Shay approached me with questions about the market here in the Sunshine State after reading several books on real estate investing. Originally from Miami, she was looking to switch careers as well as relocate somewhere further up the state as a part of her overarching goal to shake things up. And, because she wanted the decision to leave her corporate job to start a business in real estate investing to be well worth the effort, she also wanted input from a long-time Florida investor, like me. Personally, I can’t think of a better way to build your own business than that of buying real estate investment property in Florida. So, I was all for giving Shay the go-ahead. Of course, to help her feel confident about the decision, and to ensure she went about investing smartly, I gave her a few market pointers, too.
Should You Buy Real Estate Investment Property in Florida?
Historically, Florida has been a hot place to invest in and there are a number of reasons why. But, I get the trepidation that a lot of investors feel about the market here since the state was also one of the worst hit by last decade’s housing crash. People lost their jobs and homes, career investors lost their property portfolios, and folks who believed that real estate was a good investment for retirement lost their life’s savings when the banks came calling. The bubble burst and Florida’s economy crashed, blowing up millions of lives with it. Still, things didn’t stay cold here for long. By 2012, Florida was one of four states leading the country’s recovery. And, its that market resilience that makes Florida a force to be reckoned with and a great place to continue investing in. But, there’s more to the state’s story than that. Let’s consider the following that will affect Florida real estate investments in 2019:
Between January 2009 and 2010, unemployment in Florida jumped nearly three percentage points to more than 11%, according to the Bureau of Labor Statistics. And, the number of underemployed individuals—a figure that is rarely calculated—likely matched, or even surpassed, the more than two million jobless Floridians. This had a devastating effect on the ability of homeowners to pay their home loans on time or at all, particularly those with adjustable rate mortgages, and helped to plunge Florida’s housing market, and its economy as a whole, deeper into disaster. By early 2011, Business Insider reported that the number of vacant homes throughout the state had increased by a whopping 63% from the previous decade. If you didn’t have the money to pay for your house, you probably couldn’t find someone who did. So, you left.
Spring forward to January of this year and you’ll find that Florida’s unemployment rate has done a significant about-face. At only 3.4%, it’s lower than the national average. Several major corporations and national chains are headquartered throughout the state, like Burger King in Miami and Publix near Tampa, and the entertainment and leisure sectors are stronger than ever. Of course, since Florida is the number one vacation destination for American families, they have to be. But, the industries of aviation, agriculture, tech, and life sciences also have a strong foothold in Florida, each employing tens of thousands of individuals—many of whom own homes or are working toward that end. And, with more financial institutions and startups moving to Florida to take advantage of its business-friendly atmosphere, the job market—and, the demand for housing—is likely to expand as well.
In addition to the tax-related benefits offered to companies that want to do business in Florida, living and working in the state provide other tax advantages as well. There is no state income tax and the statewide sales tax is levied at only 6%. Individual counties may add a surtax to this rate, but the total levied rarely exceeds 7%—still significantly lower than half of the states in the union. So, both individuals and corporations that take up residence in the Sunshine State save big bucks by doing so.
Plus, with an average property tax rate of only 1.1%, which is both less than the national average and other states with low overall tax burdens, like Texas, the incentive to call Florida home for a business or family is that much more powerful. And, though you’ll want to check with your accountant, it’s possible that these benefits will extend to your real estate investing company, too. You should certainly be able to grow your business by buying, rehabbing, and selling homes to those who move to Florida for its sunshine and the savings.
Cost of Living
The cost of living in Florida isn’t the lowest in the country, but it isn’t the highest either. For the influx of transplants coming in from cities like New York and San Francisco, it’s pretty darn cheap. Florida’s low tax burden helps, but so does the lower-than-average cost of food and relatively affordable housing outside most city centers. Yes, residents may pay more for things such as gas and utilities than many of their southern neighbors, but these expenses will still cost less than if they were living in New Jersey, Illinois, or Oregon. In fact, Florida’s reasonable cost of living when compared to much of the rest of the country is why the state regular takes first or second place as one of the best places to retire by both popular news outlets and personal investment advisors.
And, when people don’t feel the cash crunch that an exorbitantly high cost of living can cause, they’re able and willing to spend a little more on housing. So, if you can avoid some of the biggest mistakes made by real estate investors, like paying too much on the purchase of a property or overspending on its rehab, the returns you realize from selling it to potential buyers who can budget for a house could be big, too.
A strong job market, favorable tax structure, and relatively affordable cost of living usually add up to a stable, if not growing, population. Florida is no exception. In fact, even the likes of Hurricane Irma, which pounded Florida’s shores in September 2017 and caused more than $11 million in damages, can’t seem to keep people away. Now estimated at just over 21 million, an increase of more than 13% in less than a decade, Florida has passed New York as the third most populous state in the country, behind only California and Texas. That’s pretty impressive when you consider that Florida’s size is less than half of California’s and equal only to about a quarter of the area occupied by the Lone Star State. Apparently, good things do come in small packages. At least, that’s what wanna-be locals think. So, when you start thinking about where to invest in real estate, there’s every reason to add Florida to the top of your list.
Less than a year ago, Inc.com reported that Florida ranked at number eight out of ten states where real estate prices were growing the fastest. The purpose of that report? To advise investors on where they could expect to see decent returns on the homes they were buying, renovating, and reselling. By 2018’s fourth quarter, other media outlets were reporting that median home sales prices were not only still going strong, but were still going up—for the 82nd consecutive month—reaching another 7.6% increase from the year previous. So, if like me, you found off-market properties priced at below-market value in hotspots like Jacksonville or Tampa, you probably did alright. And, the good news is that because Florida’s housing market is predicted to continue doing well through 2019, it’s not too late to realize potentially good returns on your investments even if you’re just now getting your feet wet in the local house-flipping waters.
Keep in mind, however, that Florida isn’t just a great place for turning flipping houses into a good business. Though most Floridians do own their own home, more than 35% still rent, according to the U.S. Census Bureau. That’s more than seven million people who can’t, or don’t want to, take on a mortgage payment. And, demand is particularly high in cities like Orlando, where rents are considered somewhat affordable—or, at least more affordable than the cost of owning a home—despite the fact that local market rates may actually be higher than the national average. That makes Florida one of the best places to buy rental property in my book and why I hold a few multi-family units in my portfolio. The key with rentals, of course, is to ensure you correctly calculate your cap rate before you close on the deal. Do that, however, and the passive income you earn could potentially carry you straight into retirement.
In light of these market considerations, you’re probably feeling as excited about investing in Florida real estate as Shay now is—no matter where you hang your hat. Still, there’s more to the story of how to succeed as an investor than considering the forces that shape where and when to buy investment property in Florida. Yes, investing smartly, not just speculatively, will have a significant impact on your bottom line and the longevity of your business. But, the quality of your leads can make or break your ability to do so. So, if you really want to grow your portfolio, you’ve got to have a real estate lead generation system that helps you pick the best leads.
Pick the Best Leads and Grow Your Investing Business
When I chose the real estate market in Florida to invest in, it was an easy decision to make. But, I didn’t choose it based on market conditions alone, nor did I go about starting up a new career as an investor on my own. Instead, I joined the “We Buy Ugly Houses®” team and became an independently owned and operated HomeVestors® franchisee. And, I did so because my overarching goal wasn’t just to invest in a hot real estate market, but to have my pick of the best leads.
Some of the best marketing tools for investors are made available to every franchisee. The “We Buy Ugly Houses®” TV and radio ads you see and hear everywhere, give me the qualified leads that I need to grow my business. Distressed homeowners are everywhere, struggling with bills that are too big under market conditions that are considered both good and bad. And, when they decide it’s time to sell, they reach out to a national name they can trust. Since 1996, HomeVestors has been that name. So, if you join the team, like Shay and I have, these motivated sellers will be reaching out directly to you, too.
Get your pick of quality leads to grow your Florida real estate investing business in any market. Contact HomeVestors to see about becoming an independently owned and operated HomeVestors franchisee on the “We Buy Ugly Houses®” team today!