Many families from across the country are choosing Florida as the destination of their next move. In fact, Florida is consistently one of the most popular places for interstate migration. A higher number of people are moving to Florida than to most other states, and many of those families are coming to South Florida.
Can you blame them?
As the population grows, the demand for homes grows as well, which means an opportunity for families to make extra money through real estate investing in South Florida. The median home costs in Broward county, for example, have appreciated at 7.7% over the last year. That’s higher than the national average!
Home appreciation is something to pay attention to. Real estate investing can be a lucrative passive income stream or an exciting part- or full-time job. For the right Florida residents, home ownership can be a reliable way to bolster your investment portfolio, while also gaining many homeowner benefits.
The Benefits of Real Estate Investing in South Florida
Florida’s real estate market is as ripe as our oranges and as hot as our summer sun. But a steady market doesn’t guarantee returns. There’s always risk to any investment.
Implementing a strong financial strategy is key for achieving success in South Florida real estate investment. Hedge your investment risks to maximize your opportunities for a return.
Stocks Vs Real Estate Investing
Families new to investing will hear diverse advice as they prepare to build their portfolio. Some people will talk about the benefits of buying individual stocks, others will encourage you to buy index funds, and many will encourage you to invest in real estate.
As real estate investors ourselves, we can’t help but sing the praises of buying property. But for the best financial advice about your portfolio, consult with a financial planner who abides by the fiduciary standard.
With that said, here are two unique advantages to real estate investment that stocks don’t offer:
An Investment Loan
Your mortgage is one of the most unique investment factors of real estate. Think about it this way: Your mortgage is a bank loan to help you take advantage of investment opportunities you can’t afford out of pocket.
If you go to the bank to request a $150,000 loan to invest in stocks, no teller will give you the time of day. Go back to the same bank the next day and request a mortgage for the same amount, however, and you’ll have the teller’s attention.
Turn a necessary living expense into an investment
Real estate investing is one of the only forms of investment that allocates your money toward a necessary living expense. Think about it this way: The alternative to buying a home is paying rent, which essentially means paying a business for the service of living under a landlord’s roof.
By choosing to buy a home, the money you pay month to month goes directly toward building equity in a long-term investment.
Types of Real Estate Investing
The act of purchasing a house is in and of itself an act of financial investment. While buying a home doesn’t naturally generate a passive income stream, it does mean you’ve purchased an asset that tends to appreciate in value. The difference is that the value you gain through appreciating real estate costs aren’t realized until you sell the home somewhere down the line.
Standard home investing advice suggests you should maintain your home for a minimum of 5-7 years. Within that time, the house will typically appreciate enough in value that you may sell it again at a cost that covers the initial closing costs.
In other words, you’ll turn a profit!
Many homeowners want their property to immediately earn a passive income for them. Perhaps the most common way to generate that passive income in real estate is through annual leasing.
Choosing to become a landlord adds to the benefit of market appreciation by opening another means of putting actual cash into your pocket every month. If you play your cards right, you can cover all your home’s annual expenses–taxes, mortgage, etc.–through the monthly rent you charge tenants.
While this typically means you don’t get to live in the house you own, being a landlord means someone else is helping you buy pay down your mortgage.
Short-term Vacation Rental
It’s easier than ever to market your home to vacationers thanks to websites like AirBnb. The new challenge is finding ways to make your home stand out in a flooded market.
South Florida is one of the top destinations for tourism in the United States. If you find a unique way to market your property to those vacationers, your home can generate a lucrative side-income for relatively minimal effort.
Short term vacation renting is more flexible than most of the other forms of real estate investing in South Florida. You can choose when you’d like your home on the market versus when you’d like to use the home for yourself.
House flipping isn’t as simple as it appears on HGTV. The projects often require locating off-market opportunities, having a realistic understanding of the time and expenses required to fix various complex cosmetic and structural home problems, and the ability to market and sell the property at top-value when all is said and done.
Each of these elements requires practice and unique skill. For the right investor, those skills can help you earn a tidy profit, and maybe have as much fun as your favorite house flippers on television!
The First Step to Real Estate Investment in Florida
Start by developing a game-plan for your ideal real estate investment. Once you have a clear vision, connect with a real estate agent who understands your goals and can help you locate the ideal property. If you’re in the South Florida market, I’d love to be your agent for finding and buying an investment property.
Contact me today to set up a consultation. I look forward to helping your family locate a property that compliments your lifestyle and fits within your budget.