We've found a whole new market
This week we’re going to introduce you to something new we have in the works. Most of you know us for our classic $100,000.00 to $200,000.00 properties located in solid B class areas that we purchase at auction and renovate to like new condition. These are great properties that provide a low cost of entry with excellent yields. We love these homes and always will, but there is a problem.
The availability of these homes is rapidly decreasing. First, we’ve got a massive influx of people moving to Florida, and many of them are buying in these excellent areas. This means far fewer homes are going up for auction as owner occupied homes increases. Next, we have got intense buying from local and institutional buyers which is driving up prices considerably.
Now as much as we love these types of homes and these areas, we are only willing to pay so much for them. At a certain point, the properties in question become overvalued. Yes, appreciation and cashflow is wonderful, but we cannot ignore the purchase price to the point where we are paying double for the exact same asset we would have paid half the price for 18 months prior. Buying at any cost is not a sound investing mindset.
With all that being said, one thing we have always been great at is pivoting to find the most profitable undervalued and under the radar niches, and we’ve got our sites set on an amazing new market. Instead of fighting over entry-level low-priced homes, we started looking into higher end homes, the type of homes you would live in. These are homes in A class communities. Homes you might rent on Airbnb for several thousand dollars a week for a family vacation. Remember, homes at all levels have a rental market.
Now instead of focusing on $200,000.00 homes, we’re looking at $400,000.00+ homes. You get the same power of leverage and appreciation, plus premium tenant profiles, and an increase in rental income proportional to the value of the home. This has the potential to create an even better cap rate for your investment. Now instead of just focusing on how many doors you want in your portfolio, we can start looking at the size of those doors. 2 doors/homes with a total cost $420,000.00 may generate a gross revenue of approximately $31,200.00 ($1300/mth/home). A premium home with a cost of $400,000.00 could generate approximately $54,000.00 ($4500/mth). Much higher gross revenue, half the number of roofs, furnaces, washer dryers and tenants.
This class of home can open up the revenue model to include executive level rental agreements, or short-term vacation rental opportunities. For those of you who are not aware, Florida is quickly becoming American’s #1 destination for both family vacations and corporate events and tradeshows due to our free and open economy. This is driving massive demand for both traditional long-term tenancy, and short term business and vacation stays.
We are currently in the process of securing properties in this exciting new market. As we start building inventory in these homes, you will hear about them first. As always, our goal will be to provide a simple all in one management solution for you.
Lyn Dela Cruz
7/8/2021 01:14:23 pm
Interest to receive inventory. Thanks
7/8/2021 01:18:57 pm
7/8/2021 10:29:06 pm
Do you have a sample proforma? For short term rentals, what are property management fees and vacancy assumptions?
7/9/2021 10:15:34 am
7/9/2021 03:11:03 am
Is the plan for these homes specifically short term rentals? Or can they garner enough income on a ling term/annual lease tenant.
7/9/2021 10:17:54 am
7/9/2021 11:23:02 am
I'm looking for a house to do short term rental. Please let me know if you have any.
7/14/2021 12:46:27 pm
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