Florida Real Estate Investing
If thinking about Florida real estate investing, now might be the time to give serious consideration to buying houses in the Sunshine State. Investors can find a bounty of oceanfront and beachside properties, along with inland residential homes.
Some of the best Florida real estate investing opportunities is single family dwellings and condos that can be used as vacation or long-term rentals. Florida is one of the most popular tourist destinations in the world. With over 1200 miles of sandy beaches and 11,000 miles of rivers, streams, and waterways there is plenty of waterfront property available.
Besides tourism, there are plenty of reasons to invest in the Florida market. Nearly 1000 people move to Florida every day. This leaves a captive audience for both rental homes and home sales. Investors can do well by offering homes for rent with the option to buy.
In addition to new residents needing a place to live, many Floridians have been displaced due to foreclosure. Sadly, the Sunshine State has been victimized by a high level of mortgage fraud. Thousands of tenants have been forced out of rental homes because properties fell into foreclosure. Many of these properties were purchased through identity theft or the use of straw buyers.
High foreclosure rates have caused a decline in property values of more than 50-percent; making Florida real estate more affordable than in the last decade. It is not uncommon to find oceanfront penthouse condos priced well under $500,000. Only a few years ago this prime real estate would have easily sold for $1.2 million or more.
Although the tourism industry is still strong, investors need to carefully weigh decision when buying investment property for use as vacation rentals. Many tourists are driving down in motor coaches and staying at campgrounds scattered across the state. Others are taking advantage of deep discounts offered by hotels.
For the time being, offering long-term rental properties might be a better option. Median rental rates for 3 bedroom/2 bath inland homes hover around $1200 per month. Beachfront and oceanfront properties are nearly double that amount.
One consideration of buying property near bodies of water is the cost of property insurance. Florida has some of the highest rates in the country, so before taking out a mortgage note find out how much it will cost to insure the property. It is not uncommon for insurance rates to be as high as 25-percent of the monthly mortgage payment.
Another consideration is Florida's property tax system. Under the Florida Constitution revenue collected from "ad valorem taxes" is reserved for local governments. The state does not derive any revenue from property taxes.
Taxes are assessed on privately owned property based on market value. The value is taxed at established "millage rates" which vary by county. A "taxable value" is established based on exemptions, such as Homestead, differentials, and limitations. Afterward, the taxable value is multiplied by millage rates to determine the actual property tax.
Volusia and Alachua counties have the highest property tax rates in the state, while Flagler and Orange are on the lower end of the spectrum. Monroe County, home of the Florida Keys, falls in the middle.
Investors unfamiliar with Florida's real estate market would be wise to spend time researching available properties. It can be beneficial to participate in local real estate clubs on join online investing groups to get a good feel for areas offering the best deals and lower property taxes.
To become successful with Florida real estate investing requires education and good timing. Those who take time to research the state can find great deals on investment properties. We invite you to discover other profitable niches by perusing our real estate article library packed with information about buying distressed properties and tips for making smart investment choices.
Published on March 04, 2011 at 08:49 AM