can't find positive cash flow in Cocoa Beach FL area

Can't find positive cash flow in Cocoa Beach FL area

Jim StanleyPro Member
Denver, CO · Member since 2017 · 58 posts · 27 votes

I'm looking to buy my first rental.  Here is my thought process:

We are looking to move from Denver to Florida- probably Cocoa Beach/Melbourne area in the next 2 years. 

We will likely keep our Denver house as a rental but that's not what I'm asking about.  

Prices in Coco Beach/Melbourne are going up fast and several companies in the area (Northrop Grumman, Blue Origin) are hiring lots of high pay jobs.  

I think I would like to buy something there now and rent it out.  

I am thinking SFR in a good neighborhood with good schools for the following reasons:
1- Better neighborhood= better renters, less vacancy, less damage, etc
2- We might want to live in it at some point
3- Just "feels" less risky than multi family or SFR in lesser neighborhood

I've been looking at houses and condos that local realtors have been sending me and nothing has any real positive cash flow.  I don't think my assumptions are terribly conservative, but I am assuming 10% for property management.

I'm looking for positive cash flow and appreciation.  I'm willing to sacrifice profit for lower risk, especially on my first (hopefully not last) one.

Should I give up on SFR's and concentrate on multis?

Should I lower my standards on the neighborhoods?

Is this not the the right area/timing?

Pros and cons of house vs condo?

Any insight appreciated. THANKS!!!

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  • Real Estate Agent · Merritt Island, FL · Member since 2016 · 1 post · 0 votes
    9y

    Hi Jim, 

    This is a great area and I agree, it will get better due to space tech and much more...  Are you looking at homes that need rehab, retail move-in-ready homes or both? There are a few areas here where you can still find a deal but it sounds like you still need to hone in on what you want. Since it's your first deal and you're wanting to minimize risk, then don't buy a $400k house, buy a $150-200k built in the 60's but be careful about what you're buying and where you buy it, your agent should be helping with that.

    Sounds like you're working with multiple realtors, bad idea. You need to find one agent you can trust and work with them so they can trust you too. No good agent is going to be able to give you the attention you need if you're not going to fully commit to them.

    Once you figure out what you want and it's realistic, grab it fast when it comes on the market. 

  • Real Estate Investor · Orlando, FL · Member since 2014 · 8 posts · 3 votes
    9y
    SFRs are very expensive in Cocoa Beach since the land under the house is worth over 100k right now. The market is extremely hot in the area so you will have to be analyzing deals every day or week until you see something come up that is actually a deal. You might have the best luck with a vacation rental in this area. Melbourne is a totally different and larger market and ranges widely in price depending on the part of town. I also see a huge upside with all the high paying jobs coming in. Decide on your purchase criteria to help narrow your search. I'm closing on a multi family in Cape Canaveral this month, that city is almost only multi fam and condos. good luck!
  • Bill S.Pro Member
    Moderator
    Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
    9y

    @Jim Stanley so my advise is to pick the home you want to live in and buy it. Trying to make it "work" as an "investment" in between is going in two directions at the same time. Buy the house you want and rent it to offset your costs. If you can't afford to do that, then perhaps you need to rethink your goals. Trying to buy a primary residence and make an investment at the same time doesn't every really turn out well in either direction. Sort of like living with a split personality you never really get what you want with either option.

  • Jim StanleyPro Member
    OP
    Denver, CO · Member since 2017 · 58 posts · 27 votes
    9y

    Thanks for responses.  Here are a few answers/comments:

    "This is a great area and I agree, it will get better due to space tech and much more... Are you looking at homes that need rehab, retail move-in-ready homes or both?"  Looking for move-in-ready since I won't be there.

    "Decide on your purchase criteria to help narrow your search."  That is one of the things I'm having trouble doing.

    "my advise is to pick the home you want to live in and buy it. Trying to make it "work" as an "investment" in between is going in two directions at the same time. Buy the house you want and rent it to offset your costs."  Agreed

    "If you can't afford to do that, then perhaps you need to rethink your goals."  I think I can afford it- but want to make best use of my money.

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