If you’re thinking about investing in rental property in Pensacola or anywhere in the 32501 zip code area you might be wondering what makes a good rental property in Pensacola. We’ll share with you 3 of the factors to what makes a good rental property in Pensacola and to see if rental properties are right for you…
Rental properties can be a great investment. From the cash flow to the security of owning a real asset, real estate investors have known for a long time that rental properties are an amazing asset to keep in your portfolio. But one question persists that needs to be answered before you invest, “What makes a good rental property in Pensacola?”
After all, you don’t want to invest in ANY property – you want to invest in the right one! So, here are 3 of the best factors that make up an ideal rental property in the 32501 zip code or anywhere in Pensacola and surrounding area.
What Makes A Good Rental Property In Pensacola?
#1. Strong House, Cosmetic Upgrades Only
Unless you’re handy, or have a lot of experience, you may not want to invest in a house that requires a lot of effort to get it ready to rent. After all, every day that you delay renting is a day that you don’t get the cash flow you desire. A strong, well-built house that is free of problems and only needs cosmetic upgrades is a great place to start. Yes, you might pay a little more up-front for this kind of property but you’ll save time and money afterward in getting it ready to rent.
However, if you have handymen that you always do business and you trust, and also, if they take care of you with pricing, it won’t be such a bad idea to buy a home that needs repairs, specially if you buy the property at discount rate to compensate you for the money that you have to spend on the house.
Moreover, if your handyman or contractor can finish in a short period of time, that would be great. Like I mentioned above. everyday that your rental is vacant. It’s a money going out of the window. So, you need to make sure that A) You handyman or contractor is reasonable enough to get a good price for him, and to buy the property at a discount rate to make up for repairs and lose time for vacancy while you’re repairing the house.
#2. Affordable
While you might want to spend a little more for a house that is already in good condition, you’ll still want to make sure that it’s affordable. In the Pensacola area, there’s a mix of properties – some are affordable and others are not. (This is what we do here at EliTrust Real Estate Investments LLC – we find the affordable ones! Give us a call at 850-861-1326 or click here and fill out the form to see some affordable rental properties in the area.)
You need to know what’s the cap rate for the rental that you’re buying. To calculate the cape rate you need to divide the total rent you’re collecting for that property by the price you’re purchasing the property.
For example, If you’re buying a property for $100,000, and you’re getting $1,500 a month for rent, then the total rent you’re getting a year is $18,000. The math will be as follow. $18,000 ÷ $100,000 = 18% cap rate. Anything above 10% would consider a good investment. But we’re a real estate buyers investors and we want to get more for return on our money, so, I would say go above the 15% cape rate.
#3. Good Rental Market
You also need to make sure that this is a good rental market. The truth is, not all markets are good rental markets. In some areas, everyone buys and nobody rents; in other areas, everybody rents but they move too much. A good rental area is one where there are plenty of long-term renters.
I kept this one for last because it’s the least important of all three. The reason why I said that because you make money when you by the property, so you can make a rental a good one when you buy it at the right price for you to be able to rent it at affordable rate for most people which can compensate the tenants for the location that the property in! You fell what I’m putting out here?
Summary
These three factors exist in rental properties throughout the Pensacola area and we can help you find them. In fact, we’ve got an inventory of properties that meet these and other requirements for what makes a good rental property in Pensacola… and our clients love working with us because we help them bypass the time and effort required to FIND these properties, since we’ve already done a lot of the legwork.