Investing in a Ft Lauderdale Condominium

Today I received numerous calls from potential Ft Lauderdale Real Estate buyers considering purchasing a Ft Lauderdale Condominium for investment purposes. Being very conscious of the investment markets and lack of returns available in the stock market and alike I can certainly understand the interest in Ft Lauderdale Real Estate as an investment vehicle. Many a fortune has been made in real estate and I am certainly an advocate of Ft Lauderdale Real Estate, however I am also an advocate of making sure that every investment is made with a working knowledge of what you are investing it. If it were simple to purchase a Fort Lauderdale Condominium and from day one have it pay for itself, it would only make sense that demand for Fort Lauderdale Condominiums would be great and inventory would be shrinking quickly. This is exactly what is happening in the Ft Lauderdale Condo market, as real estate prices in Ft Lauderdale have declined at the same time rents for Ft Lauderdale Condominium units have gone up, and therefore the Fort Lauderdale condo investment is looking more attractive.
 

Fort Lauderdale Condo Rental Policies

Fort Lauderdale Condo rental policies can vary dramatically from one Ft Lauderdale Condo building to the next, and there is no shortage of the variations of the rental restrictions in Ft Lauderdale Condos. The most lenient of rental policies are the daily rentals of a Ft Lauderdale Condo Hotel. At these properties such as The Fort Lauderdale Hilton, you are purchasing a condominium unit and sharing the revue with the hotel management company. Personal usage is limited as part of the management program agreement. The investment differs from a traditional Ft Lauderdale condo in that the property is managed by a hotel management company. One of the most important issues affecting this type of investment is that financing with a traditional mortgage currently is extremely limited. There are Ft Lauderdale Condos at the other end of the spectrum that do not allow any rentals at all. In the middle are Ft Lauderdale Condominiums that allow rentals after a year of ownership, for a minimum of three months at time, only once a year, twice a year, 12 times per year and every assortment of these rules. The message for a potential Fort Lauderdale Condominium buyer who has rental income as part of their goal is communicate clearly this goal to their Fort Lauderdale Realtor. Not knowing the policy of the Ft Lauderdale Condominium building you purchased does not allow you to ignore the rules of the Fort Lauderdale Condominium.

Fort Lauderdale Rental Condo Market

Every Ft Lauderdale real estate investment is valued by numerous criteria. When an appraiser values a property they look at many different factors. When a Fort Lauderdale Real Estate investor values a property two of the most important criteria are cost of ownership and potential appreciation of that property. Even though I am optimistic that appreciation is going to happen over the next five years, this remains an unknown and may be looked at as the added value to a well run property. Taking this approach the savvy Ft Lauderdale Condo investor is going to strictly look at cash flow and overall cost of ownership. With this in mind let us look at two recent Fort Lauderdale Condominium investments and see how the numbers stack up for a Ft Lauderdale Investment condos.

Tides at Bridgeside Square Recent Sale to a Ft Lauderdale Investor

This three bedroom Ft Lauderdale Condo at the Tides at Bridgeside Square was purchased for $290,000 – with a condominium monthly maintenance of $870, and expected annual taxes of $5300 or approximately $442 per month. This Ft Lauderdale Condo quickly rented on an annual basis for $2200 per month.  This generates a cash flow of $1312 per month which is a return of 5.4% on the $290,000 investment. Additional expenses such as rental fees, insurance, vacancy projections, repairs, need to be considered. In the case of these condos from our past experience an additional estimate of about $400 would cover these additional costs, bringing the return down to 3.8%.  Will this return cover the costs of your mortgage? The answer to this is based on your initial down payment. We usually find it takes an initial down payment of between 25 and 30 % to breakeven. There are two additional numbers we have chosen to ignore for this analysis, first is the tax deduction generated through depreciation, the second is appreciation of the property. If we assume that depreciation generates a tax savings of about $2000 per year, and 3% appreciation adds $8700 per year, we then start to see a return of 7.4%, at a time when passbook saving account are paying less than 1%, it is clear why a Fort Lauderdale Condo today is quickly becoming an attractive investment. Did I mention there is also the added value you that someday you get to use your very own piece of paradise, your Ft Lauderdale Condo.

Ft Lauderdale less Expensive Condo Investments

A Fort Lauderdale Condo sells for $85,000; the taxes will run $1530 or $128 per month. Monthly maintenance on the unit is $340 per month and it rents fairly easily for $900 per month.
Following the same model as above this Condo generates $5185 in cash flow, a return of almost 6.1%. Additional cost of about $100 a month, bring the return in at about 4.7%. Add in appreciation and tax savings and this unit could return 9 % per year. Why the greater return on the less expensive condo. It’s simply about risk. The less expensive condo most often is less expensive for a reason. The most obvious reason may be location but this is the same factor that will allow the first investment to appreciate more over time. The greater return is the payment for the risk of owning a property that may be a bit less rewarding over time.

Sales of Fort Lauderdale Condos are Strong

Strong sales of Ft Lauderdale Condos have been causing a tightening of supply. Once at a year of supply of saleable inventory, some estimates today say there is less than a three month supply. We expect that supply is going to continue to tighten and great Fort Lauderdale Condo investment properties will begin to rise in price. Certainly there will be properties where values continue to drift lower and to some it may appear that the overall market is still declining. It is our opinion that the properties that continue to drift lower will do so for numerous reasons such as poor management, deferred maintenance and as it relates to this article excessively restrictive rental properties that prevent investors from purchasing at these properties.

At Eric Miller and Associates we compile a report for our clients looking to purchase rental Ft Lauderdale Condominiums. We research the Fort Lauderdale Condominiums over the past six months that have had the most successfully rental results as a percentage of total units in the complex; rental activity is a good sign of desirability. We then confirm the rental policies of the building, and research available units. When you ask to receive this report you will be added to an auto-notification as properties become available for sale at these Fort Lauderdale Condos. For all your real estate needs in the Fort Lauderdale area working with the team at Eric Miller and Associate is the start of a great Ft Lauderdale Real Estate investment.

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Eric Miller REALTOR®
Keller Williams Realty Professionals
3696 N Federal Highway, Fort Lauderdale, FL 33308
Direct: (954) 383-8170
Fax: (954) 630-7050
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