According to the National Association of Realtors of the United States, Florida 2022 came out on top in popularity with foreigners who buy real estate for investment. This popularity was caused by excellent climatic and social conditions which later led to a rapid rise in prices.
During the last year alone, from November 2021 to November 2022, the average property price in the state has increased by almost 10%. With this being said, the data for the last ten years is even more impressive. In 2018 the average cost of a residence in Florida was $240,000 and today it is $390,900, meaning that over five years, the average cost of local residential properties has increased by 61%.
To buy real estate in Florida profitably, you need to know about the features of the region. Below you will find tips to help you get the most out of your Florida real estate investment.
Content:
- Choose the area with the largest increase in property values
- Choose an area where the cost of rent increases
- Check the area’s infrastructure
- Don’t think for a long time
- Order an expert examination
- Pick months with low demand
- Pay attention to large land plots
- Conclusion
Choose the area with the largest increase in property values
There are many settlements in Florida known for their luxury villas, comprising both luxurious residential villages and standalone mansions on the coast, as the state is washed by the Gulf of Mexico on one side and the waters of the Atlantic Ocean on the other. The length of the state’s coastline including all the islands and bays is about 13,560 kilometres. Due to the high level of infrastructure development and the multitude of jobs, the region is one of the most comfortable and prestigious areas in the United States.
The table shows the areas of the state with the most active growth in property values over the past year. Experts are certain that price growth in these locations will continue in the medium term, albeit at a slower pace than in 2022. Buying a home in these cities will allow you to receive tangible profits through resale or rental in the next few years.
| Area | Percent value increase (November 2021 to November 2022) |
|---|---|
| Iona | 76.9% |
| Aventura | 41.2% |
| Daytona Beach | 41% |
| Kendall | 39.2% |
| Panama City | 38.1% |
Despite the rising real estate cost, Florida will remain attractive to investors in 2023, as residences in the state continue to cost less than in other US states that are popular with investors. For example, today in the Sunny State, a detached house with a plot of land can be found for $50,000, while prices for luxury residences start at $400,000 which is well below California or New York prices.
Choose an area where the cost of rent increases
Over the past year, Florida has seen a rapid increase in rental property prices. According to Harvard University, eight out of the ten areas with the highest rent growth in the country are located here in this state. This means that property owners can receive a stable recurring rental income that will increase in the coming years.
Miami took first place in Florida in terms of villa rental growth in 2022. Since the beginning of 2022, rental rates for mansions have risen by 39%. On average across the state, growth in demand for rent provided a 10% increase in rates.
Check the area’s infrastructure
Luxury real estate is chosen by people who are accustomed to premium amenities. To make the residence effortless to sell or rent, it is important to pay attention to the infrastructure in both the village itself and the proximity to amenities.
To get the maximum return on investment, choose villas with good transport accessibility. Infrastructure such as schools, kindergartens, hospitals and shops should ideally be located within a fifteen-minute drive.
Don’t think for a long time
Buyers quickly flock to profitable residential properties as soon as they appear on the Florida real estate market. In November 2022, the average time it took for residences to be purchased on the local real estate market was forty-three days. However, in the areas most sought after by investors, for example, in Iona, properties are sold within seventeen days on average. The best properties aren’t on the market for very long.
If you want to buy a villa in Florida, you need to make an offer to the seller as soon as possible to ensure another buyer doesn’t beat you to it.
An important tip: if you have picked up a property that another client is interested in, do not rush to immediately raise your bid. In some cases, it is sufficient to simply pay the associated costs. Offer to increase the cost only if the initial payment does not interest the seller.
Order an expert examination
After the conclusion of the preliminary contract and before the final settlement, the buyer has the right to assess the property by inviting a property inspector who in turn will tell you how reliable the house you are buying is.
The inspector will tell you:
- What is the property condition
- If the property price corresponds to its market value
- If the property needs any repairs.
Pick months with low demand
Before 2020, the Florida real estate market was seasonal as the best month to buy a residence was in April. Compared to November which was the most active month for buyers, the price difference was about 6%.
In recent years, real estate price surges were mostly due to the pandemic and the political situation, thus making it difficult to accurately determine the market seasons. However, if you look at the statistics, you can see a gradual decline in demand and price that began in August 2022. This means, that at this current moment, this is the right time to invest your capital as you can buy properties at a better price. Experts predict that the cost of residential properties in Florida may gradually decrease for another two-three months, after which it will begin to increase again. Today's investments will pay off in the long run.
Pay attention to large land plots
If your budget allows, it is still possible to purchase large tracts of land in Florida that are larger than 10,000 square meters. Such properties can be used for one grand residence, or the land can be divided into several plots for the development of smaller villas. In 2008, Russian billionaire Dmitry Rybolovlev did just that. Dmitry bought Donald Trump’s mansion which he then demolished and then later divided the lot into three areas with three separate residences, earning $13.74 million from the resale of the resulting developments.
Conclusion
The higher the cost of the purchased property, the greater in absolute terms the amount that can be saved by purchasing a luxury mansion at the right time. For example, you can invest in purchasing real estate today, when Florida is experiencing a decline in demand and value. According to experts, prices in the state's real estate market will continue to rise for at least another ten years, meaning that the current decline is only a short-term correlation.