If you’re seeking a way to profit from Florida real estate, you might be in the right place. Although the real estate market in Florida was booming in 2021 and 2020, the market has changed slightly as we move toward 2023. September 2022 market data year-over-year indicates a 30% decrease in the number of homes sold and a 21% reduction in the number of houses listed for sale. However, prices continue to increase steadily, increasing by just over 15% for the year.
What does this economic environment have to do with Florida real estate investors? What can investors do to maximize their earnings potential in this Sunshine State?
To get to the center of the market for real estate in Florida, We spoke to Nadia Tenouri, a top agent of Matthew Brookens’ team in the greater Tampa region. Being an investor herself, Tenouri has a unique perspective regarding what constitutes an investment opportunity that is hot and also great for investment properties located in Florida.
Aspects Of A Surprisingly Booming Real Estate Market In Florida
Before we look into Florida investment opportunities, it’s worthwhile to consider certain things that will make a place more attractive for investment all over the world. When you’re considering investment places, keep these things in your mind.
An Extremely Desirable Location
A fantastic property at an affordable cost is only valuable when it’s located in the correct location. Smart investors research the area where the property is located and pay particular attention to factors that attract people who are renting or buying.
Most people know this fact: Florida has been one of the most popular destinations for a vacation in the United States for as long as we can remember. With more than 8,436 miles of coast and top-of-the-line themed parks, Florida attracts an average of 122.4 million visitors annually. This is excellent news for the rental market!
Additionally, the influx of people who choose to make Florida “home” continues to increase. The data on moving shows that Florida has been ranked as the top destination for people moving to other states. This is also excellent news for the long-term rental and the fix and flip markets!
If you’re researching the local market in Florida, take note of the factors that make this area appealing. Are there any features like the location of a school, industry, or natural element that are likely to continue to draw tourists and renters or buyers to the region?
An Expanding Economy & Job Market
In the opinion of Forbes, Florida is among the top states in terms of economic growth in recent times. “Florida’s GDP ranked 4th in the U.S. and has seen growth of over 30% between 2011 and 2021.” Analysts attribute the growth in business to lower taxes, a favorable business environment, and a solid workforce.
A rising economy typically suggests a steady, growing real estate market. Locally, investors must be aware of major companies with an established track record in the region and new companies planning to move into the area. These are excellent indicators of the need for consistent housing.
Proven Track Record Of Census Growth
The overall population growth is good for investors as it implies that the region will continue to exhibit a significant need for homes.
In the entire state of Florida, Florida is expected to remain a magnet for residents in the coming years, with an expected forecast of about 300,000 more people every calendar year and over 23 million in 2025. According to the Orlando Sentinel, “Florida continues to see population increases roughly equivalent to adding a city the size of Orlando each year.”
Of course, investors will be looking to dial closer to their desired area, either a city or a county. To study the historical and projected growth of population within any particular area, look into U.S Census data and county-by-county information collected by the state.
Solid Rental Rates Overall
Because cash flows are directly linked to rental earnings, investors must research the average rental rates in an area. Investors can anticipate the following rates for rental, on average, within Florida:
- Studio apartments: $771
- 1-bedroom units: $835
- 2-bedroom units: $1,021
- 3-bedroom units: $1,358
- 4-bedroom units: $1,610
But, within the state, rent rates vary considerably based on region. The average rent for a one-bedroom home in Washington County is $557; however, within Palm Beach County, it’s $1,180. Within that same region, elements such as access to water and community amenities result in fluctuating rental prices that investors must consider by neighborhood, in particular.
Florida Fits The Profile For Personal Portfolios
Alongside data, investors must also select the area where it could help advance their goals. For instance, some investors are interested in something other than managing and maintaining their property. They may, therefore, prefer to select an area that is based more on appreciation over time rather than cash flow. Others prefer a more hands-on approach to real estate and, hence, prefer to pick a property close to their home.
Tenouri states that her personal plan is to eliminate condos because of their tendency to excessive HOA fees and assessments. Instead, she suggests single-family as well as smaller multi-family houses. “There are fewer uncontrolled variables, meaning ones that you can’t hedge against.”
Top Locations To Sell Florida Real Estate Investors On
Let’s look at some of Florida’s best individual real estate markets. We will look at some local factors as well as the median home price with data from Realtor.com. RentData.org’s average rental rates and Florida Demographics’ population size.
Orlando
Orlando, the tourism and business capital of Central Florida, is a great place to invest both for the short and long term. Orlando’s home prices have risen by 21.5% over the last year, and the city is among the 15 largest cities in America for projected growth. Investors can take advantage of vacation rental opportunities in the southwest of the city near the theme park. At the same time, the continued expansion of the north and eastern sides of the town makes it an ideal area for buy-and-hold strategies.
- Median home price: $395,000
- Average rental rate: $1,713
- Population size: 309,154
Miami
Miami’s population density continues to make it a hub for investment. Miami’s home prices have been steadily increasing for 125 straight months. This is the longest growth trend ever recorded. Although the median price of a home may seem high, it is essential to remember that the price of the city as a whole will increase due to the beachside condos and mansions. If you look inland and especially towards Hialeah, there are many affordable investment opportunities.
- Median home price: $589,900
- Average rental rate: $2,068
- Population size: 439,890
Gainesville
Gainesville, home to the University of Florida and a large number of young professionals and students is an excellent place to invest in rental properties. Over 65% of Gainesville’s residents rent out their homes. Over time, owning property in Gainesville can also pay off. The real estate market has appreciated 14.6% over the past year. You could say that Gainesville is a great place to invest.
- Median home price: $309,900
- Average rental rate: $1,415
- Population size: $140,398
Jacksonville
Jacksonville is a top city for real estate investments because of its established industry and population growth. Jacksonville is home to four Fortune 500 companies and 20+ hospitals. It also has two major auto part manufacturers, a booming entertainment industry, as well as the third-largest military base in the United States. Add to that affordable home prices and high rental rates, and you have the ingredients for a successful investment.
- Median home price: $321,000
- Average rental rate: $1,455
- Population size: 954,614
Cape Canaveral
Cape Canaveral and the Space Coast region are ideal for investors who prefer a laid-back atmosphere. Cape Canaveral hosts Port Canaveral – the second busiest seaport for vacations in the world. In the peak months, over 100,000 cruise passengers pass through this small town every week. Many stay in town and enjoy its quiet beaches or the Kennedy Space Center nearby before or after their trip. Cape Canaveral is easily accessible to investors from out of state due to its proximity to Orlando International Airport.
- Median home price: $352,000
- Average rental rate: $1,525
- Population size: 9,970
Tallahassee
Florida’s capital boasts an incredibly high median home value, especially in light of the shocking 30,9% increase in price since 2020. Tallahassee’s Florida State University is a significant draw for students looking to rent apartments. Tallahassee’s location on the panhandle gives it a milder, more seasonal climate compared to other parts of Florida. This is a significant benefit for transplants from the north.
- Median home price: $299,000
- Average rental rate: $1,361
- Population size: 197,102
Tampa
Tampa is located on the Gulf side, a beautiful city with serene beaches. Tampa is not just a beautiful city on the Bay; it is also a hub of economic activity. Tampa Bay Economic Council states that “Tampa Bay has 20 corporate headquarters. Five of them have been listed on the Fortune 500 list in 2021.” Nearly 500 foreign-owned businesses representing more than 40 nations have established themselves in our community. Tenouri recommends specifically the downtown area of Tampa as well as the beach town New Port Richey and the northern suburb Wesley Chapel to investors.
- Median home price: $430,000
- Average rental rate: $1,651
- Population size: 387,050
Lakeland
Tenouri suggests investors also keep an eye on the up-and-coming Lakeland. This medium-sized town is conveniently located between Orlando and Tampa. It’s an excellent choice for those who want to be close to both cities. Lakeland has a few colleges some beautiful museums, and is the corporate headquarters for Publix. These factors contributed to the region’s 3.3% growth rate in recent years.
- Median home price: $350,000
- Average rental rate: $1,375
- Population size: 115,425
Although the property market in Florida is decreasing slightly from the previous years, property investments continue to move quickly. Therefore, you’ll need to be ready to submit an offer as soon as possible when an eligible property comes to the market.
Tenouri says, “You need to be aware of something in the first few minutes after it goes on the market if you wish to take advantage of the best prices. It’s impossible to think, ‘Oh, I’ll contemplate it more. I’ve seen investors do that, which is how you should take advantage of deals. It’s not a good idea to be slow and think about it; you must be prepared when it hits the marketplace.”
With that in mind, make sure you’ve got your budget set, your financing set, and a thorough market analysis. If you are competing with other investors for the same property, you must be sure of your best and most attractive deal.
The Florida actual property market provides a fantastic investment opportunity. If you do a little research and have a good team, this could be an ideal opportunity to invest in properties in this part of the Sunshine State.
