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Hi, welcome back to The Wealth Wagon, I hope you had an amazing Tuesday. Today we are back discussing everything you need to know for Real Estate Investing. Today we have a great market snapshot! Enjoy!

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Real Estate Investing

Market Snapshot:

Orlando’s real estate market remains a hot spot due to its booming tourism industry and rising population growth. Investors are drawn to its mix of short-term rental opportunities and long-term residential growth.

• Median Home Price: $390,000 (as of September 2024)

• Year-Over-Year Price Increase: 5.8%

• Rental Market: Strong demand with short-term rentals averaging $3,000/month in high-tourism areas.

• Vacancy Rate: 3.1%, indicating steady occupancy, particularly in neighborhoods close to Disney World and Universal Studios.

Deal Of The Day:

Beachfront Condo in Miami, Florida

• Property Type: 2-Bedroom, 2-Bath Condo

• Price: $705,000

• Rental Income Potential: $72,000/year (short-term rental market)

• Cap Rate: 6.4%

• Highlights: Located in Miami Beach, this condo has direct beach access and comes fully furnished, making it a turnkey investment. Miami’s year-round tourism market ensures consistent rental demand, while property values continue to rise, up 10% year-over-year in this area. This is an ideal investment for those looking for both cash flow and appreciation.

Real Estate Tip:

Investment Strategy:

A wraparound mortgage allows you to take over an existing mortgage while adding your own financing on top, creating a "wraparound."

• How It Works:

  • You negotiate with the seller to take over their mortgage at their existing lower interest rate.

  • In addition, you create a new loan (the “wrap”) where you pay the seller more than their current loan payments.

  • The difference between your payment and the seller’s original mortgage goes into their pocket, while you enjoy better financing terms.

• Example: A buyer takes over a seller’s mortgage with a 4.5% interest rate and adds a new loan at 5.5%, which is still below the current market rate of 7.0%, making it a win-win for both parties.

Current Interest Rates:

Orlando, Fl

• 30-Year Fixed Residential Mortgage: 6.5%

• Commercial Loan (5-Year Fixed): 5.99%

• Investment Property Loans: 6.75% for single-family homes, up to 7.5% for multi-family units
  Higher interest rates are impacting affordability for new buyers, but experienced investors can leverage creative financing strategies, such as seller financing or adjustable-rate mortgages, to navigate the higher costs.

Economic Conditions

• Unemployment Rate: 3.3% (below the national average of 3.8%)

• Tourism Impact: Florida welcomed over 100 million visitors in the last 12 months, boosting demand for short-term rental properties in cities like Orlando and Miami.

• Inflation: Rising construction costs, up 5% year-over-year, are affecting new developments. However, the influx of high-net-worth individuals from states with higher taxes (like New York and California) is pushing up luxury home prices and keeping the overall real estate market strong.
  For investors, this economic growth continues to support rental price increases and property value appreciation, especially in vacation rental-heavy markets like Orlando and Miami.

How to Start Investing with Minimal Capital

Real estate investing doesn’t always require a large down payment. One strategy for those with minimal capital is house hacking. This involves buying a multi-family property, living in one unit, and renting out

the others to cover the mortgage. For example, a duplex in Tampa, Florida can cost $

500,000, but with just a 3.5% down payment using an FHA loan, you can get started with around $17,500 out of pocket. The rental income from the other unit could cover a significant portion of the mortgage, making it a great way to build equity while minimizing monthly costs.

Another method is partnering with other investors. Pooling resources with friends or family allows you to invest in larger deals. This could mean splitting a $1 million investment property in Miami, where each partner puts in $100,000 to cover the down payment and reserves. In return, all partners share in the cash flow and appreciation.

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Key Takeaways:

• Orlando Market Snapshot: Strong tourism demand, with home prices up 5.8% YoY.

• Deal of the Day: Miami Beach condo, $705K, generating $72K/year in rental income.

• Real Estate Tip: Networking can help you find below-market deals and off-market properties.

• Investment Strategy: Wraparound mortgage allows for creative financing, taking advantage of lower interest rates.

• Interest Rates: Multi-family investment rates are 7.5%; higher rates mean creative financing is more crucial than ever.

• Economic Update: Florida’s low unemployment and high tourism numbers continue to push real estate demand, especially in short-term rental markets like Orlando and Miami.

Subscriber Q&A

Q: What is a mortgage pre-approval, and why is it important when buying a home? - Subscriber
A: A mortgage pre-approval is a lender's assessment of your financial situation to determine how much they are willing to lend you. It’s important because it gives you a clear budget for your home search and shows sellers that you're a serious buyer, which can help in competitive markets.

Q: What are the key differences between a fixed-rate mortgage and an adjustable-rate mortgage (ARM), and how should buyers decide which is better for them? - Subscriber
A: A fixed-rate mortgage has the same interest rate throughout the loan term, providing stable and predictable payments. An adjustable-rate mortgage (ARM) has an initial fixed period with a lower interest rate, but the rate adjusts periodically based on market conditions after that. Buyers should consider their long-term plans and risk tolerance—fixed rates are better for those seeking stability, while ARMs may be more attractive if you plan to sell or refinance before the rate adjusts.

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That’s All For Today

I hope you enjoyed today’s issue. If you have any questions regarding today’s issue or future issues feel free to ask. Come back tomorrow for information on how to grow your income and wealth. I hope to see you.

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