The South Florida real estate market is showing signs of re-bounding. Companies are hiring again and bank foreclosures have slowed down. So, demand will be increasing and the inventory will be smaller, and prices will rise.
This is an excellent time to buy and hold properties (rentals) - although, prices may not bottom out for another six to eight months.
But, if you wait for “the bottom”, it may be too late. The upswing will be swift. So, focus instead on creating a profitable cash flow….NOW.
Five (5) things to consider when buying in this market:
1. Location, etc.
Choose an area that has a lot of real estate activity. If a sub-division has properties that are sold regularly, that is a fantastic sign. It means the community is in demand and will likely be the first place buyers or renters look when searching for a home. Communities with limited sales activity are considered “bad” by investment standards.
2. Stay away from gated communities.
They may seem appealing from a security stand point, but the myriad of restrictions in these communities will impede progress (i.e., limited access when showing the property to potential renters, restrictions on renovation schedules…).
3. Title insurance: critical condition.
Title insurance is the most critical part of the transaction now. Standard Florida Association of Realtor contracts state that the seller must provide clear title in order to transfer ownership. However, buyers must purchase title insurance in order to protect their asset. There are more and more challenges to the validity of lender foreclosure sales (e.g., new Florida Attorney General inquiry, irregularities in lender’s foreclosure processing, etc.). It is critical that a stable, well financed title company is selected.
4. Permits are not optional.
Thousands of homes in South Florida have illegally built additions (e.g., bathrooms, garage conversions). When writing contracts, please allow for an inspection period. During that time, contact the local permitting office to confirm that the number of bedrooms and bathrooms are accurate. There’s nothing worse than purchasing a house and then having to tear out a bathroom or bedroom to make the house code compliant.
5. HOAs are out.
Just recently the Florida legislature passed a law giving HOAs (home owner's association) more authority to collect dues and limit access to community amenities for delinquent homeowners. Unfortunately, this action has created rifts in communities across the state. The legislature tried to help fix a very real problem….banks and homeowners were neglecting to pay dues on houses that were in the foreclosure process and that created an undue burden on homeowners who were paying their fair share. As a landlord, it would be easier to manage a property without the intrusion of a HOA Board. And, since buyers are trending away from HOAs, when you eventually sell the property, it will more desirable.
This is a great time to buy investment property in South Florida. Just make sure you do your homework.
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