With 35% of properties owned by absentee owners, Florida is top of mind for many investors considering getting into real estate or adding to their portfolio. To give you a sense of our market here in Northeast Florida here is a breakdown by region.
|City||# Properties (residential)||# Absentee-owned Properties (residential)|
|St. Augustine||85,600||30,031 (35%)|
|Palm Coast||62,800||26,356 (41%)|
|Fernandina Beach||27,400||11,315 (41%)|
|Ponte Vedra Beach||16,670||4,300 (26%)|
|Jacksonville Beach||12,400||4,077 (33%)|
|Flagler Beach||6,080||2,300 (36%)|
Proportionally, Palm Coast leads the pack with 41% of absentee-owned residences, and St Augustine is the number one market with more than 30,000 properties as investment properties. I am getting a lot of calls from investors lately so here are some of the questions I generally ask and why.
Are you a cash investor or will you be financing?
In this market, to be a strong contender, you’ll want to have your pre-approval ready to go if you are not paying cash. Some properties can have over 40 offers so to be in a strong position you’ll want to have your financing poised and ready to go before we start looking at properties. As we put in offers these days we also need to send proof of funds. If you are doing a joint venture with other investories be sure to have your partnership or LLC ready and an amount raised.
What return on investment are you looking for?
With investment properties you’ll want to see it like a business. Look at all of the fixed costs, rents, and length of leases. We’ll also need to consider what updates you may need to do to the property to get it marketable. Consider the market monthly rents or nightly rates on comparative properties such as on Airbnb. Generally seasoned investors will ask for a Net Operating Income or Capitalization Rate (Cap Rate) to determine their level of interest in the property. Contact me and I can help you with this. Beware of overpriced multifamily which is generally the case especially near beach areas. Palm Coast is a great idea, it is just very low inventory and we need to act quickly.
Are you interested in a fixer upper or would you prefer something that is ready to go?
To build equity faster you might consider something that needs some cosmetic upgrades that are easy to do. If it is an Airbnb, this can be to your advantage as you can rethink the guest experience and offer things that are attractive to guests like a pool, jacuzzi, hammock, grill, fire pit etc. This will help you compete with other properties on the market.
What is the zoning?
Are you allowed to do short term rentals or not? Is the property part of an HOA? During the search you’ll need to dig into the details of the county’s zoning and double check what is allowable and for how long in the zoning. If it is part of a homeowner’s association you should read the rules for that as you would not want to put an offer on something that doesn’t allow for rentals.
Think outside of the box!
If you are really in love with the idea of walking to the beach, you may want to consider purchasing a lot and then building. Now, this is not for everyone obviously, but if you are creative and you have a longer window of time it could be an option. If you want to look further inland you could find larger, more affordable land opportunities. For vacation rentals, you might think about tiny homes, dome homes, glamping, or RV parks. Be creative and think outside of the box!
Ultimately this is about potential to generate income, so mostly for investors this is about income and not an emotional decision. If you’d like to start an investment property search let me know!
Source: TitlePro247, March 2022, Residential