Real estate is one of the most reliable investment vehicles, and Florida is well known across the country as one of the premier states for profitable real estate investing.
It only makes sense that more and more people are catching on to the benefits of real estate investing in the Sunshine State. But even in the stable and profitable markets in Florida, things can go wrong if you don’t have the knowledge to make good investment choices.
So, here are 3 tips to help you purchase profitable investment property in Florida.
#1 Research Cities, Neighborhoods, and Streets
It’s true that Florida is a great place to put your dollars as a real estate investor. But that doesn’t mean all Florida cities and neighborhoods are equally profitable when it comes to real estate investing.
Before purchasing an investment property, research the overall soft factors that could potentially attract renters and homebuyers as potential customers. Factors such as business and population growth, winning sport’s teams, recreational activities, and overall love for the community can make the difference in the success of a community’s investment real estate market.
Then as you get closer to purchasing an investment property, research specific neighborhoods and streets to determine if specific investment properties could generate the cash flow and profits you demand.
Since many investors are not interested in doing the research, especially if they have a large investment firm or live out of the area, they use a wholesaler to do the research and provide investment properties.
#2 Get Strategic With Cash Flow
Real estate investing has an outstanding track record of building long-term wealth. But, buying investment real estate does not make an investor rich over night.
Successful real estate investors are very savvy and intuitive when it comes to deal making, and generating cash to purchase, maintain, and manage their investment properties. They expertly analyze cash flow before purchasing an investment property, and carefully monitor cash flow during the life of the investment.
Therefore, it is important to purchase investment properties with features that most generate cash flow, and then maintain the property to those standards. It’s also important to understand the net cap rate of properties you consider purchasing, and to monitor the cap rate for the life of the investment.
Much of the cash flow a real estate investor has at his disposal comes from implementing sound financing options to generate cash flow, which we discuss next.
#3 Financing Investment Properties
There are a plethora of financing options for real estate investments, depending on numerous factors regarding the property and the investor’s financial circumstances.
Though it’s not within the scope of this article to discuss all these options, it is very important to note that the financing of investment properties can make or break an investor, even if he owns the best properties in the world.
One such cash flow financing strategy is using hard money to purchase and rehab an invest property; then after it is tenant occupied, refinance the property with conventional financing.
Another strategy is to pay cash for a property, and immediately get cash back out from the property with delayed financing in order to buy another property with cash.
Another strategy is to use a self-directed IRA to get a non-recourse loan for the property, which can also lower the investor’s tax liability.
There are many such financing and cash flow strategies, and investors need a plan to implement these strategies before buying investment property, so that the purchase is setup correctly to allow for the desired financing options.
Graystone Investment Group
Graystone wholesales high cash flow properties in the Greater Tampa Bay market.
To explore the profitability of Florida real estate investments in the Tampa Bay market, please fill out our Investor Profile, or contact us direct.
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