Florida - The Sunshine State

They nailed that slogan!  I've been here in South Florida for two weeks and have seen only a few drops of rain the entire time.  Now I've moved a little further up from the Gold Coast to St Augustine, the US's oldest established city and still great weather.

Studio Condos in South Beach

My reason for being here - simple.  More and more people have been asking me about investing in Florida real estate.  I decided to take some time to explore a few of the markets which have been mentioned and can say that I'm personally very impressed with what's out there and how much bang you can get for your buck.  There's nothing like it in the CEE. 

First, there's Miami Beach which is a personal favorite.  I found studio condos two blocks from the beach completely furnished for $60,000 to $80,000.  Another property, an older 80 sq meter (810 sq ft) two bedroom unit in need of reconstruction, for $100,000.  It was in the heart of SOBE (South Beach) - three blocks from Lincoln Road and two blocks from Ocean Drive.  And still there are others in mid beach and north beach for less but equally interesting because they're all still "on the beach" - just not SOBE.

$78,000 2 bedroom home in Homestead, FL

Then there are the single family homes (SFH) within a short drive from Miami for less.  They are houses that were caught up in the foreclosure frenzy and are now renting at $600 to $1,000 per month.  These homes, many believe, will appreciate faster than the condos only because Americans will once again want to own their own home.  Once the country recovers you'll see people who were once renting going back to home ownership.  

So a lot is out there for you.  Just depends on the route you want to take.  Both can be excellent long term investments.  A condo has more up front costs such as the monthly home owner association dues (which typically average about $250-$300 per month) but they're fairly easy to manage from afar.  Those dues cover things like repairs and maintenance of the building, roof, elevator, etc.  Single family homes are more for the long term renter but you might have maintenance/repair issues as time goes on - from a simple repair to  new landscaping for example, after a tenant moves out.


If you're considering investing in real estate, now is as good a time as any and South Florida is one of the best places I've seen in recent years.  It's been out of reach for many people for so long but prices have come down to affordable levels.  And with the rental market going strong, even the most conservative investor  gets very reasonable returns.


For more information send me an email or message here and I'll get back to you.  I'll be happy to help you find you're place in the Sunshine State.

 

I Love Real Estate

The bottom line is that it has more to do with the fundamentals of the transactions and the interactions with people than anything.  Real estate can be a great investment in good times and in bad simply because it can (or should) produce positive cash flow for the investor.  Yes, equity is important but cash (flow) is king.

Real estate hasn't really hit bottom yet in regards to prices but I hear that demand is increasing, at least on some level, and will continue, albeit at a snails pace, over the next 12 to 18 months. But demand alone DOES NOT justify a price increase which might otherwise be ok in another time or place.  This time things are different.  The shadow inventory alone (some say there's 10,000 units sitting unsold in Prague alone) will  continue to stifle prices for probably another two years.

In spite of the so called recovery of the broader economy, high unemployment and continued financial market jitters mean mortgage lenders will remain guarded in their lending practices. Monetary policy, however, does remain supportive and the historically low mortgage rates have boosted  home affordability, providing some price stability across parts of Europe.  In Western Europe, for example, prices have risen by about 2% on average since this time last year and there is a very mixed picture at the individual country level, reflecting the diverging path of economic recovery.  Property values continue to fall, however, in Ireland, Greece, Spain and the Baltics, where the economic difficulties continue.  The Nordic markets and the UK appear to be the strongest  markets, price-wise, while prices are stabilizing in larger markets such as Germany and France.  But through it all it appears that the so called pricing correction that many claim happened during the crisis fell short of balancing investment price-to-income ratios. This may imply that there are still downside risks to today’s pricing levels.

Same ole, same ole

Not much news to really talk about.  It's the beginning of the year and we only just begin seeing activity from about mid February.  It's pretty historic that way.  August is dead because of summer holidays and December through mid February is the same because of Christmas and winter holidays.  Today marks the start of business is some ways because school begins again today.  That usually means parents are back at work too!

With that are published reports of how down the residential market is and how tough it might be to see any real progress.  As I mentioned in a previous post, there are some 10,000 unsold apartments on the market.  This coupled with developers looking to start new projects we're talking years to get to a balance in supply and demand.  The buyers market scenario will be around for some time.

Now the question is when interest rates will begin to climb.  That usually stirs some activity as buyers act on their buying impulse to get in before a rate hike.

Another interesting article, which I posted here (to the right) concerns banks having so many unsold flats and not being so proactive in their marketing and sales. Times might be changing on this as people around say that this year might mark a change in how the banks cooperate with their developer clients.