Are you considering buying an income property in Sarasota, Florida? If you are, you've landed on the right page. In this article, we'll share with you everything you need to know about investing in the city of Sarasota.
Being a landlord can be a very lucrative venture. Having a tenant pay down your mortgage or provide you with consistent cash flow can be a wonderful experience.
There is one caveat, though: you have to do it right! Among other things, you have to invest in the right property, know how to find great tenants, and invest in the right location.
Speaking of location, Sarasota has recently become a popular choice for real estate investments for multiple reasons. For instance, there's a strong economy, great quality of life, and a high rental demand. For a savvy investor, investing in Sarasota real estate is a great idea!
In this article, we here at Anchor Down Property Management will go into the basics of buying an investment property in Sarasota. Follow our recommendations to minimize your risks and maximize your ROI.
What is the Sarasota Real Estate Market Like?
Sarasota real estate is one of the most desirable in the country. The city is home to white sand beaches, numerous golf courses, rich arts and cultural, fine dining, many shopping options, and great weather year-round.
For such reasons, demand for rental homes is typically high. The average rent for a 1-bedroom apartment is currently $1,384. According to Zumper.com, this represents a 13% increase compared to 2020. The trend is expected to continue even into the future.
Top Tips for Real Estate Investments in Sarasota
1. Secure a Down Payment
Investment properties usually require a sizeable down payment, and the approval requirements are typically stringent.
For instance, the 3% you may have put down on your home won't be sufficient for an investment property. Broadly speaking, you'll need at least 20% as down payment.
If you don't have cash for the down payment, consider obtaining it through bank financing, or loaning from friends and family.
2. Invest in the Right Location
Within Sarasota, there are certain areas that are better for real estate investing than others. Some of the best areas to invest in Sarasota include Sarasota Springs, Fruitville and North Sarasota.
A good location is one with:
- Low property taxes
- A good school district
- An increasing population
- A growing job market
- Access to public transportation
- Low crime rates
- Many amenities (such as movie theatres, malls and parks)
3. Know your Expected Margins
Calculate the expected return on investment. Aim for at least 10% in annual rate of return. So, suppose you buy an investment property worth $200,000, then the expected ROI should ideally be at least $20,000 in gross annual income.
You also want to factor in the expenses. Estimate expenses at 1% of the property value annually. So, from our example above, that would sum up to $2,000.
Other costs of running an investment property include property taxes, HOA fees, and maintenance costs.
4. Avoid Buying a Fixer-Upper
Fixer uppers can be tempting to buy because they sell at a bargain and have less competition. They also allow you to build and design the home however you like.
That said, a fixer upper has its fair share of risks. Repairs can be costly and take many months to conduct, and the home may have a myriad of hidden problems.
Ideally, unless you have experience carrying out large renovation projects, you should buy a rent-ready property.
5. Know your Legal Responsibilities
As a landlord, you need to understand the legal obligations bestowed upon you by Florida law. It's important that you know, for instance, rules regarding security deposits. That is, how to store a tenant's security deposit, allowable reasons to make deductions, and when to return it.
Similarly, you have to understand the antidiscrimination rules that exists in the state of Florida. According to the Fair Housing Act, it's illegal for you to discriminate against a tenant based on any of their protected characteristics, including race, color, national origin, familial status, sex, and disability.
In general, understanding the Florida law is crucial as a property owner.
6. Increase the Desirability of your Rental Property
The rental industry is competitive. As such, you need to continuously make your property stand out from its competition.
One thing you can do is ensure you've priced your property right. The perfect price will ensure you maximize your income without jeopardizing its competitiveness.
You can also consider refreshing its look. Does the paint look like it has seen better days? If so, a coat of paint can make a huge difference. What about the curb appeal – is it sure to give a lasting impression? If not, give it a makeover.
7. Hire a Property Management Company
Managing a property can be an difficult task. Between finding tenants, collecting rent, and dealing with tenant complaints, property management can prove stressful and overwhelming.
Luckily for you, Anchor Down Property Management can help simplify all that for you.
By working with a property management company, you can reduce your stress and increase your ROI.
In a Nutshell: Real Estate Investing Tips in Sarasota
Sarasota continues to be one of the top real estate investing destinations in the country.
To maximize the potential of your Sarasota property purchase, consider partnering with a professional management company who understands the market and has experience in the kind of property you wish to buy.
At Anchor Down Property Management, we can help you buy, manage, and even sell your real estate investment. Get in touch today!