As a real estate investor, aspiring rental property owner, or landlord in Orlando, Florida, you've likely seen many different rental property asset types. If you're a seasoned real estate vet, you've probably debated with your peers which property type you like the best and which you believe in producing the most amount of income and profit.
There are many different rental property forms and different asset types that vary greatly, especially in the Orlando real estate market. We'll be covering the various options rental property investors have in the Central Florida area and what pros and cons come with each type of rental property asset type.
Let's begin with the basics. What are the different types of rental properties in Orlando, Florida?
You must determine your own needs and goals you wish to accomplish with the rental property investment (because each rental property asset can produce different outcomes and have its own set of pros and cons.)
As a full-service property management company, we believe that owning a rental property in the Orlando market is a secure investment. Before we get into the different rental properties in Orlando and the pros and cons of each, we wanted to provide you with all the benefits of owning any rental property.
Pros of Owning a Rental Property
- Equity Growth & Appreciation
- Tax Benefits
- Passive Income Source
- Retirement Planning & Security
- Investment Diversification
We firmly believe that owning a long-term rental property in Orlando has excellent benefits, and the future looks bright. Now, let's get into the specifics of each rental property type.
Single-Family Rental Properties in Orlando
The single-family rental property market in Orlando is Hot! Just ask Dream Finders Homes, making a push for build-to-rent single-family homes or REIT firms like American Homes 4 Rent, and Invitation Homes, our 10's of 100' thousand SFR. These national companies have scooped up single-family rental homes, and Orlando, Florida, is their feeding grounds. Most real estate investors focus their time and energy on single-family rental homes. As made famous by Bigger Pockets, the BRRRR Investing strategy allows an investor to purchase a rental asset that is 1. Buy Cheap, 2. Rehab the Property, 3. Rent the Property, 4. Refinance and 5. Repeat. The BRRRR technique is primarily single-family specific and can be used for all types of real estate rental properties.
Single-family rental homes in Orlando are incredibly competitive, and according to Seeking Alpha, "HOT." Single-family rental fundamentals are:
Single-Family Rental fundamentals are among the strongest in the REIT sector. SFR REITs reported near-perfect rent collection, record-high occupancy rates, and rent growth eclipsing 5% in their recent reports.
Graph Courtesy of RentCafe.
Pros of Owning a Single-Family Rental Property in Orlando
- High Single-family Appreciation
- Excellent Rental Demand
- Easy To Sell If Needed
- High Occupancy Rates (While Occupied)
- Higher Rental Rate Increases (Year over Year)
Cons of Owning a Single Family Rental Property
- Vacancy: When a Tenant Moves Out, You Are At 100% Vacancy Until Re-leased.
- Numbers Sometimes Don't Work with Purchase Price
- Location, Location, Location (can adversely affect rental rate)
- More Expensive Per Unit than Multi-family
- Rental property In An HOA ~ High HOA dues (if applicable)
- Very Competitive Among Other Real Estate Investors
Townhome Rental Homes in Orlando, FL
As a newbie buying rental property in Orlando, Florida, you may very well be thinking a townhome is excellent because "I only know how to take care of the inside of the property." The Homeowners Association will just handle everything outside. This is true on the surface but at what cost? Here are the pros and cons of owning a townhome rental property here in Central Florida.
Pros of Owning a Townhome Rental Property in Central Florida
- Exterior And Community Maintenance Handled
- Amenities Included (pools, tennis courts, clubhouse, dog park, playground)
- Higher rental rates due to amenities
- Typically In A Great Location
- Rental Rates Inline With Large Renter Population
- Extremely In-demand
- Rent Quickly
Cons of Owning a Townhouse as a Rental Property
- Community/Association Dues
- Financing Challenges (similar to condos explained below.)
- Good Resale Value
- HOA Management Providers (no control)
Condo Rental Properties in Orlando Florida
There are many different condominium options available in the Central Florida area. Condos have many of the same pros and cons as townhomes, although they have slight differences from rental properties.
Pros of Owning a Condo as a Rental Property
- Typically More Affordable Than Single-Family Properties In Orlando
- Community And Highrise Appreciation
- Great Security/Guard Gated
- Located in Great Areas (especially in Downtown Orlando)
- Amenities Included
- Water, Trash & Sewer Sometimes Included in HOA Dues
Cons of Owning a Condo as a Rental Property in Florida
- Lack of Privacy & Neighbors
- Association Fees
- Pet Restrictions
- Limited Parking
- Harder And Take Longer To Sell (if needed)
- Take Longer To Lease
Multi-family & Apartments in Orlando Florida
Multifamily and apartments remain one of the best markets in the nation for occupancy and rate increases for real estate investors. As a professional multifamily property management company in Orlando, Florida, we see our managed multifamily and apartments performing very well. Although, in the Central Florida market, the inventory is shallow. Multifamily assets are few and far between.
According to RealPage, "among the nation's top five annual rent growth performers, Orlando recorded the best occupancy rate and was only topped by Phoenix for the best occupancy rate growth and rent growth. So, let's dive into the pros and cons of owning a multifamily rental property in Orlando.
Graph Courtesy of RealPage.
Pros of Owning a Multifamily or Apartment in Central Florida
- Cheaper Price Per Unit
- High Cash Flow
- Lower Vacancy Risk Than Single-family Homes
- Scalability/Portfolio Growth
- Single Location (easier for management and owner)
- Increased Cash-flow Opportunities
Cons of Owning a Multifamily or Apartment
- Higher Tenant Turnover
- Longer to Lease
- More Maintenance Requests
- Owner May Pay for Water & Trash (depending on how the apartment is metered)
- Less Available
- More Strict Regulations
Property Managers Conclusion
Orlando and Central Florida have many different rental property options for real estate investors and landlords alike. The future of the rental market in Orlando will be bright. We hope this guide allows you to understand better and determine the types of rental properties available in Central Florida and each rental property type's pros and cons.
If you are looking to purchase a rental property in the Greater Orlando area or are looking for property management services for your Central Florida rental property, Contact Us Today. We are Orlando's best choice for property management services!