Real estate investments in Florida: risks and advantages

Real estate investments in Florida: risks and advantages

Like any other investment, buying real estate in Florida has many advantages as well as risks. Let's take a look at the key reasons why Americans and foreigners invest in local properties and the potential pitfalls they may face upon completion of a real estate transaction.


Risks associated with Florida real estate investment

The climate is the most serious risk that any investor interested in Florida real estate needs to be aware of. Yes, locals can enjoy sunshine and warm weather most of the year, but the recent Hurricane Yan is a sobering reminder that not everything is as “sunny” as it seems. Thousands of people, from Wall Street power players to ordinary people, moved here during the pandemic, attracted by the lower cost of living and the advantageous tax system. Now, they are facing one of the most expensive and severe hurricanes in US history.

The disaster caused widespread flooding, especially along the coast of the Gulf of Mexico in Florida, and left millions of homes and businesses without power. Damages to infrastructure and property are estimated at $100 billion. This is the first extreme natural disaster many newcomers have experienced in this state, which is particularly prone to climate concerns. That’s why, after concluding a sale and purchase transaction, investors need to insure their property against this type of situation.

Real estate investments in Florida: risks and advantages

Reasons to invest in Florida real estate

There are countless reasons why US and overseas investors are interested in Florida properties. The most common factors are the following:

  1. Affordable prices. Florida is one of those states where the cost of housing is lower than the national average. A large amount of undeveloped land in its territory keeps the prices down. Prices for local facilities remain stable, while the rest of the US experiences a sharp increase. Acquiring a housing unit in the Florida market remains a successful investment, even though it has expanded amid the pandemic due to the migration of remote workers.
  2. High supply. There are always options available to buyers considering Florida real estate. The local market offers a wide range of options for both commercial and residential buildings. The sunny region also features a lot of primary and secondary properties. Each investor will be able to select a strategy to suit his preferences and financial resources.
  3. State benefits. The Florida government provides a range of financial incentives to attract real estate investors and support regional economic growth. These incentives include grants, investment models, investment patterns, investment loans, and tax refunds of up to $3,000 for each additional job created in the state. First-time home buyers can receive up to $8,000 in tax credits.
  4. Favourable tax laws. Florida is one of the states offering several tax benefits to its residents and investors, creating a favourable business environment. E.g., residents do not have to pay personal income tax. In addition, the state does not levy taxes on individual entrepreneurs and partnerships. Setting up an LLC will also help investors to avoid income tax. However, if it is a corporation, you will need to pay a government tax.
  5. Economic growth and stability. Florida’s economy develops rapidly due to the influx of tourists and the emergence of new businesses and new jobs. The ripple effect of long-term economic growth and stability will certainly have a positive influence on the local housing market. The number of people who can afford a mortgage to purchase a home continues to grow. Investments in Florida properties allow you to enjoy the fruits of this growth and economic stability.
  6. High demand for rental properties. The real estate market can sometimes be unpredictable. Sometimes investors may invest in rental premises, only to have them empty for weeks or even months after the transaction. As luck would have it, this situation is extremely unlikely in Florida. The local rental market is strong, and the demand for affordable housing continues to rise.
  7. A strong labour market. As Florida has good economic prospects, many businesses open offices here. There are approx. nineteen companies of Fortune 500 in the state. Many other businesses are contemplating following this example. This leads to a growing number of new job opportunities, which, in turn, has a positive impact on the demand for real estate.
  8. Growing population. Florida’s population is constantly growing, resulting in an increased demand for residential units. The Sunshine State attracts many job seekers, young professionals, baby boomers, retirees, and foreign investors, making it a great place to live and work and, above all, a profitable location for real estate investments.
  9. Unique lifestyle. Florida has many aspects that make it the ideal place to live, such as white sandy beaches, landscaped parks, and almost perfect weather. The idyllic and serene lifestyle is the main reason why many people prefer to relocate to the state, which also leads to rising demand for residential and commercial properties.

Real estate investments in Florida: risks and advantages

Things to know before making investments in Florida real estate

Before making a real estate investment in Florida, potential investors should be aware of the following:

  1. The local housing market is at its peak. At present, the Sunshine State housing market is one of the most lucrative investment markets. This is facilitated by the aforementioned advantages, such as a favourable tax system, and high rental demand. At present, there are various properties available here, including homes in well-known areas such as Miami, Orlando, and the Gulf Coast. The investor should confirm that the purchase suits his goals before making a financial commitment.
  2. Choosing a location is just as important as choosing a home. The investor shouldn't focus solely on the requirements his future home needs to meet. Of course, the property should be taken into account, but so should the location. Florida is home to thousands of resorts and places, each with its unique beauty and advantages. The selected location will affect the asset’s long-term financial potential. As a result, this issue needs to be approached wisely.
  3. Maintenance and management of properties. The investor should decide immediately whether he will handle the maintenance and management of the real estate or hire a special company. This decision depends on whether he intends to permanently reside in Florida or not. If the owner decides to rent his property out, he will be responsible for any queries or problems that may arise after concluding the rental agreement. The management companies will take on this responsibility, taking care of the regular monthly fee collection, keeping the property in good condition, and sorting out any difficulties encountered.
  4. There are different types of contracts. In Florida, there are two types of contracts available for acquiring property. The first option is a standard contract that states that the seller is responsible for fixing any property issues that are found. An “As-Is” contract is an alternative. When signing this paper, the seller will not be responsible for fixing any issues that have been pointed out. This allows the buyer the choice to back out of the transaction.
  5. Consultation with specialists. Florida real estate purchases are challenging, especially for first-time buyers. For assistance in selecting a residential or commercial unit, contact the highly qualified specialists at Florida-Real.Estate. Customers of the online platform will receive support at every stage of the transaction, from finding a suitable unit to concluding a purchase and sale agreement and resolving after-sale issues.

Real estate investments in Florida: risks and advantages

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