South Florida Real Estate Investing 101
Introduction: Getting Started In Real Estate Investing
So, you’ve seen those “house-flipping” shows on TV and are certain this business is right up your alley! It seems like this is exactly what you’ve been looking for your whole life, and you can’t wait to get started as a real estate investor! Yes, it can get very exciting and may seem like it’s best to just dive right in, but keep in mind, flipping is not always as glamorous as it may appear to be on television. A lot of hard work, dedication, and education is needed in order to become successful.
Real estate education takes time. I know what you’re thinking, “Educating myself? I’ve already seen it all on TV! What else is there to know?” Although it may seem like you know everything there is to know about investing because you’ve seen every single episode of “flip this house,” and took notes, there will always be more to learn! We’re not saying to dump thousands on an investing course, but do your due diligence!
- American Real Estate Investor School (Miami)
- Broward Real Estate Investors Association (BREIA – Davie)
- Miami Real Estate Investors Association (MREIA – Miami)
- Dade Real Estate Investors Association (DREIA – Miami)
Get familiar with your area, figure out what’s selling and what people aren’t really into right now. Is your area better for buy and hold properties, or quick fix and flips? With an area popular to travelers and first time homebuyers like the Dade, Broward, and Palm Beach county areas of South Florida, either choice might be a profitable investment!
First things first, build your network! When you’re just getting started, it may seem like a difficult feat to find people in the industry. This is the easy part! Once you choose a location, do an internet search for local real estate investment groups. These groups usually host networking events, and if you do your due diligence and attend the most popular events, you’re bound to meet a great deal of like-minded individuals who are more than willing to help with your next deal. Whether it be a partner, a contractor, or a hard money lender that you are looking for, you will surely find one at one of these events! Here are a few investor networks in South Florida to put on your list!
- South Florida Real Estate Investors Association (Boca Raton, FL)
- Weston Real Estate Investors Network (Broward – Weston)
- Distressed Real Estate Investors Association (Boca Raton, FL)
Real Estate Investing In South Florida
Florida’s population is projected to increase by six million people within the next thirteen years! This positive migration will result in an increase in housing demand, making Florida the perfect place to get started in real estate investing!
When pinpointing an area, South Florida proves to be the most lucrative place to set up shop. South Florida has ample supply of dated and distressed properties just waiting to be brought back to life! These homes are also low to moderately priced, but, with property prices constantly on the rise, South Florida is a hotspot for investing!
The swelling of foreclosures and abandoned properties really makes this part of the United States a diamond in the rough for real estate investing! But, not only do you see many under-priced properties in South Florida, you are also dealing with the demand for new construction, and the amount of buildable land available to you to get that done!
Dade, Broward, Palm Beach – Strong Market For Rentals And Flips!
Thinking of investing in South Florida? You’re in luck! There is a high demand for rental properties in South Florida, both short term and long term. Along with Florida being considered a major vacation spot, there are also several universities scattered along the state, which make investing in mid-size homes, large enough for 4-5 roommates to share, or even single efficiency units (your typical one bedroom apartments), attractive options.
The demand for these units is likely to rise from September to June, and if you do happen to get stuck on finding a long-term tenant during “school season,” you could always rent weekly to tourists during the summer! Since South Florida is such an amazing vacation place, you are likely to attract snowbirds, and in the Miami area specifically, there is a constant flow of Latin American tourism all year long! With apartment share apps like AirBnB on the rise, you are sure to get your unit rented!
According to Zillow, the average home and real estate in South Florida sells for about $170,000. With a median rent cost of $1500, you would boast an average 10% rental yield (before tax, maintenance and property management fees) and is a much better rate of return than you will find with any savings account on the market!
Buy and hold properties may be a great option for the investor looking to build their cash flow, but for others, completing a fix and flip project for a large one-time profit is the way to go! According to RealtyTrac, the average fix and flip in South Florida cost $220,000 to buy, and sold for $302,000 only six months later! $82,000 is a healthy gain, even after the rehab amount comes off the top!
With most flippers, there is a simple strategy. Buy low, fix up and sell high! Investors in South Florida are always looking for a good deal, and with the home prices in the Miami-Dade area jumping about 8% over the last few years, they are really able to take advantage! Once the investor is done renovating, they can cash out on their investment!
Flippers tend to flock to areas where the prices are low. Since Miami was just recently number one in foreclosures in the country, there are still many properties up for grabs at a good price.
Miami Dade County Real Estate Statistics
According to FL housing data, in Dade county, the average value of a single-family home is $335,332. A mobile home averages at $40,320 and a condominium has an average value of $288,271. In Miami-Dade county and the surrounding metro area, the HUD fair market rent is $774 for a studio apartment, $995 for a one bedroom apartment, $1250 for a two-bedroom, $1671 for a three-bedroom and $1987 for a four-bedroom unit, according to U.S. Department of Housing and Urban Development.
According to the Analysis of LPI Applied Analytics data by LISC, the Miami and Ft. Lauderdale area have a foreclosure rate of 11.62% on 1-4 unit homes and a serious delinquency (90+ day) rate of 4.18% in September 2013.
In 2016, the median size for a new single-family home in Miami-Dade county was 1973 sq ft.
Broward County Real Estate Statistics
According to FL housing data, in Broward county, the average value of a single-family home is $297,276. A mobile home averages at $73,691 and a condominium has an average value of $152,607. The average sale price for a single-family home in Broward county in 2016 was $348,174. In Broward county, the HUD fair market rent is $773 for a studio apartment, $980 for a one-bedroom apartment, $1253 for a two-bedroom, $1790 for a three-bedroom and $2188 for a four-bedroom unit, according to U.S. Department of Housing and Urban Development.
In 2016, the median size for a new single-family home in Broward County was 2064 sq ft.
Palm Beach County Real Estate Statistics
According to FL housing data, in Palm Beach county, the average value of a single-family home is $352,737. A mobile home averages at $50,723 and a condominium has an average value of $180,804. The average sale price for a single-family home in Palm Beach county in 2016 was $534,503. In Palm Beach county, the HUD fair market rent is $765 for a studio apartment, $991 for a one-bedroom apartment, $1240 for a two-bedroom, $1691 for a three-bedroom and $2044 for a four-bedroom unit, according to U.S. Department of Housing and Urban Development.
In Palm Beach County, the median size of a new single family home was 2338 sq ft.
Popular South Florida Property Types
Florida-style home plans reflect designs that exemplify all the best parts of Florida living. Spacious, often open floor plans flow seamlessly from room to room, to assimilate indoor and outdoor living spaces. They also feature large verandas, luxurious master suites and at least one decent sized guest bedroom.
Since the weather in South Florida can be blistering hot during the day, these homes are built with comfort in mind. Large windows are placed strategically around the home in order to allow the cooling breeze to flow freely throughout the home.
The Benefits Of The South Florida Market
When it comes to investing in Florida real estate – especially for the first-time investor – South Florida presents a unique opportunity. Not only is the tri-county area the eighth most populated metropolitan region in the country, it is also among the most quickly growing. According to the United States Census Bureau both Miami-Dade and Palm Beach County have experienced 7.8% growth over the last five years. Broward County has also seen a significant rise – at 8.5% over the same time frame!
Besides Florida being a hot spot for year-round living, it is also a major destination for seasonal residents. In Palm Beach County alone, 20% of properties are classified as vacation homes or “seasonal” properties.
Between the rising economy, continued population growth, and the solid reputation for international travel, the housing market in South Florida provides some of the biggest opportunities for serious South Florida investors who are ready to act! While South Florida is a hot spot for year-round rentals, it is also quite popular for first-time homebuyers. This makes South Florida an ideal location for buy and hold and fix and flip investors alike!
South Florida’s Appealing Location
Although most of the houses you see in South Florida are three bedroom, two bath, ranch homes, you’d be surprised at the places you can find! There are some amazing properties in South Florida, and they range anywhere from waterfront properties and tropical hideaways, to city-like apartment style units.
Keep in mind, when looking for South Florida investment properties, don’t get too attached to the home; leave your emotions at the door! This project isn’t about what you like, or what you would want in your home! Stay objective and figure out what most people are looking for! Once you learn the property demands of the South Florida market, you can choose the best property for your project.
Here’s a little tip with South Florida investments, when the property features a pool, fitness center, or beach access, you can be sure that it will rent or sell quickly! So, if the opportunity arises where you can get your hands on a property that offers one or more of these features, take it!
Don’t let the excitement cloud your judgment!
You’ve done your due diligence, educated yourself, built a network and spent months searching for the perfect property. At long last, you’ve found “the one,” and can’t wait to get started on your rehab! We know how excited you are, but don’t let that excitement throw you off course!Remember, your investment property is your business! Be cautious and start with smaller projects to get your feet wet. By small we don’t necessarily mean start with a one bedroom, one bath condo, but don’t go adding two new bathrooms to the one bathroom home on your first flip!Find a low-priced property that needs mainly cosmetic work, fix it up, and get that property ready to be rented or on the market for sale! The quicker you get in and out of there, the more of a profit you will be making in the long run!
Make a plan!
You have the property in mind, but did you do anything to secure it? Have you lined up easy access to funding? Asset Based Lending has a strong footprint South Florida area, and is available to help you acquire a hard money loan for your next investment project quickly and efficiently. Whether you’re a seasoned flipper, or a first-time investor, ABL has a program for you! With interest rates from 9% to 12% and origination points from 2% to 3%, you are sure to get the best deal to get the “flippin” show on the road!