One of the effects of the great mortgage foreclosure recession is the large increase in rental properties in communities that were once generally owner-occupied (i.e., primary residences or vacation homes).
As prices plummeted after the foreclosure, investor groups sprung up to buy the now-cheap properties and turn them into rental properties as a long-term investment. One such company is Invitation Homes, founded in 2012, that now owns 80,000 properties in seventeen markets, including a substantial number in South Florida. A Property Appraiser search for IH3-IH6 Property Florida, LP (subsidiaries of Invitation Homes) showed ownership of 1,138 homes in Palm Beach County alone almost all available for rent.
Summer break has come to an end, and children have started school again. In South Florida this means that “season” is right around the corner. Season is the time of year when many snowbirds come down to avoid the cold winter, as well as many international folks who are involved in the equestrian community. It is the perfect time when investors, and others who vacate their homes for a few months, provide housing for those coming down for season as they can usually obtain a good rental premium.
While seasonal renting can be lucrative for landlords, it is important that they are protected while doing so. A well-written lease agreement that protects a landlord is a must. A useful tip for landlords with seasonal rentals, as well as yearly rentals, is to try to obtain the entire rental amount up front or as much as possible. Besides the obvious benefit of collecting the money at the beginning and not wondering if the tenant will make the next payment or not, there is another benefit as well. Should the lease need to be terminated, say because the tenants throw an unruly party, if the lease is properly terminated by the landlord, the landlord could be entitled to keep the remaining amount of money that was paid for advanced rent. Continue reading →
If you are thinking about purchasing a rental property make sure you are not making your decisions based on common, incorrect assumptions. With rising prices and historically low interest rates the real estate investor is back in full swing. However, buying a rental property and counting on it to pay for your retirement or provide you easy monthly passive income may not be a smart move.
Home vs. Investment
Arguably the most pervasive myth when it comes to investing in real estate is the belief that buying a home is a great investment. To be clear, buying multiple rental properties and relying on rental income from those properties can actually be a good investment. However, purchasing your primary home and relying on it to fuel your retirement is rarely ever a good idea. Your house isn’t an investment, ATM or piggy bank. It is a place to live in. Do not forget that. Continue reading →