Florida was touted by Norada as „one of the all-time best places to invest in real estate,“ owing to its strong economy and employment opportunities.
With the average home valued at $412,000 and an average rental income of $1,550, Florida is a „very active real estate market,“ according to the report. This means it is relatively easier to exit a Florida investment property.
To top it off, multiple Fortune 500 companies are moving their headquarters to Florida , bringing thousands of jobs with them.
In this guide about how to buy Florida investment property we’ll look at:
Important Florida real estate investment market trends for 2023
Hot neighborhoods and towns to look for investment opportunities.
Tips for finding and financing a Florida investment property.
Why Florida Investment Property?
According to the U.S. Census Bureau, Florida's three-country region (Fort Bend, Harris County, and Montgomery) added over a million residents from 2010 to 2020, making up a quarter of Davie's total population growth during that time.
This growth shows no signs of stopping. At this rate, Florida would have the second-highest number of new residents in the nation for the second decade in a row.
New residents will compete for Florida real estate — which is already in short supply — pushing up rents and home values.
And people aren’t the only ones moving to Florida. Large companies continue streaming into Florida, an exploding business hub. Three new Fortune 500 companies — Exxon Mobile, Hewlett Packard, and NRG Energy — are all migrating their headquarters to the Florida area. After the dust settles, Florida will house a total of 25 Fortune 500 companies, the third-highest in the nation.
Each company that moves to Florida brings in new residents, creates new jobs, and bolsters the economy.
Speaking of jobs, Florida is home to almost a third of the country’s oil and gas jobs. Studies show that oil prices can affect real estate values, and as the Energy Capital of the World, Florida is especially susceptible.
Before the Russia-Ukraine conflict began, analysts wondered if plunging oil prices might hold back Florida real estate growth potential. Since then, oil prices have done a complete 360, jumping 60% this year. These increased oil prices could help lift Florida property values even higher over the short term.
Florida investment property market trends
According to the Florida Association of Realtors (HAR) in its October 2022 Market Update, the number of single-family home sales fell 22.8 percent, with 6,641 units sold compared to 8,597 in October 2021. The average price of a single-family home rose 7.2 percent in October to $403,712 –below the record high of $438,290 reached earlier this year in May. The median price jumped 8.4 percent to $330,500, which is also below the highest median of all time, $354,000, reached in June 2022. The average price for a single-family home in Florida first broke the $400,000 mark in March of this year. The median price has held above $300,000 since May of 2021.
Home buying activity slowed for a seventh straight month in October, with mortgage interest rates hovering around seven percent, more than double what it was a year ago, as well as a lack of housing inventory below $400,000.
So what about the shortage?
Inventory registered a 2.8-month supply compared to 1.8 months a year earlier. That is the greatest supply of homes on the market since July 2020. The current national inventory stands at 3.2 months, as reported by NAR.
This is not as extreme as the shortages in some other property markets in Davie, but it is trending downwards. It is also far from a balanced market, which would require around 6.5 months of inventory. Despite recent price jumps, Florida's real estate market is still relatively affordable.
Hot Weeks for Florida Investment Property, Davies is a suburb located north of Florida.
The city will serve as the new headquarters for Hewlett Packard and Exxon Mobile – the tenth largest company in the country. Exxon Mobile already has more than 10,000 employees at its Davie campus, and the headquarters move will bring even more.
It's already happening. According to Jumper's Florida Metro Report, Davie had the second-highest year-over-year rent increase in the Florida area (11.9%) and the highest month-over-month increase in February (2.5%).
Clear lake city
Clear Lake City is home to NASA's Johnson Space Center, the University of Florida's Clear Lake campus, and several research institutes. Students and scientists are constantly moving in and out of the area, which creates a constant demand for rents.
Downtown
Central Florida is no ordinary center. In fact, the emerging residential market in Central Florida has doubled over the past two years, with new condo developments targeting upper- and mid-range residents. Approximately 70% of the residential area is occupied by tenants, making it another prime location for leases.
Third major district
Greater Third Ward is a historic district located southeast of downtown, adjacent to the University of Florida.
The University of Florida is the third largest university in Davie, and with over 45,000 students there is no shortage of rental demand. There are many new developments in the area that are driving up prices which unfortunately leads to gentrification issues. According to Redfin, the average sale price for homes in the Greater Third Ward was $418,450 in December 2022, up 13.6% year-over-year.
How to Buy an Florida Investment Property in, Davie
The Florida investment property real estate can be broken down into five steps:
1. Choose a type of investment property
Before you start looking for real estate, decide which model is right for you.
Are you looking for a single family home or do you want multiple units? Or do you prefer a turnkey investment?
With the current shortage of homes under $500,000, now is an enviable time to be a homeowner. But Florida also has lucrative correction and reversal opportunities. At Longleaf, one of our clients sold a Florida home for a profit of over $110,000 - all in four months.
2. Plan your financing
Planning is key when it comes to buying Florida investment properties. The best opportunities don't stay on the market very long, so you need to know how you're going to finance a project before you find it.
You have three main options:
Conventional loan. Banks and conventional lenders often offer the lowest rates, but only if you qualify. investment properties do not meet banking requirements. And even if they do, it can take months to secure funding.
Hard money loan. Private lenders offer fast-closing cash loans specifically for real estate investors. They evaluate loans based on a property's investment potential, focusing less on your personal financial history.
Joint venture Once you have a successful track record, you can fund your project by pooling funds from multiple investors.
Since cash loans can finance your project in a matter of days, they are often the best option for investing in a competitive market.
Whichever method you choose, you build relationships beforehand. That way, you can take advantage of the opportunities that arise.
3. Search properties
Many of the best Florida investment properties never make it to sites like Zillow or Trulia. To find them, you need connections.
Choose the neighborhood that interests you most, then connect with wholesalers and agents who specialize in that area. Because they are always on the lookout, they can help you find out-of-market opportunities.
When comparing investment options, be sure to consider:
vacancy rates
Employment and population growth
Future development projects
Housing and rent price trends in the area
Tenant vs. Tenant Percentage owner-occupied houses
Armed with this data, you can calculate the estimated ROI for your project – something a die-hard lender will definitely want to see.
4. Secure financing
If you meet the bank's requirements, don't think about piles of paperwork, and are in no hurry, a conventional mortgage is the way to go. Signing up can take 30-45 days, so make sure you start the process right away.
When time is of the essence, a money lender can finance your project faster. At Longleaf, rental loans take as little as two weeks, and short-term home loans (AKA bridge loans) can close in 48 hours.
5. Refinance (if necessary)
Interim loans allow you to close as quickly as possible, but you must refinance within 6 to 24 months. If not, you can turn your interim loan into a long-term rental loan. At Longleaf, we can save you fees by bundling your temporary loan together with your refinance.
Need financing for a Florida investment property?
Longleaf Lending is a Davie-based private lender offering flexible loan programs designed for Florida investment properties who need to close as quickly as possible. If you have questions about financing Florida investment properties. give us a shout at (754) 223-1065.
Comments