investing Archives - Buying Property In Florida: The Florida Property For Sale Complete Guide

Florida Real Estate Investing: Leaseback

Leasebacks are a great way to achieve instant cash flow when buying Florida property as an investment.

Here’s how it usually works.

Florida is booming with new home builders.

A portion of these new home builders would rather free up their cash by selling their models at each of the communities.

Then they lease them back for the time that they are selling in each community.

The upside is that if you purchase a builder’s leaseback, you have immediate cash flow.

The downside is that the builder will only pay the going rate, and many times it isn’t a great return. However, it’s a great way to ensure instant cash flow!

The other downside is that the lease is usually open ended. The builder will demand that you let them lease for as long or as little as they need it.

So for example, if the builder takes longer than usual to sell out the community, you are stuck with a rental rate that is at or below the current market value. On the flip side, if the builder sells out quickly, or decides to build a new model series, they might vacate early.

Your 1-2 year cash flow is cut short!

If you are interested in pursuing a leaseback, please contact us. They are not that common, and most builders have a following of investors that snap up any new models at a builder’s new community.

So . . . you have to be patient, and willing to move on your Florida property purchase quickly!

Pros and cons of a Florida real estate investment

florida investment in real estate

Perhaps the biggest ‘pro’ for Florida investment real estate is that it can help to balance your portfolio –

– for example by diversifying out of other types of markets (e.g. stocks and shares) or by expanding your investment geographically (always with an eye on the expected movement in the £/$ exchange rate, if that’s predictable).

And a dream home in the sun is always a great place to use for a holiday if no one else is in residence!

There are several other advantages:

Good rate of return: historically, real estate has produced a high rate of return for owners/investors, well in excess of inflation.
Leverage: financing is typically available for approximately 70% of the purchase price.
Equity build-up: as property appreciates in value and any loan is paid off, investor equity accumulates.
Tax advantages: there are both income and capital gains tax benefits, although this of course varies by country and by individual.

Remember, though, that there are disadvantages too:

Lack of liquidity: the real estate sales process can be lengthy if you wish to turn your asset back into cash.
Local market: unlike popular stocks and shares, the available market is specialized and local.
Purchase and ownership costs: buying and selling incurs substantial commissions and taxes; ownership imposes maintenance and rent collection burdens.
Risk: increasing costs can negate investment returns and property prices can go down as well as up.

To find investment properties currently available on the MLS, click here. (If you need a reminder about MLS, what it is and what is can do for you, click here).

The overall message to emphasize, though, is the usual one with any investment: if in any doubt about the course of action you’re planning, seek professional advice before making any commitment.

Or click here: Contact Us to send us any questions you have about investing in Florida real estate.

The Myths Of Guaranteed Investment Property

You’ve probably seen web pages with enticing offers about guaranteed investment property in Florida:

Double your money in two years!

Let the renters pay for your second home!

Pay us $5,000 up front now you’ll get $50,000 in rentals!

Well, we can’t over-stress this:

Watch out – if it seems too good to be true, it probably is!

Florida is a great place to buy a piece of real estate, and guaranteed investment property is a fabulous goal – but you need to be more wary about these offers than almost any other purchase you’ve ever entered into.

Need more convincing? Here is an extract from the Orlando Sentinel on April 29th 2006:

Kissimmee attorney receives 5 years in prison

A suspended Kissimmee attorney has been sentenced to five years in prison for his participation in a fraudulent investment scheme.

S. Craig Wakefield must pay victims more than $220,000 in restitution after pleading guilty to one count of racketeering and a count of securities and investment fraud.
Wakefield . . . . solicited investors from all over the country, telling them they would receive a “guaranteed” return of 10 percent to 12 percent on their investments. Wakefield and his accomplices collected more than $376,000, but the victims never received promised returns.

This is just one example. Nearly 10 years on from that example, the risks are just the same and the promises just as disingenuous.

Need more convincing? Well, don’t take our word, how about the US government. Check out this SEC web page that includes the fairly plain advice:

Be highly suspicious of any “guaranteed” investment opportunity.

This is targeting financial and stocks and shares schemes, but the principles are equally as valid for real estate investment. And when it comes to Florida, we’ve seen many otherwise-careful buyers suspend their judgement because of the lures of the the sun and the lifestyle.

So . . . . you have been warned!

We strongly believe that, whether it’s Florida investment property, company shares or whatever, the promise of guaranteed income is more than likely a high-risk lure. And that’s whether you are talking to an attorney, a Realtor or anyone. We also believe that it’s illegal under Florida law – but do let us know if we’re wrong on that!

Florida Real Estate – The Right Time To Buy?

April 22, 2015 by CFE Team

This is the text of an article that we published seven years ago and we’ve reproduced it here because some of the comments are still valid. We’ve added some notes to highlight the major changes. However, things have moved on a lot since then, so Contact Us for the latest state of the market.

If you’re interested in Florida real estate, you’ve probably seen many, many news stories recently, because there are lots of opinions out there about the state of the market. So if you have some thoughts about investing, what should you do? Is now a good time to buy or not?

Well, before you go any further, make sure you’re clear about your reasons for buying. For example, if you’re looking for your dream home in the sun and plan to hold it for personal use over a number of years, now may be an excellent time to buy because:

There is a wide choice – it’s a buyers’ market right now, there are many homes for sale and not many buyers, so your bargaining position is strong.
The exchange rate (£ to $) is at the best level for years. (Note: that’s obviously not so right now!)
Prices have come down from the highs a year or two ago, so value-for-money is good.
And if you’re looking for an investment to take advantage of the current exchange rates, you can also find some good deals (but make sure you’ve done your homework first).

So if you’ve figured it all out and you’re ready to jump right in and search for the right home, click here: Florida property search

On the other hand, if you’re looking for a short-term gain, maybe you should look elsewhere:

There is almost a full year’s inventory of resale homes on the Central Florida real estate database (the Multiple Listing System, “MLS”) – so the buyers’ market won’t disappear very soon! A couple of years ago there was about one month’s inventory. (Update: now we’re back to about 3 or 4 months’ supply)
Prices are unlikely to rise by any great amount very soon. Some pessimists foresee further price reductions (but there are early signs of a pick-up in activity that suggests this may be overstated). (Since this was written, we’ve returned to increases in double digits in many cases)
Selling costs are high, compared to UK levels, so you’re likely to need a year or more just to break even!

This is of course only an overview of current conditions. For free help and guidance tailored to your own individual plans for buying Florida property, Contact Us.