Buying a rental property

[lorraine]

Hi dont know if I am putting this in the correct section. My parents are coming over soon and are looking to purchase a house in the davenport area to rent out. They would want to stay in it themselves for approx 3 months of the year, December to March. Could anyone tell us roughly how much income they would get by renting it out after paying out for a managing agency, bills etc. Thankyou Kind regards Lorraine

[floridapete]

There is simply no way to tell how much income they would make - it all depends on so many factors !

My best advice, however, is if they can afford to buy a place with the attitude that whatever income MAY come off the property after the purchase price, their mortgage (if any), the property taxes, insurances, tangible personal property taxes (being a rental property), licenses to be able to rent legally, management costs, utilities, pest, phone, TV., lawncare, pool care, sales tax on rentals, resort taxes on rentals, IRS taxes (costs of making annual return even if no taxes are due) etc. etc. etc. then that would be a bonus !

But if they have the idea that they can simply buy a place and give it to someone to manage and rent when they are not in residence and watch the cheques roll in each month - then think again, long and hard. There is no such thing as 'guaranteed rental income' except in the minds of those sharp salesmen who use such promises to sell real estate to naive buyers. They will never see that income !

If your parents would not have the time and business nouse to source all the rentals themselves, then better not expect others to do it for them !

So basically, if they can afford to buy this thing with NO rental income at all - then they may want to go ahead. But the higher % of rental income that they need to break even on their 'investment' the less and less likely it is that they will realise that break even in the current and currently degrading rental market.

Far better for your parents to become renters themselves on a wintering, seasonal basis. There must be thousands of homes out there, yes even in Davenport, who will be just eager to rent to them for that kind of period. Then they just lock it up and walk away from it at the end of their stay - leaving somebody else with all the problems and costs of ownership !

Yes, there are just a few people who make an income out of it - but they work at it full time, marketing, dealing with enquiries and bookings, handling all the monies and paying all their bills. Your parents may not have the time or the will to do all of that ? My guess is that in the current poor, oversubscribed market, 75% of rental owners are not making a profit (income), maybe even more !

I hope that this helps.

[DEE F]

And Lorraine, if that doesnt put them off , then nothing will ha ha ha, hope to talk to you soon.


Love Dee xxx

[Susie]

Hi Lorraine,

Peter gives good advise and no secret that I have been there done it and still doing it since 1989

It is a buyers market at the moment and the dollar is high against the pound. So a good time to buy in many aspects but !

Bookings are way down since 911, air prices are always rising and only recently there airport taxes went up agin. My rental home property taxes rose from $2800 ish to $5800 this past year also hurricane/flood insurance has gone sky high since the high number of hurricanes we had la while ago . There are so many more homes being built the bookings will become harder to achieve and driving down the amount of rental rates you can get.

You can be sucessful but this takes endless hours of hard work promoting your villa

I normally tell people that unless they can afford to have it empty for half the year not to bother

Another point to note, is it may be better for you to buy a rental home ! The reason I say this is that you live in the USA so can write off loses against your personal income and expenditure because you live in the usa.

Maybe you buy it and let mum use it? Just a thought

[lorraine]

If your parents would not have the time and business nouse to source all the rentals themselves, then better not expect others to do it for them !

MMMMMMMMMMM I dont know maybe I reading this wrong!!!!!!!! Any how thanks for the advice. Thanks Sue and Dee and I will call you later Dee. My parents would buy the property cash no mortgage and they dont need an income from it, they were looking to invest some money into a property and obviously as there only grandchild (our son) lives out here they thought invest it here and spend more time here. They arrive in March and will have a look around . I was just wondering what they could rent for if they wanted to. Thankyou Kind regards Lorraine

[peter gold]

I agree with all that has been said Even in a buyers market be careful.
Maybe orlando and the surrounding areas are overbuilt
Look at Winetr haven down the 27 cheaper and ready to boom and the St Augustine area

[lorraine]

Hi Peter thankyou I shall check it out. By the way did you know the villa at gants hill

[peter gold]

Yes and will be visiting very near there on March 12th as mother is in a home just off the roundabout.
I see we are 15 years apart so doubt if we owuld have met as you were three when I moved away to college!!!
Mother still there aged 90.
I used to hang out in the old Wimpey bar of that was in your era!!!

[peter gold]

Lorraine
St Augustine only 90 minutes away from Orlando gives you the coast, history, accessability to other States, not as hot in winter, just as nice in the summer, safe from hurricanes says the history, and wil be my future home when I sell my house in Graveyard City or Gods waiting room a/k/a/ Sarasota/ Venice.
Maybe they need a furniture shop??

[lorraine]

Oh you shattered my dreams thats where I want to move Sarasota. And the villa my uncle owned it and I worked there from a very young age (lol dont tell anyone) I thought I recongnised your name but maybe not my uncle was Riddell. Thanks for the St Augustine I have already checked out and we shall pay it a visit.

Kind regards Lorraine

[floridapete]

Lorraine, You may want to post this question on Top Forums - which is a much more rental-based group than this one, and see what repolies you get. I think that you would find them interesting !

"If your parents would not have the time and business nouse to source all the rentals themselves, then better not expect others to do it for them !

MMMMMMMMMMM I dont know maybe I reading this wrong!!!!!!!!"

What I was trying to say is that the rental game is nothing like to 'easy peasy' as many buyers think - before they buy.

So many of them expected to simply buy the place, hand it over and sit back while the rental cheques roll in (because that is what they had been told to expect by the fast-talking salesmen).

Of course, that is not the way that it works - and you have to have the time, the marketing money, the business acumen and the ability to be responsible with other peoples money to build a successful rental business. And make no mistake it IS a business in all respects - not a part-time hobby.

There is a thread like this running currently on Top Forums.

I will give you a link to it: http://www.top-forums.com/forum/showthread.php?t=28541

[lorraine]

Hi Peter thankyou kind regards Lorraine

[anniefromessex]

Hi Lorraine,

We went to St Augustine for a long weekend. Really nice place and as Peter said it is very historical. Obviously we werent looking for houses to buy or anything like that but it is well worth a visit anyway, with house hunting on the side.

By the way I had my "hen" night at a Pub in Gants Hill, the name escapes me for the moment, old age definitely creeping in! To get back to the subject in hand, good luck with the house hunting.

Love Anniexx

[peter gold]

Annie
The valentrine???

[lorraine]

Hi Annie thankyou we going to check it out, but my parents seen a house which a friend of friend owns in champions gate area that they are interested in. They want to be near to us and we are at Winter garden so that wont be to far. I spoke with Dee and Carl today very nice couple and hopefully will be coming to the coffee morning hope to see you there. Oh Peter can you recomend a nice hotel in Sarasota on beach we need a break away thanks Lorraine

[peter gold]

Lido Key Resort quite pricey though

[DavidL]

Hi dont know if I am putting this in the correct section. My parents are coming over soon and are looking to purchase a house in the davenport area to rent out. They would want to stay in it themselves for approx 3 months of the year, December to March. Could anyone tell us roughly how much income they would get by renting it out after paying out for a managing agency, bills etc. Thankyou Kind regards Lorraine


For 3 months of the year I would advise them to rent, this way they can 'float' around Florida and do some touring. As others have said, it is a buyers market and I firmly believe that the worse is yet to come. Those ARM haven't yet taken effect.