Homeowners who are currently in forbearance with their homes in Orlando due to COVID-19 or other reasons are looking for ways to get rid of their homes before foreclosure hits their credit. If you are looking to purchase a rental for cheaper, this is one of the options to go. The BRRRR method stands for “buy, rehab, rent, refinance, repeat”.
You might have driven by a sign in an intersection with an advertisement that people will buy your house for cash. These are typically wholesalers or investors. Wholesalers are itching to make deals. It’s all about the chase for them. Once they have bought the home for cheap, they don’t want to spend the time to fix up the properties. That’s when they reach out to investors or potential homeowners like you who are interested in getting a property in Orlando for less than the market price. Some homeowners have gotten 4 bedroom pool homes for $50,000 less than the appraisal value. They will probably need some renovations, but you will build up some equity in the property.
You can get a construction loan if the property needs a little bit of work. This will also help build up some equity in the property when you go to sell later. The best way to find discounted construction materials like flooring, countertops, etc. is to make friends with other real estate investors in local meet-ups. Vacation rental property management companies will also have connections to local contractors they have worked within the past. A property manager can also help coordinate with them to make sure it gets done on time while you are home in your primary residence.
Once it is ready to rent, you are able to finally start producing income. A lot of our homeowners will renovate one room at a time once they’ve made enough income for the year. These are short-term rentals. Guests are looking for a fully equipped kitchen, functioning washer and dryer, tv’s in the bedrooms, etc. Homeowners who are buying previous vacation homes and turning them into residential often have furniture they are trying to get rid of as they have their own already. They will get rid of the furnishings for cheap. This is a great way to update your vacation rental for pennies on the dollar.
Since this is an investment property, you more than likely don’t live in the area. This is where you need to find a property management company that can rent out the property for you during your absence. We help many investors by overseeing their properties and produce income. Once they starting producing income for six months into their property, it’s time to get their property refinanced. Lenders will often give you a lower interest rate if there are renters in place consistently. It becomes less of a risk to them to see there is income coming in.
The last step is to repeat. Often homeowners who are buying their vacation home start small. They purchase a three-bedroom pool home. Once they are successful, they will buy their second property as either a four or five-bedroom pool home. The key is to make sure your properties are cash flowing. Find a property management company that will keep your property constantly booked so you can make your mortgage payments. Vacation homes that we manage are rented out an average of 240-260 nights annually. Once you have a great management company, you will confident to keep adding vacation rentals to your portfolio. You can fully focus on flipping properties while they continue to make you money. Are you ready to start investing?