One of the most popular questions we hear from property owners looking to expand their portfolio is the following; 'What are the best types of real estate investments to buy?'
Unfortunately, there is no one 'standard' answer for that when it comes to a Parrish property because it depends on the financial goals of the investor.
Some investment properties lend themselves to a higher cash flow (such as a vacation rental), whereas the cash flow on other properties might not be as good—but they offer a greater chance of capital appreciation.
Let's take a look at some of the factors investors should consider when deciding whether or not to proceed on a potential rental property pick from the perspective of seasoned Parrish property management.
If Your Financial Focus Depends on Cash Flow
Single-family homes in a non-deed-restricted community are one example of a higher cash flow property type. Properties located within non-deed-restricted communities do not have the same mandatory fees associated with multi-family units like a condo or other amenity-rich communities. Ultimately, this saves the property owner the additional expense of the fees associated with such amenities and regulations; most of the rent is going into the owner’s pocket to boost cash flow.
However, many of your future renters are looking for the kind of benefits and advantages that living somewhere with built-in amenities offers. It may cost you some of your monthly returns to add such a property to your portfolio—but you'll appeal to a greater variety of renters by having the advantage of a pool or gym as an option for your single-family homes. Rather than losing prospective applicants to apartment living, your rental property will seem attractive to the needs of their lifestyle.
Another example of a cash-flow rich property type is vacation rental properties in the Parrish, Sarasota, and Bradenton area. These kinds of investments can present a very lucrative opportunity for property owners in our beautiful part of the Gulf Coast. However, to truly maximize the income they represent, investors are best served by working with an expert Parrish property management company.
Working with professional property management in Parrish means having a dedicated team to handle maintenance and repairs, cleaning services, marketing, guest inquiries, bookings, and check-ins and check-outs. If you decide not to shoot for the cash flow advantages of a short-term rental property, property management services still benefit you as an investor if your focus is offering annual rentals.
If You're More Interested in Property Appreciation
Sacrificing monthly cash flow with an eye on the long haul is another option. With this 'pot of gold' at the end in mind, some investors will consider selecting a property within the confines of an HOA, such as a condo or townhome.
These properties are typically built in more desirable areas (think Lakewood Ranch and Palm Island) and are often considered more prestigious—with the amenities to back it up. You are likely to achieve greater appreciation potential in this type of rental property over a five to fifteen-year period.
The downside to these types of properties is the often-costly fees associated with the purchase of a multi-family property like a duplex or condo that we mentioned before. However, it's worth noting that these fees function as a reserves fund for pre-planned community maintenance and care.
This can benefit property owners who don't want to stay on top of grounds maintenance, replacement roofs, or exterior painting now—and in the future. This can also be an attractive option for renters who prefer hands-off living but want the advantages of a spacious property in a planned community.
Ultimately, investors who are looking at buy-and-hold properties from the perspective of appreciation potential should keep in mind that appreciation really only matters if your intent is to sell someday.
If your plan is to eventually move into your rental property as part of your retirement plan, or you're interested in using the property as a vacation home, then you should be buying real estate investments with this facet in mind. Your purchase will need to appeal to renters now, but it also needs to have the essential qualities you're looking for in a retirement home down the line.
What's the Right Move for You as a Property Owner?
All this to say, there is no 'one-property-type-fits-all answer' to the original question. There are lots of different scenarios out there for picking properties that rely on your individual goals as an investor.
Speaking to a full-service, Parrish property management professional who understands real estate investments will put you in a far better position to make the right decision when you buy your next investment property. If you are considering investing in the area and would like to speak more about the benefits of property management services, please reach out to us!
A great way to get started engaged in the services we provide (without worrying about management fees) would be to take advantage of our free rental analysis for any rental property you're considering. We'll be able to help you run the numbers and perform expert research that may just help shelter your portfolio from a lemon!