5 Things You Need to Know About Buying an Investment Property in Fort Lauderdale
1. Ensure you know all the expenses and potential income associated with the property BEFORE you buy it! There's a long list of investors that have over extended themselves and neglected to complete proper due diligence prior to purchasing real estate. You will need to decide first if you're going to rent the piece of real estate you're purchasing, or if this is something you're buying as a second home with the hopes that it will increase in value over time. If you're strictly looking for price appreciation then you simply need to ensure you can comfortably pay all property costs monthly. If you are looking for something that is cash flow neutral, or positive, you need to ensure you've accounted for all expenses. At the most basic level you need to ensure you've properly calculated the property taxes, association home owners association fees, insurance, and monthly mortgage payment should you have one.
2. Speak to a lender prior to purchase if you are financing. There are a number of factors ranging from the property itself, to the buyers creditworthiness that will affect a buyers financing. In some cases a seller may offer to finance the property they're selling to the buyer in the transaction. This is called seller financing and is great when available as it requires no mortgage underwriting from a traditional lender. If you are using a traditional lender you would need to ensure that your contract allows enough time for the lender to underwrite and fund your loan.
3. How will you rent the property? Fort Lauderdale is filled with owners who purchase here, but don't live in the area. If you're looking for a tenant how will you find one? Some owners have experimented with a posting on Craigslist, typically that's met with minimal success. If you don't live in the area you will, in all likelihood, need a Realtor or licensed property manager to look after your property. This will cost the owner some money, typically one month's rental fee, but it will save a ton of headaches. I once had a unit owner in California call me at 8am Eastern time to say he needed an agent right away to find him a new tenant. His tenant would call him whenever he heard loud noises outside the apartment, he was calling his landlord at 5am Pacific time. A Realtor or property manager can act as a tenants point of contact and prevent these types if situations.
4. How will you hold title? Some people buy property in their own name. Other people buy real estate in the name of a corporation of LLC, while others buy in the name of a Trust. Always speak with a qualified CPA and attorney prior to purchasing real estate for investment purposes. Ensuring you've received sound advice now can save you from litigation or tax consequences later.
5. Use a Realtor you trust. Sounds simple enough, but it's not always done. You need a Realtor that understands the local market. Someone who has detailed knowledge of the market place, and the property you are considering. None of us have the answers to everything all of the time, but be sure to work with a Realtor that can get you detailed answers to each question you have about a property. Nothings more important than research and proper guidance in a real estate investment transaction.
I work as a real estate specialist in a small area of Fort Lauderdale. If you’re interested in buying or selling a home in: Rio Vista, Victoria Park, Downtown Fort Lauderdale, Fort Lauderdale Beach, Harbor Beach, Lauderdale Harbors, Collee Hammock, Seven Isles, Nurmi Isles, Idlewyld, or Las Olas Isles, please feel free to contact me at (786)443-7203 or through my email email@example.com.
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Written By Casey Prindle