When it comes to investing in rental properties in Jacksonville, FL, choosing the right neighborhood is essential. If you want to know which neighborhoods are best to invest in Jacksonville, Florida, look no further.
How to Find the Best Neighborhoods
When it comes to investing in rental properties, one of the biggest mistakes that investors make is focusing on neighborhoods based solely on their proximity to where they live. While this may seem like a convenient approach, it can actually lead to a number of problems down the road.
Most of the time, prices in these neighborhoods are too high to produce positive cash flow. After monthly expenses such as the mortgage payment, property taxes, insurance, and expected maintenance costs, investors can find themselves coming out of pocket to support the property on a monthly basis. This can quickly eat into any potential profits and make the investment not worth the effort.
Another issue with this strategy is that it often encourages investors to become the property manager. However, managing a rental property can be a time-consuming and stressful undertaking, especially if you don't have experience in this area. There are professional property management companies that can do a better job at a much lower cost than you'll be able to achieve on your own. As an investor, your goal should be to maximize your returns while minimizing your workload.
By choosing the right neighborhood and working with a professional property management company, you can achieve both of these goals and set yourself up for long-term success.
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Qualities of a Good Investment Neighborhood
There are four key criteria that should be considered to maximize your returns and minimize risk.
Low Prices
Low prices are a key factor to consider during your investment journey with rental properties. Fortunately, Jacksonville offers some of the lowest median home prices in the country, making it an ideal location for real estate investors. Jacksonville's median home prices are 30% below the national median, which offers significant potential for investors looking to maximize their returns. (source: Northeast FL Multiple Listing Service)
When identifying neighborhoods to invest in, it's important to focus on workforce housing neighborhoods that have home prices slightly below the already low median income prices. You should look to invest in homes priced in the range of roughly $220,000 to $290,000. By focusing on neighborhoods with affordable home prices, you can minimize your investment risk and potentially achieve higher cash flow and overall returns over time.
High Rents
High rents are a crucial consideration when it comes to investing in rental properties. Jacksonville boasts some of the best rent-to-price ratios in the country. Jacksonville's rent-to-price ratio is 16% better than the national average, which means that rental property investments in the region can generate positive cash flow.
Focusing on workforce housing neighborhoods that offer the sweet spot where the rent-to-price ratio is at its highest while avoiding high-crime areas is key. Rental demand is typically high in these neighborhoods, which helps to increase the rent-to-price ratio and drive positive cash flow for investors. Investors also capitalize from above-average home price appreciation, which boosts the return on investment.
Surrounded by Jobs
In Jacksonville, there are several neighborhoods that stand out in this regard. The Westside is home to NSA Jacksonville (Jacksonville’s largest Navy base,) which creates approximately 20,000 jobs in the area. The Northside is home to multiple Amazon distribution and fulfillment centers, while the Arlington neighborhood boasts a range of job opportunities from Jaxport and Jacksonville University. Additionally, the Southside is anchored by the University of North Florida and the St. Johns Town Center.
All four of these neighborhoods are located within a 15-minute drive of downtown Jacksonville, which is the largest concentration of jobs in the city, boasting 55,000 jobs and home to three of the four Fortune 500 companies in the area.
Next To a Path of Progress
Investing in neighborhoods located on the path of progress is another strategy for rental property investors looking to maximize their returns and achieve long-term financial growth. Downtown Jacksonville represents the biggest opportunity for investors to earn above-average returns on investment over the next market cycle. While commercial buildings in downtown Jacksonville may seem like an attractive investment, buying rental properties in the neighborhoods that surround downtown can offer high upside without the additional risk.
Here’s why: Over the past seven years, there has been significant development in downtown Jacksonville, with $5 billion in development currently underway. As more people move downtown, more businesses are opening to serve them, which is increasing jobs and median incomes in the area. This flywheel effect is bringing more people, amenities, jobs, and higher incomes to the area and is similar to what has happened in other successful downtown areas such as Nashville, Tampa, and Austin.
Investing in neighborhoods located on the path of progress can help investors tap into this growing demand and achieve higher cash flow and overall returns over time. It's important to act quickly as prices in these neighborhoods are likely to rise as the area continues to grow and develop.
How to Get Started With Investing in the Best Jacksonville Neighborhoods
Investing in the best neighborhoods in Jacksonville, Florida, can offer excellent opportunities for rental property investors looking to maximize their returns. By focusing on neighborhoods that offer low prices, high rents, access to job opportunities, and being located on the path of progress, investors can tap into rental demand, generate positive cash flow, and achieve long-term financial growth and stability.
Currently, some of our favorite neighborhoods to invest in around Jacksonville include the Westside, Northside, Arlington, and Southside, which offer affordable home prices, a strong job market, and easy access to downtown Jacksonville.
With its growing population, booming job market, and ongoing development, Jacksonville is an attractive market for rental property investors looking to achieve high returns and long-term success. At JWB Real Estate Capital, that’s their specialty and they can help you get started.
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