Investing in Florida Real Estate

Welcome_to_FloridaThe Sunshine State – we have it all…. some of the most beautiful sandy beaches in the world along 2300 miles of coastline and more than 11,000 miles of rivers, streams and other waterways, great weather year-round, plenty of things to do throughout the state, growing economies in our cities, home to innovation and technology, and the great outdoors. Florida is the golf capital of the world, with more courses per capita, and welcomed over 112 million tourists last year. We have a wide range of homeowners – some live in their homes year-round, others buy rental property to produce a stream of income or hope to see their investment grow, and still others own second homes and getaways for their intermittent use. If you are considering buying property as an investment in the Sunshine State,  here are a few things to consider:

  • Buying an investment property is meant to make you money, but you will need to spend money first. Do you have an adequate down payment and are you able to make the monthly mortgage payments if you can’t secure the renters?
  • Make sure you have reserves to make the mortgage payment in the event the property has to sit empty for a while.
  • If you are buying investment properties that are fixer-uppers in order to flip or to keep, get a qualified inspection before you place an offer and budget correctly for any renovations needed.
  • Consider what budget you will need for continual maintenance.

Because real estate is cyclical, property values over the long-term are an unknown. However, history has shown that home prices do increase over time. What returns can you make on an investment house? Time’s Money section suggests that big Wall Street-backed firms that own thousands of rental properties aim for a 5%-7% return on their homes. Individual investors, especially those who don’t have to pay support staff, should shoot for at least 10%,

Keep in mind that you can’t expect to charge enough rent to cover all of your costs – mortgage, property taxes, maintenance – but you can expect to recover some of them, which will help pay off the principal on the home. There are also some tax advantages that you should be aware of:

  • Interest, taxes, insurance and other expenses are deductible against the property’s income, while losses can usually be deducted against your other income.
  • Depreciation – basically an allowance for wear and tear – is another tax deduction, usually over 27.5 years, or 3.636% of the purchase price of the buildings (not the land) per year.
  • Rental properties can be sold, and the proceeds rolled into other rental property without paying capital gains taxes.

Renters are a huge consideration for rental investors. While background checks are available and there is insurance that can cover bad renters, but be prepared for those who don’t pay the rent, destroy or damage the property or cause you other issues. You will need a repairs budget. If your home is a vacation rental, have you researched sharing-economy outlets like AirBnB to lessen the burden?

Buying a home as an investment property could be a good idea if you are prepared.

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cropped-investment_properties_network_iconInvestment Properties Network takes a team approach to finding our clients the very best investment opportunities available in the Florida Real Estate market. With offices in Miami and Orlando, we cover the state, thoroughly researching every opportunity we determine is a fit to meet an investor’s criteria. This approach is the key to our success in focusing on international investors, ranging from first-time buyers of residential properties to the experienced investor in commercial and income-producing property. Each client is treated with the same care and attention benefiting from our experience in finding the right real estate investments to suit individual investment needs. Contact us today!  Tel: (305) 306-9353, Email: info@InvestmentPropertiesNetwork.com. Visit us online at www.InvestmentPropertiesNetwork.com

 

 

Is the home-ownership dream over for South Florida?

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South Florida Real Estate Market Update……

Financial independence and quality of life seem to be trumping home ownership for people in the South Florida real estate market. Developments in pedestrian-friendly neighborhoods in areas where amenities, entertainment options and new employment opportunities are growing are luring a pool of renters, especially millennials, into the rental markets of the tri-county area of South Florida. A lot of people are selling their big houses in the outlying areas of the cities dotting the coastline and moving into concentrated urban-living situations.

According to the Real Deal, web-based reporting on South Florida real estate news, 10,200 new apartments are expected to come to market in the tri-county region, compared to 8,700 in 2015, marking a 17 percent increase. That includes 5,500 new apartments in Miami-Dade County plus another 4,700 units in Broward County and Palm Beach County combined.

Ten-X.com, a real-estate research platform, reports that apartment vacancies in Miami have been on the rise as of late, reaching 4.7 percent in the third quarter of 2016. While rents are currently at an all-time high, growth has already begun to decelerate. They point to further slowing, predicting annual growth falling below 1 percent by 2019. Though its economy continues to grow, data points to a stabilizing effect that should continue to give multifamily investors pause. 

A lot of micro-apartments are coming on the market. These are small units, usually under 500 sq.ft., with many being studios. Rents range from $995 to $2,000 or more a month. Micro units meet the needs of younger people who are remaining single. According to 2015 statistics released by Harvard University’s Joint Center for Housing Studies, adults under age 35 made up 19 percent of U.S. households but less than 10 percent of homeowners.The homeownership rate for 35-44 year olds had fallen most and was down 5.4 percentage points from the 1993 level and back to a level not seen since the 1960s. With renters often spending 40% percent to 50% percent of their salaries on rent alone, these tiny living quarters are a welcomed relief from the higher-priced larger apartments on the market. However, certain land development regulations and zoning codes may have to be revised from the minimum square footage many cities in South Florida currently have on the books. Allowing developers to build smaller apartments will make financial sense for developers and boost affordability for users.

The Harvard study reports there has been record growth in rental demand. The share of US households that rent their housing rose to a 20-year high of 35.5 percent in 2014, marking the 10th consecutive year of robust renter household growth. Renter household growth has averaged 770,000 annually since 2004. While soaring demand is often attributed to the millennials’ preference to rent, households aged 45–64 in fact accounted for about twice the share of renter growth in 2004–2014 than households under the age of 35.

Fort Lauderdale was ranked as the third-best metro market for buyers of multifamily properties, with monthly rent per unit projected to increase from $970 in 2015 to $1,169 in 2019, marking a 20 percent growth. Miami was ranked as the third-best market in the nation for sellers of rental buildings, with monthly rent per apartment projected to increase from $1,240 in 2015 to $1,359 in 2019.

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cropped-investment_properties_network_iconInvestment Properties Network takes a team approach to finding our clients the very best investment opportunities available in the Florida Real Estate market. With offices in Miami and Orlando, we cover the state, thoroughly researching every opportunity we determine is a fit to meet an investor’s criteria. This approach is the key to our success in focusing on international investors, ranging from first-time buyers of residential properties to the experienced investor in commercial and income-producing property. Each client is treated with the same care and attention benefiting from our experience in finding the right real estate investments to suit individual investment needs. Contact us today!  Tel: (305) 306-9353, Email: info@InvestmentPropertiesNetwork.com. Visit us online atwww.InvestmentPropertiesNetwork.com