The Orlando, Florida area can be a great place to buy real estate—just ask Walt Disney. The park he built laid the groundwork for the transformation of this area from rural swamp to cultural magnet. Now, I’m no magic prince and I don’t build fairy castles. But, in the 20 years I’ve been flipping houses in the Sunshine State, I’ve learned that the rest of us can make our dreams come true, too.
In order to do it, you need some elbow grease, experience, and the right tools. You need to know where in Orlando to invest and how to properly evaluate a property.
I’m here to help. Based on my experience, here’s how you go about securing the best potential ROI on an Orlando, Florida real estate investment.
Where to Find the Best Distressed Houses for Your Orlando Florida Real Estate Investment
To start, you need this list of the best Orlando neighborhoods to invest in. But, before you wear out your shoes trying to identify the good deals by walking around, let me tell you where you might find deals in these neighborhoods. Here’s a few ideas to get you started:
Real Estate Auctions
Several auctions sell real estate in Orlando, sourcing their stock from estate sales, foreclosures, and homeowners otherwise in distress. When looking for properties on auction, seek out as much information as possible ahead of time on the auction’s website. Target a few properties that best fit your scope and budget, then set a hard ceiling on how much you’re willing to pay. Placing the winning bid on a property is no help if you’ve overpaid and can’t turn a profit.
Websites like Zillow and Craigslist list tons of distressed properties in the Orlando area. Listings constantly refresh as owners and agents place homes on the market. The strength of online real estate listings is the volume—but the weakness is their accuracy. Houses found online may or may not actually be for sale, priced accurately, or in the condition they promise. So, due diligence is indispensable when sourcing online. Be sure to search within specific parameters and set limits on your time—it’s all too easy to scroll forever and get nowhere online.
I find that organic leads can provide some of the best investment opportunities. These are the leads you get when a distressed homeowner contacts you directly. Instead of chasing or soliciting properties online or at auction, you’re evaluating and responding to a potentially exclusive opportunity. You get the first bite at the apple—the person contacting you is contacting you, because they think you can help them.
That’s not to say there’s no legwork involved in generating organic leads. Homeowners in distress need a reason to contact you, such as a personal connection. Without a personal connection, you’re relying on marketing and the trust your business has established over years. If you don’t have significant marketing resources, or are new to the business, consider teaming up with someone more established to help build your reputation.
Using each of the above tactics, it can be all too easy to find investment houses for sale in the Orlando area. The tricky part is knowing how to evaluate which ones can provide a return and which will drain your funding.
What to Account for When Evaluating an Investment Property
To evaluate a prospective property, you need to compare the total costs of purchase, renovation, and holding against your estimated after-repair value (ARV). Your ARV is based on the condition of the house and recent sale prices of similar houses in the same neighborhood. The total cost of your investment property should generally not exceed 65% of your expected ARV.
To calculate the total cost, be sure to include:
- Purchase Price. Reducing your purchase price is your greatest opportunity to reduce your project’s overall cost.
- Renovation Costs. Perform a thorough inspection and plan renovations based on similar homes in the area. Then add about 20% to your figure for unexpected costs—unless you have access to one of the best property valuation tools available.
- Carrying Costs. Insurance, utilities, home services, and any mortgage costs multiply every month that you own the house. Setting your sale price too high can cause your carrying costs to overwhelm your profits as the property sits on the market.
- Cost of Money. Unless you’re the federal reserve, money isn’t free. Be sure you include what you owe on your hard money loan in every estimation of cost.
- Taxes. Taxes are based on your appraised property value, how long you hold the house, and how you classify the property.
- Transaction Fees. Real estate agent, escrow, and recording fees are relatively small, but must be accounted for.
Even if you are sure what these costs add up to, do the math twice. Mistakes will literally cost you. Certain valuation tools can also vastly simplify the process, by providing quick, accurate estimates.
Investing in Orlando Real Estate With More Support
It isn’t easy to start investing in real estate by yourself. Even if you have the money, you might not know how to get traction. I know, because I tried investing on my own for several years before I became an independently owned and operated HomeVestors® franchisee. It’s helped every aspect of my business. HomeVestors not only introduced me to my experienced local mentor and a strong, national brand, “We buy ugly houses®” to generate qualified, distressed property leads, but also got access to tools like ValueChekTM, which helps me to quickly and accurately assess a potential property’s value.
Looking to build your professional real estate investment kingdom as an Orlando real estate investor? Contact HomeVestors today!
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