Have you considered investing in an Orlando rental property but need to know whether you should buy a fixer-upper or a turnkey property?
There are many factors to consider when deciding which option is best for you and your investment strategy. The main thing to consider is deciding what your goals are for buying a rental property. For example, do you want to fix a potentially older and cheaper home to transform it into a modern, livable one? Or do you want to buy a pricier turnkey property that will quickly become an opportunity for extra cash flow?
The Benefits of Buying an Orlando Fixer-Upper Rental Property
The main benefit of a fixer-upper in hopes of using it as a rental property is that you can initially put little money into buying the property. You will have more wiggle room in your budget for repairs and upgrades by purchasing a cheaper house. Most Orlando investment properties can take upwards of 5-10 years to appreciate in value, while fixer-upper properties can appreciate as you renovate the home.
When upgrading a rental property from the ground up, you can install fixtures, appliances, paint, wallpaper, doors, etc., that are aesthetically pleasing and on-trend. A perk to completely renovating an investment property is that you can see all of the nooks and defects in the walls, underground, and ceilings that may need attention and extra repair that you may not have seen otherwise.
Another excellent reason for investing in a Central Florida fixer-upper is the property taxes since they’ll be based on the home’s purchase price.
Pros of Buying a Fixer-Upper Rental Property:
- The aesthetics are customizable
- Lower prices & Property Taxes
- Catching necessary repairs before it’s too late
- Appreciating the value of your home almost immediately
The Downside of Investing in an Orlando Fixer-Upper
While there are many perks to investing in a fixer-upper, there are some downsides you may want to consider. First, if you are looking for a quick turnaround on your Investment, time is of the essence. Depending on the state of the property and your contractors, construction may take a very long time. You may have a set budget for the purchase of the home, as well as the renovations necessary to make it livable. Purchasing a fixer-upper is problematic when trying to stay within a budget because you may encounter things that need to be fixed that you did not account for repairing.
Another thing to consider is that most banks will not mortgage a property that needs extensive repairs because it can be a risk for them. This can make your loan options very limited. In addition, many banks will not allow you to do the remodel yourself, so you will have to find a way to finance the renovation if you cannot pay out of pocket for your contractors.
Cons of Buying a Fixer-Upper:
- The turnaround time may take longer than expected
- You can potentially go over your budget
- Financing through a bank can be complex
- You may run into problems with the home that will cost more money and time than anticipated
The Benefits of Investing in an Turnkey Orlando Rental Property
The “easiest” option when investing in a rental property is to buy a move-in-ready property. Not that investing in any rental property is easy, but investing in a turnkey can allow for a quicker return on your Investment.
A turnkey rental property means there are no renovations necessary when purchasing the property. It is very simple to hand it over to a property management company to begin managing the property.
Unlike a fixer-upper, there are no headaches with going over budget or taking longer than expected to close on your property. Of course, you may want to add final touches, such as painting or decorative details, but you will only need to do the tiny final repairs.
Pros of Buying a Turnkey Rental:
- There are no renovations necessary
- You can stay within your budget
- Easy for your Orlando Property Manager
- The return on your Investment is quick
The Downside of Investing in a Turnkey Orlando Rental Property
When investing in any property, unexpected pitfalls are bound to happen. Investing in a turnkey property might mean a more significant investment is needed upfront because of its pristine condition. Just because your property is move-in-ready does not mean it is completely what you want your property to look like.
If you want top-notch tenants, you may consider sprucing up your property with unique touches and amenities that will invite the right prospect. When you purchase a turnkey property, there is a possibility that the last owner had outdated appliances, fixtures, wallpaper, etc. These items don’t necessarily need to be replaced, but if you want to make the most bang for your buck, it is crucial that you update them.
Cons of Investing in a Turnkey Rental Property:
- You may pay a hefty price for your property
- The aesthetics of the home may not be up to date
How can an Orlando Property Management Company help?
If you are curious about what options are available in the Central Florida area, sometimes it is best to consult a professional property manager, especially if you are an out of state investor. Property management companies in Orlando will know specific areas that produce the best returns for your investment property.
Rental Property Managers can view the property in person to tell you how much work a fixer-upper needs and inform you on how much that property will rent for once the renovations are complete.
Another great benefit to working with Orlando or Tampa property management companies to find and purchase an investment property is oftentimes you can get reduced property management fees for using their property management professionals to purchase the investment property.
Orlando Property Management Summary
There are pros and cons to investing in a fixer-upper and a turnkey property. Consider your current goals and long-term goals, as well as the position you are in financially. For example, a turnkey may be the better option for you if you have little time to spend on fixing a home but can afford to pay more. On the other hand, if you enjoy customizing your home that may cost less and best suit you and your future tenants, a fixer-upper may be the better option.
The Listing Real Estate Management is here to help you invest and manage your properties in Orlando, Florida, whether you decide a fixer-upper or a turnkey property is better for you!
Feel free to contact our property management team if you have any questions. We’re your go to boutique Orlando property managers. Cheers!