Florida is starting to show signs of a property recovery.
How do I know?
Well, I talked to some people. I observed. I asked some questions.
All done during my recent visit to Florida from mid June to mid July 2012.
My findings cover two areas: 1) Pompano Beach just north of Miami and next door to Fort Lauderdale. And, 2) The towns of Inverness and Hernando in the middle western part of the state.
Pompano Beach
Concerning the property market, one thing I noticed – a very encouraging sign – is building activity. Large cranes operating on commercial sites. And, builders actively working away on residential construction.
Also, after visiting a few open houses and talking with several real estate agents, the feedback is positive – houses are selling. The two agents I spoke with were very excited. Both told of multiple closings coming up; that’s payday for real estate agents. One agent said he’s got 5 closings in the next week. As I looked through the open house, his attitude was very clear – he didn’t care if I bought or not. He knew the property would sell. He’s got investors coming in from all over looking to scoop up bargains.
What’s a bargain?
Well, this particular house I inspected was on the market for about the $700,000 mark. How’s that a bargain?
It’s a bargain because it’s below replacement costs. To buy the land and build the same house at today’s labor and material prices would run you over a million bucks!
But, the rental returns aren’t exciting at only about 5%. So, this house would rent for about $3,000 a month or $673 a week.
The agent told me most of his investor buyers are ecstatic with a 5% return on their money. Apparently, they can’t get a better return anywhere else.
Inverness and Hernando in Citrus County
These are the town where I already own properties. Market here is still very stagnant. But, rentals are in big demand. Single family 3 and 4 bedroom homes are especially popular. Finding good tenants doesn’t appear to be a problem. All my properties are happily rented.
Rents for a nice 3 bedroom home run from $700 – 900 a month! Yes, you can live in a very nice home in this area for a bargain.
Rents in this area have not moved much over the years. One of our rental properties is rented today for $750 a month. When we built the home back in 1993 we rented it for $650 a month. That’s not a lot of rental growth over the years. But, when you can buy a home like this now for the $100,000 mark, that’s a handsome return … in my book at least.
When’s my next trip to Florida?
Not sure. But, I believe the market is going to be very attractive for owner occupiers and investors for a while. I would like to get back over there soon to get stuck into the action while the window of opportunity is still open.
Any specific questions about the Florida/USA property market? Let me know.