For years, Florida real estate was at the top of the list of properties investors wanted to acquire. The Sunshine States has been deemed one of the top tourist destinations in the world and investors often purchase homes and condos for use as short-term rentals.
The potential to acquire wealth from Florida real estate investments was a very real possibility until the economy fell apart. Now much of the state is littered with foreclosure properties created through upside-down mortgages and massive mortgage fraud.
Thousands of oceanfront condos and beach houses sit vacant. Investors who purchased vacation properties are finding it difficult to attract tenants because people can no longer afford a vacation at the beach. Those fortunate enough to rent out their properties are competing with hundreds of other hungry investors and often forced to reduce rental rates in order to generate some level of cash flow.
Florida used to be a state that people flocked to, but today the number of people moving out of the Sunshine State exceeds the number of people moving in. The U.S. Census Bureau reports over 200 Floridians move out of the state every day.
Much of the mass exodus stems from chronic unemployment. Other factors include increasing property taxes and insurance and reduced property values. Additionally, a substantial number of residents are retirees living on fixed incomes. The cost of coastal living prohibits many ‘snowbirds’ from returning to the state during winter months and has forced many to sell their home well below market value.
According to Foreclosure Data Online, Miami-Dade County has the highest rate of foreclosures, with Orange County following close behind. Broward County is expected to join the ranks due to the cessation of NASA’s space shuttle program.
While things may appear all gloom and doom for the Florida real estate market there are positive aspects. Declining property values have made it considerably more affordable to buy property. Whether looking for a vacation home or investment property, houses are selling for nearly half of what they cost 5 years ago.
Beach homes and oceanfront condos that once listed at over $1 million can often be purchased for $500,000 to $600,000. Numerous homes for sale are located in gated communities that offer an abundance of amenities including landing strips and airplane hangars. Penthouse condos offering panoramic views of the ocean are selling for pennies on the dollar. Houses located within interior sections of the state are priced 30- to 60-percent below market value.
Much of the real estate available for sale in Florida is bank owned foreclosures or short sale property. Due to the state’s high rate of foreclosure many banks have been forced to nts to liquidate an overabundance of homes.
Short sale homes can be an affordable option for individual buyers or investors. Banks typically require property owners to have a buyer in place before allowing them to sell their house ‘short’ of the amount owed on the mortgage loan. This type of transaction requires buyers to negotiate with lenders and can take several months to complete. However, the overall savings can be worth the effort.
Although no one knows for certain when Florida’s real estate market will rebound chances are prices are close to the bottom. Those who have considered this market may want to evaluate conditions to determine if a good time to invest is now.
There is little doubt Florida will once again thrive. Individuals and investors who buy houses now could potentially reap substantial profits in the future. It can be advantageous to work with realty professionals familiar with the area. Doing so can reduce time spent locating properties and minimize risks when presenting offers for bank owned homes.