Inside Florida Real Estate Market
01 set 2018
The State of Florida remains a popular choice when it comes to foreign buyers. In 2017 the total purchases of residential properties made by foreign buyers went up by a significant $24.2 billion, which represented 15 percent of the national residential market. The range of different investment possibilities and the short-term profitability are key factors on that.
While buyers purchase properties all across the state, Orlando has been one of the areas that have experienced a high household growth. The overall interest in this subject has led to this quick interview with the International Real State Specialist Leandro Teles, with over 15 years of experience in the United States market, and currently, founder and CEO of TekesCorp Group, a corporate group specialized in the North-American real estate.
1. Overall, how’s the housing market dynamics in the U.S.? What are the aspects new buyers should pay attention to?
First, you need to wisely choose your realtor, unlike other countries such as Brazil, in the United States all realtors have access to the same home-listing database that is updated multiple times per day. Another important aspect would be to be sure about what kind of investment you have decided to make. Would you prefer a long-term rental or short-term vacation home? Will you use it during holidays with your family? These answers will surely guide you when finding out which would be the best choice for your investment.
2. How’s Orlando economy changing? Is it stable by now?
Orlando’s housing market is far away from being stable, but in a good way. There’s not only a growing demand on vacation rentals but also on residential housing aiming families searching for a new place to settle or even retired people coming from northern U.S. and Canada looking for Florida’s warm weather. This time, the growth is happening in a totally different way, when compared to how it was during the housing bubble in 2007. According to Forbes Magazine, it is expected a 35% growth in Orlando’s housing until 2021.
3. And, how are the foreign buyers placed in this market? What is their current level of investment?
When it comes to the foreign buyers, we see them in a highly advanced stage, already purchasing homes in Orlando or Miami. Most of them have invested in their own new homes a few years ago, and nowadays they tend to invest in building fresh new entire gated communities or even brand-new houses in popular areas. At the moment, our construction management company located in Orlando is developing 3 new communities in the Orlando area and over 18 residential units on Florida’s west coast, summing up to 135 units in total. Not to mention other bigger projects that are currently in progress.
4. What about the payback? What’s the expected income when entering this market?
When it comes to risk versus return tradeoff, the U.S. Real Estate Market is different from other investments types as the risks are much lower, which provides certainty and security while investing. When talking about numbers, the return on investment (ROI) over rentals on ready to live homes may vary from 4% to 6% per year, however, this number will go up to 8% to 10% when choosing a land and hiring a construction company. The numbers are even higher when building from scratch to sell it right after it’s completion, giving an ROI of 18% to 20%. It is always important to remember that a few other factors might affect these rates, such as location and construction type.
5. What are the market trends when it comes to investing?
It’s natural to look for other types of investments, mainly for the ones who prefer to invest in rental homes. That’s why the acquisition of homes located in long-term rental areas has attracted many investors looking for a stable investment. In 2017 Orlando was considered for the third year in a row, the city that has generated more employment in the United States. Around 1000 jobs are generated per month. That shows how high are the family domestic migration rates, represented by families that decide to move to Orlando searching for jobs and a perfect place to call it home. Windermere, for instance, is one of Orlando’s most valuable areas. That is because this area offers a huge number of high-quality schools, and continued development and investment. All of this translates into higher housing demand and a very attractive business scenario for international buyers.