Lately, it looks like South Florida real estate prices are on their way back to pre-crisis level, but the question always remains as to whether that sudden surge of interest for the real estate market will remain strong, or the bubble will burst once more.
The bottom was hit around 2011, and prices have been on the way up ever since. If we have all seen stories of things going sour, homeowners unable to pay their maintenance fees, buildings deteriorating as a result, or more and more foreclosure signs on the sidewalk, South Florida remains a strong real estate market, take a look to the marvelous properties currently available for sale and consider these points if you are interested in investing there:
1. Strong rental market
Whether you rent short term or long term, South Florida enjoys a strong rental market with high demand and good yields. Florida has several universities, which make investing in a mid-size home for 4-5 roommates or a single efficiency unit for students an attractive options, knowing demand will be high from September to June, and you could even rent it to tourists during the summer.
During winter, you are also likely to attract snowbirds, and around Miami you have a constant flow of Latin American tourism all year long. Add to that a dynamic job market, and mid-size properties are once again a great bet for young professionals about to start a family.
According to Zillow, the median home value in Florida is $171,800. We are far from MidWest prices but it is still an affordable place to invest. Home values have gone up 6.8% in 2014, and are expected to keep rising almost 2% this year.
With a median rent price of $1,500, Florida boasts a 10.4% average rental yield, which is of course before tax, maintenance and property management fees, but still a much better rate of return than any savings account on the market.
2. Attractive location
There are some spectacular properties in South Florida. Seafront, high rising towers with all amenities you can possibly imagine, mansions in back canals, or lower key tropical hideaways nestled between palm trees, Florida properties are attractive.
When you buy a property, you should always think about the person who would buy it from you. If it is a long shot, it should better be your forever property, otherwise putting it back on the market will be complicated, and it may take months or year to sell it, without the guarantee to make your money back.
When the property features beach access, a pool, a lush garden and so on, you can be almost sure there will be a buyer to take it off your hands in a short time. There were actually people camping overnight in Fort Lauderdale for the privilege of buying $500,000 – $1,000,000 properties!
3. Affordable mortgage rates
With almost 20% of homeowners under water on their mortgage in Florida, it is more important than ever that you check how affordable your mortgage will be before you buy a property.
Just a few points in a mortgage’s interest rate can result in several thousand dollars more that you will have to pay for the property over the course of the mortgage. Freddie Mac’s Primary Mortgage Market Survey shows that the average 15 year FRM is at 3.25%, and the 30 year FRM is at 4.09%.
4. Diversify your assets
Low mortgage rates combined with the ability to generate an income for your property, considering your savings would bring in close to zero interest if they stayed on a bank account, makes real estate investments pretty attractive those days. Once again, just make sure you can afford the mortgage without compromising other areas of your budget, and have an emergency fund ready if the property needs more repairs than you thought, or if the tax bill increases this year.
5. Still a place for bargains
If you are not afraid to DIY, undertake repairs and fix a place up, there are many properties priced to sell in South Florida. Some neighborhoods in Miami have already seen a new impulse with new restaurants, shopping centers…, Ft Lauderdale has been booming as well, yet you still find neighborhoods close to the one that is trending at very affordable prices. In light of the strong rental demand, you can be pretty certain those neighborhoods will soon become sought after as well.