Florida Real Estate: Investing is Not Just for Snowbirds Anymore!
I am not old enough to remember the Florida Orange Growers Association ads with Anita Bryant telling people “Orange Juice! Not just for breakfast anymore!”. But there are a lot of people who wax nostalgic when they think of their parent’s station wagon loaded with vacation gear, headed down Hwy. 27 through the lush Florida Lake Wales ridge orange groves. The sand of the pristine blue Gulf was so close you could taste the salt. You could even stand your little sister’s pestering “Are we there yet?” as you watched first wide, Spanish moss covered oaks, then groves, then finally palm trees out the windows.
“Ahhh, Florida.” And now you finally get to be there 365.
- Florida is growing up fast – really fast
- Interest is down, home values are going up – jump on Florida?
- So where is the best place to buy a house?
- Boomers may find some future needs have challenges getting met
- Residential investment property has largely dried up
- Should I be looking for vacation rental property in Florida?
- Waterfront property is still a relative bargain
- What is going on with sea level rise?
- What about storm damage and insurance?
- So what is the best kind of real estate to invest in?
- Business and commercial investment property in Florida – what about that?
- I am my own boss, on my own hours, kind of like being retired…
- This business coaching program did not resemble anything I had seen
Florida is growing up fast – really fast
According to the January, 2019 AARP The Magazine, baby boomers, now age 65 and being those born 1946 and 1964 are retiring at the rate of 10,000 per day. The boomers grew up in a time post world war showered in a land full of prosperity and abundance. The free love and hippy generations of the ‘60’s gleefully turned to prosperity, materialism, comfort, and self-indulgence, fueled and approved by parents who wanted it easier for their kids than they had it.
And easier is a key word for many boomers. That includes dealing with winter, not the thing most of them want to do.
They are headed to Florida en masse. Rust belt states are loosing population, and Florida has become the 5th fastest growing state in population according to the January 3, 2018 Des Moines Register. Many boomers soon to retirement already own property in Florida while working their last couple years in the Rust and Snow Belt.
You have to put that in perspective, though, since the “official” population stands at 21.7 million, and does not count the millions of snow birds (winter residents) nor the dual property holding boomers, still licensed in their home states while finishing up their careers. That brings the state to a functional population of around 27 million, with an overall increase in state population of 11.7% since 2010. Some areas have seen in excess of 40% per year in the hottest properties in suburbs of Naples and elsewhere.
Interest is down, home values are going up – jump on Florida?
Boomers are planning ahead, too, trying to beat the real estate value increases in Florida while mortgage rates are still low. And because of that, residential property in Florida is booming. Trying to guess the emerging markets is the challenge, though.
Florida’s mortgage and real estate industries took a huge hit, 3rd in the nation on foreclosures, during the recession post 2007’s peak. Part of the problem was a market grossly bloated by horrifically overpriced real estate that tanked far worse than most places in the nation, often loosing as much as 80%.
Much of that gross overpricing was due to market demand by the first wave of boomers heading down to retire.
But the hit did not last long. Florida’s building never really slowed down, at least around Orlando, Naples, most the Treasure and Sun coasts, and points in between. The builders were looking into their crystal ball, which showed more people retiring soon and wanting to shed their parkas for flip flops. The educated gamble worked, and their building binge has only increased, rental prices have increased, and so has traffic. After all, the boomers escaping snow had to go somewhere. Why not Florida?
So where is the best place to buy a house?
What does all that mean for investment property in Florida?
It means many of the flip houses that flopped during the recession – massive numbers of foreclosed houses were in every part of Florida – are gone and have been gone. Property has gone up, 7.9% last year, and a prediction of 4.9% by Zillow for 2019. Zillow only admits to a 20% drop in Florida values from the peak in 2007, but some areas like the Gold Coast and Daytona area saw up to 70% decreases. Those areas are up 25% or more in just the past 3 years and had already recovered some in the five years previous.
Orlando, according to Forbes Feb. 2018, “Best Buy Cities: Where to Invest in Housing in 2018” states Orlando was up 35% over 3 years, and considered Orlando the #1 hot spot. Why? Orlando is still 22% below national housing median costs. That is one reason the boomers are flocking. Orlando has a 3 yr population increase of 7.6% alone. Jacksonville stands at 5.9% in that same time, Last year Orlando averaged 9% increase in property values on homes. It is predicted to gain 21% by 2021.
Orlando has a few of serious issues, too – sprawl, resources, and infrastructure needs. So do Miami-Ft. Lauderdale-West Palm (South Florida), Jacksonville, and Tampa. Traffic is atrocious, air quality has become an issue, and crime has increased. Those issues face nearly all of Florida, were water, in particular, and infrastructure, such as roadways, police and fire protection, and local resources especially for seniors are often seriously lacking.
A right to work state, Florida has limited state and local resources. Water, sewage, brush and forest fire protection, are all very big issues. Forbes is also quick to say fast growth markets tend to be overpriced markets very, very quickly, making investment risky at best. Medium priced slower markets tend to have lower risk, reasonable returns and way less stress.
Boomers may find some future needs have challenges getting met
Programs for the elderly are lacking, health care needs such as primary providers are popping at the seams, and finding home health care is a big challenge and extremely expensive. And you might not find Florida the retirement bargain you once thought of, as cost of living has greatly increased. Long term average rental rates have outpaced Minneapolis-St. Paul.
So why isn’t this a paradise for investment?
Residential investment property has largely dried up
What Forbes is talking about is a working couple relocating and owning a home, not investment property. Most of the cheap houses, especially those coming out of foreclosure you can make good money on have evaporated, and inventory is very short even on fixer uppers and “as is” property. You have to be able to locate a decent property in a good school district (resale always has to be a consideration for down-sizing later) that you can afford, and afford to fix up.
And speaking of fixer uppers, you better be able to and have the time to do the work yourself. Trades are all short handed in Florida. It may take you quite a while to get everything done that needs done on a property, and Florida real estate tends to be somewhat seasonal. Miss the snow birds and you wait until next season. Rental property also is subject to a higher transient rate than nearly anywhere else in the nation.
Should I be looking for vacation rental property in Florida?
So if I were hunting good investment real estate, would I hunt residential in Florida? Or a vacation property like a condo? There are many horror stories about buying a condo to rent out in Florida, many of them revolving around Spring Break and the notorious damage done by students. (In contrast, Bike Week in Daytona has few issues other than traffic and people hitting motorcyclists.) Even Airbnb has people qualify their ages and what events they are coming for.
I mean, after all, Florida is about this, right?
Waterfront property is still a relative bargain
Florida might, however, be the one place you can afford to buy oceanfront property, as Florida is the lowest cost per foot average of waterfront property in the nation. It will still run you double what a standard house will, though. The next challenge is the availability of insurance coverage. Many areas find premiums the highest in the nation.
Why? Two reasons – hurricanes and sea level rise.
Florida has experienced three major storms in three years. They had 5 in 2004 which put many insurance companies out of business, leaving property owners hanging. According to the National Hurricane Center in Miami, hurricane strength and damage potential has increased and will keep increasing, due to global weather and ocean current changes, and warming oceans.
One of the best things to come out of 1992’s Hurricane Andrew was a vast improvement in building code. The Miami-Dade Hurricane Code has become required for most new home and commercial construction in all parts of Florida. The painful lessons learned from decades of shoddy workmanship and shaky inspections coupled with developer leeway via old boy politics came to an end with the most expensive storm the US had seen until Katrina, Harvey and Irma years later. Did I say there have been 3 devastating storms in three years? Two of which have been the two costliest storms in U.S. history?
What that means is you can buy a building or house with some assurance it will survive a major storm intact. That was not always possible in Florida. You might, however, want to build it on stilts.
What is going on with sea level rise?
Sea level rise, regardless of your opinion, is a real fact. The State of Florida has been quietly preparing for major socio-economic impacts within the next decade due to sea level rise. Miami, Ft. Lauderdale, St. Augustine, all the way to Brunswick, GA take sea water breeching the seawalls or backing up through city sewer and storm water systems every binaural, spring, or king tide day now. That translates to several days a month, and have been for a couple years.
There are communities in Florida like Edgewater below Daytona that are facing the entire town being flooded by 2030 with 11-30 inches of water per the State Consortium on Sea Level. Discussions have not even touched on all the areas off canals built from trenched marl, or blackwater swamp areas in Big Bend, salt marsh below Ft. Myers, or areas along the Intracoastal Waterway. Tallahassee has been real quiet as it is bad for business if they state the facts. They have been working on it for 8 years.
What does that tell you?
What about storm damage and insurance?
One of the biggest issues on oceanfront property is beach erosion. Often the beach is not the only thing to get destroyed, as storm damage, even high tides, can take out roads, utilities, and in some cases, wash out your septic system. Those are all reasons that insurance companies do not like to write oceanfront property and charge you accordingly.
The Miami Herald, Nov. 27, 2018 in “The Invading Sea: New Florida Governor Must Tackle Sea Level Rise and Climate Change” noted that not only was Florida having issues due to water and weather, but Florida had to also face flooding, increased fire issues, ground water contamination, rapid decrease in natural areas and species, fresh water springs in serious jeopardy, sewers, chemical dumps, the huge, and dying Indian River Lagoon, and even military ordinance issues within the state. Even those endorsing incoming governor Ron deSantis, such as South Florida’s Ron Bergeron, who headed the Florida Fish and Wildlife Conservation Commission for many years, wryly joke about the name given the study and used by the State – “Paradise in Trouble”.
On the good side, property taxes in general are slightly below national average, and Florida has no personal income tax. The state also does not have estate taxes nor intangible taxes. Homestead exemptions are liberal once you actually reside in state.
All that adds up to comforting reasons for baby boomers to be flocking to warm Florida winters and no snow to shovel.
What that means for an investor is you have to look and try and guess where they are next headed to.
You can buy “as is” property and do the refurb and hope for a modest profit after all that work. It is extra challenging since boomers are the key buyers, and boomers generally do not want a house or building that has maintenance if they can avoid it. They are buying new homes in developments with HOA’s and a golf course.
So what is the best kind of real estate to invest in?
Retiring means turning in the key, not having to hunt turn-key. It is supposed to be a lot easier, right?
How about digital real estate? That is what a lead gen property is, and most people run their business at home with a laptop and an easy chair. You get to name your own schedule, work as much or little as you want, at what times you want pretty much. A lead gen business is a perfect match for retirees not yet quite ready to retire. If you want something to make some decent $$$ and still get in a round of golf, check out this link https://www.bestrealestatedirectory.com/lead-gen/ about the fastest growing business on the internet in 2018 according to businessreivew.org.
When I am investing money, I do not want to have to wonder, dig, research for weeks, probably visit, and then second guess Mother Nature about my money being tied up in a property. I want a safer, surer investment. I would rather have my view be this
and let someone else deal with the hurricanes and beach erosion.
I would rather be putting my extra money into my lead gen business where I know it is safe from predators, no matter how many legs they have.
Business and commercial investment property in Florida – what about that?
A lot of the baby boomers suffered significant losses to their 401(k)s during the down swing, and many of them are hunting for second income streams to offset those loses. There are a lot of businesses up for sale right now in Florida.
There are lots of companies out there ready to take your hard earned cash for a business.
Just make sure they do not take you.
Florida, sadly. has a long history of people taking people, be it property in a swamp or unscrupulous unlicensed contractors post storms or preying on the elderly. Due diligence and much caution are advised.
Any number of biz-you name its have sprung up trying to “assist” boomers in buying a business. Sellers are even utilizing Craigslist to avoid brokerage fees. Buying a business usually involves purchasing the good will, trade secrets, inventory, and other stuff that make the actual operation possible. A business also has to be somewhere, whether it be a room in the buyer’s house, or a commercial space to have all their “stuff”.
The old catch phrase of “location, location, location” really hits true in commercial property in Florida right now. Some areas are booming – such as Sarasota, Venice, parts of Ft. Myers, Naples, areas around South Florida, Orlando, and Ponta Vedra, SE of Jacksonville. And some of those same areas, plus many others – may as well have scabbies when it comes to off-loading tired old commercial buildings.
One only need drive down Hwy. 1 or get off 441 to see strip malls nearly empty, shopping centers with lots of large vacant stores, and free standing empty buildings. A few have sold and are being bulldozed for urban renewal – mostly multi-family housing, because rentals are getting scarce and expensive in Florida. A big challenge with commercial redevelopment in Florida is dealing with old boy politics, city and county councils, and infrastructures set up to make most of their money off impact and permitting fees. Commercial investors have deep pockets, right?
It is interesting when you try and find information, blogs, or articles on investing in Florida, all of them are written by commercial property investment groups. They try to convince you that Florida is tax friendly, has low unemployment (because so many of them are retired!!) is “relatively inexpensive compared to New York and Los Angeles” (well, what isn’t??) and is the #1 investment location for foreign capital.
So even if you get ahold of a decent little shopping plaza, what can you expect? 10.6%.
Great ROI, right? Not so fast. Over 20 years. And that is the national average per investopedia.com. Numbers for Florida are not so forthcoming. A lot has to do with so much excess property sitting vacant in places like most of Orlando’s suburbs, Daytona to Titusville to Cocoa Beach and south, large chunks of Jacksonville, vast expanses of the panhandle, and what little of the keys is still intact after Hurricane Irma.
You see, there is huge commercial property growth – a lot of it new construction – in high rent districts like Sarasota and Wellington – but not a massive amount of anything in the vast remainder of Florida.
I, for one, do not want to have to drop several million dollars to get a piece of commercial real estate that may have a 2-4% rental ROI. All I need is one vacancy and I have lost my shirt.
Besides, why if you are retiring to Florida do you really want a business to tie you down 24/7? If you do, are you already underfunded and need the cash flow? That is one reason there are so many business for sale in Florida. People coming down and thinking it will be easy. It isn’t. Running a brick and mortar is just as hard in Florida as anywhere else.
I am my own boss, on my own hours, kind of like being retired…
I would rather not have to play Russian roulette with my money. My lead gen business regularly returns 80-90% profit margins to me, day-in and day-out. I travel when I want. Let me explain how I got into this wide open, ethical, honest, business model.
After graduating from college with a degree and a new corporate $35K job, I quickly realized that if I really wanted to make money, it had to be doing something besides working for someone else. So I started to hunt. I tried MLM’s. I tried reselling inventory. I even tried online as an Amazon seller. I made a little, had a lot tied up in inventory, and worked a lot of extra hours. I had no life. I did this for several years, then I read an article about Dan and the lead gen coaching program he has written.
This business coaching program did not resemble anything I had seen
I have to admit, I was sort of jaded by then, but Dan came across as a straight shooter and hard worker, and he worked the business himself every day. I looked around for blog articles and information and was pretty impressed with what I saw. Since I was working 40+ at my regular job which I was learning to hate, and and another 30+ on my own pursuits, I thought “what the heck, nothing to loose.” I clicked on the link, signed up for a free information session, and the rest is history.
Dan did not promise me any pie in the sky. He said, and I knew, that owning a small business (well, I am not so small any more, I an way into 6 digits, pushing 7 this year) was work. Sometimes a lot of work. But I also knew that if I wanted freedom to be my own boss, make my own decisions and mistakes, that I needed to work. I was impressed. Having a background in computers, I knew the internet was the up and coming arena for all things business.
So, I signed up, paid my tuition, took my classes seriously, and dove in. I still worked my “real” job – for 5 months. I killed it in 5 months. Really. And I never, ever, looked back.
The very first lead gen site I wrote was this one.
and rented it right away for $750/mo, direct deposited to my bank account.
Not much compared to a rental, you are thinking. Not so fast. I have been making that every month for 4 years. My expenses are minimal. I have profited $32,400 on that site in the last 4 years, and I do not touch it. I am not even sure I have had to talk to the customer in a couple of years. Mailbox money with continual, stable, residual income.
Will your rental property or flip house do that? I doubt it. Let alone have an 80-90% return.
My retirement is set. I am 29. I do not play golf, but I have a lot of traveling I want to do, and outdoor activities I love. And I am getting to enjoy them and make a 6-figure income every year building my business. Oh, that is profit, by the way.
Do you really want to start a new career, or own a business you are married to, again? Or have to bust your butt repairing real estate destroyed by an irate foreclosed-on owner? Not me. I like the ease of my lead gen business. If you are looking for some of that comfort and self-indulgence, maybe you should consider lead gen in your future. The view is pretty darn good from where I work.
Check it out, no cost, no obligation. No irritating sales calls. No one pushing you to do anything you do not want. Just information. Click here and get some real retirement spending money https://www.bestrealestatedirectory.com/lead-gen/
And pass the suntan lotion while you are at it.