From Miami Beach to Orlando, Florida remains the top destination for Canadians. But are there still bargain properties available the savvy investor?
Real estate investing anywhere in Florida starts with the weather. Throw in world-famous attractions, a large student population and economic development projects and you’ve got all the ingredients for a successful investment.
Home to Disney World, the University of Central Florida and a short distance to the Atlantic Ocean and places like The Kennedy Space Center in Cape Canaveral, the area is an investor’s paradise, according to Steve Perez, managing partner of Altura Investment Realty in Orlando.
He concurs that weather is an advantage, especially when it comes to renovating investment properties, as construction can continue year-round. With the population continuing to grow, Perez says demand for housing is strong, as is the supply.
“We’ve had 35 per cent appreciation over the past two years,” he says. Prices have dipped though recently after a hyper-exaggerated market due to large institutional buyers snatching up thousands of homes. “Many of them have now stopped and the market has begun to stabilize. 2014 looks much better for the individual investor because the market is less competitive.”
Homes prices increased throughout Central Florida compared to statewide during 2013, according to a report released by Florida Realtors. In the Orlando Metropolitan area, which includes Orange, Seminole, Osceola and Lake counties, the median home price rose 20 per cent to a median price of $165,000 – exceeding the 15.9 per cent statewide increase and edging the region closer to the statewide median home sales price of $168,000.
According to Perez, single-family units in established neighbourhoods are the best investment and the average price for these in $60,000 to $100,000 for rentals and $80,000 to $150,000 for flips. He says their average rental deals goes for about $70,000 and expected rents of $1,100, with cap rates anywhere between 12 to 15 per cent.
In the communities near Orlando’s theme parks, yields are even better, renting out properties to tourists for weekly rents of $1,000 to $1,500.
Perez says the supply of housing in the area is steady, as Florida is a judicial state when it comes to foreclosures. “This means that the banks have to go through a lengthy foreclosure process and have a back log of homes or shadow inventory. The banks have been releasing this inventory slowly and we feel there are at least three years left of undervalued inventory.” Perez says there are currently 14,732 homes listed on the Orlando MLS and that thousands of FSBOS that will be sold in 2014.
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Investment Hot Spots:
Dégelis, Gull Island, Chaswood, West St. Paul, Cape St. George