If you’re thinking of Orlando real estate investing, here are some tips on property types that you may consider. When investing in real estate, there are a number of different types of properties that you can choose from. Each will have its pros and cons – and each will require a certain amount of knowledge in how to purchase the property, keep the property maintained, and eventually sell the property when you are ready to move on. The most popular of the residential types of properties to invest in include the single family home, multi-family homes, and condominiums.
Single Family Homes
Single family homes are by far the most popular and primary type of housing in the U.S. Most of these types of homes are built on lots that are larger than the actual structure itself, which adds a surrounding yard that can be landscaped to provide curb appeal. Many single family homes will also include a garage – either attached or detached.
Like most properties for Orlando real estate investing, there are both advantages and disadvantages to single family homes. Some of the advantages include the fact that the entire space around the building is private to the occupant. In addition, additional homeowner’s association fees associated with this type of dwelling are typically lower than the association fees for condominiums and townhomes – although this is not always the case. Sometimes, single family homes don’t have any association fees at all! But sometimes, the fees are higher than the condominiums and townhomes.
There are also some disadvantages to single-family homes as investment properties. For example, all of the repair and maintenance – including both interior and exterior – are at the owner’s expense. Single family homes will also not typically include amenities such as playgrounds for children, workout facilities, tennis courts, etc, but of course, sometimes they do include some amenities. Generally, if the single-family home you choose has homeowner’s association fees, there are likely amenities available, which can be included in the marketing for the home when trying to find tenants.
Due to their popularity, single family homes are the easiest to sell in the U.S. They also appeal to the broadest number of people. Therefore, if you’re considering Orlando real estate investment, you should be aware there are typically many more candidates who will be available to purchase or rent a single family home when you have one for sale or for lease.
A single family home is also the easiest type of property to finance. (Many people ask me, “Can I finance an investment property?” and the answer is yes, although please watch this video so I can explain the details if you want more information about that.) Due to their wide appeal, there are many different types of mortgage products that are available to those who are seeking to purchase this type of property.
Multi-family properties can include duplexes, triplexes, four-plexes, and larger multi-unit apartment buildings. Oftentimes, a real estate investor may live in one of the units and rent out the others. This can provide a great way to have some – or all – of your monthly mortgage paid, while still having your own separate space.
When purchasing a multi-family property for Orlando real estate investing, the lender will typically evaluate the property on the basis of its income potential, as versus the strength of the investor or buyer’s financial statement. Therefore, it is important to provide the lender with an accurate income and expense report when applying for the mortgage on this type of property.
Condominiums are also a popular form of investment property, especially if you find the right one! This is especially the case in resort areas where units can be rented out for high profit. For example, some condo units here in Orlando can be rented out for many times the amount of their monthly mortgage. So, during the cold winter months when travelers come down from the north and stay for several weeks, they can rent a condo unit rather than stay in a hotel or extended-stay suite.
Condos can give you all of the benefits of property ownership such as the deductibility of mortgage interest and equity, yet without the need to provide a great deal of physical maintenance. This is because most – if not all – of the exterior maintenance is performed by the condo association. In addition, these arrangements usually also offer many amenities such as tennis courts and swimming pools. Due to their low maintenance aspect, along with all of their amenities, condos can offer a great rental property opportunity. But these features have a price tag, so be sure to find out the association fees that are required for the property, and factor it in when you’re estimating your income.
Commonly, those who purchase condos are typically required to have at least 20 percent down at closing, depending on if the condo community itself qualifies for special types of financing. So keep that in mind as well.
The Bottom Line on Residential Income Property
Using these pros and cons that I’ve offered, you should be able to tell which type of property is the right choice for your Orlando real estate investing purchase.
Also, regardless of which type of property you purchase, you should consider some of the best Orlando property management companies to manage it for you. Managed properties often perform better financially because the property manager is tasked with marketing to and locating the right type of tenants, collecting rent, performing maintenance on an ongoing basis, and pricing the property correctly according to the market to ensure you’re not losing money.
That’s where we come in! We provide quality Orlando property management services in and around Central Florida so that you can reap the benefits of Orlando real estate investing without all of the work.