FLORIDA! What is driving these 3 Florida markets?

Question

I am seeing a lot of construction of investment properties (Duplex, Fourplex, Single Family Rentals) going on in a handful of Florida locations. I do not know Florida very well. Can you tell me what is driving this construction growth?

1) Citrus Springs: This is a small town, pop 10k, with only 1% annual growth over the past 12 years and only 1.1% growth the past year, but the amount of new investment property construction seems to far outpace the area growth. Why? Is it that Citrus Springs offers cheap land so people are taking advantage of this and hoping buyers/renters will follow ? This area seems to far away to be a commute to Orlando...is this right? Are there major industries and businesses that have moved into the area?

2) Ocala:     Ocala is a larger area, but still only ~64k population growth at 3% annual rate past 12 years, 2.3 % growth the last year.   In greater Ocala there is a lot of building of investment properties (Duplex, Fourplex, SF)...Why?  What is driving this construction growth?  Can you commute to Orland from here?

3) Palm Coast:    The 64k population in Palm Coast is stronger with 2.2% annual growth.  This area seems to be a retirement community with the primary businesses being hospitals, restaurants and big box retailers to accommodate the retiree growth, but I do not see any major industries or businesses here.  Is this right?  Why the real abundance of investment property growth here?

Florida continues to be a growing market, always listed at the top of the list for real estate investment.  However, I do not want to get caught up in the hype and want to understand what the key factors driving this growth.  Can you help me understand this?

Randall Alan · Answer

@Brett Merrell

Florida has always been a retirement haven… especially from the way more expensive North East… No state income taxes and lots of sunshine…. Do you really need anything else?   For what you pay $3,000 a month to rent 600sqft in NYC you can own 3000sqft in a Florida suburb.  It’s sort of a no brainer.

No, you do not want to commute from Ocala to Orlando.  I can’t give you specifics about growth.  I think from a real estate perspective trying to read the future tea leaves around population dynamics for a single family/ small scale landlord is over-rated.  But owning 37 units in central Florida I can tell you that the rental business is booming!   Way more demand than supply!  When we list one of our units we will get 30-50 inquiries a day off of Zillow! Not all of those are qualified… but we go through and screen them from there.

Hope it helps!Randy

Joseph Beilke · Answer

@Brett Merrell

I can speak a little about  Citrus Springs and Great Ocala are.

I can speak a Lot about Palm Coast as I personal own Duplexes, and manage other investor properties in Palm Coast and why I like it for long term strategy.

I'll start off with Citrus Springs and areas in the greater Ocala area such as Marion Oaks. Land was and still fairly cheap out there.  I do not know if theses areas were mirrored off Palm Coast due to the way the road networks and "scatter" lot type of selling, but they are eerily similar. But in my opinion these area didn't create or complete the infrastructure to be fully desirable.  We can use city water as an example.  In Marion Oak the water lines do not reach ever residents. So you will find streets with zero homes built because a potential buyer will not want to pay to extend a line to their property.  But once extended every other buyer afterward can hook up to that line at 10th of the cost.  So what you have is larger turn key build to rent companies come in and build Duplex, Tri's and Fourplexes.  They build cheap to keep price favorable for ROI but many of the home are 2/2 or 3/2 just about 900-1000 Sqft with no Garages or even cover parking.  So the area as whole is becoming heavily rental only with little appreciation and rent increases over time.  I consider investing here myself.  But until more owners live in these areas it's a no go for me.  I am personal working with a couple looking to selling in Citrus Spring and buy in Palm Coast or NC.

So how is Palm Coast different.  First off Palm Coast is far from perfect, I believe we are currently going through an identity crisis.  We have leadership that is pushing hard to bring in more people with large HOA developments being approved and 1/3 being 55 and over. Doing this will delay the need to build more schools which are already at capacity.  Homes are still selling fairly rapidly if priced right.  But our scatter lots not in HOA's are starting to dwindle and the city is not making anymore and I haven't seen any zoning changes to neighborhoods to approve more Duplexes.  They are working toward a west of the rail road Master Plan mega community, similar to Silver Leaf and Nocatee in St Johns County north of us by about 30 mins.  If that get approved the identity of Palm Coast will have switch from its original design to  HOA single family only community.

Is this a bad thing?  I do not thing so. Mainly because Florida in the past 2 years has also transition from a transient state to a growth state.  With that being said, the Rental market is still fairly strong with people moving here trying to figure out where they want to live and play. Palm Coast is 75 Min to Jax Airport and 90 to Orlando International Airpor and Disney.   30 minute in either north or south off I-95 you are in St Augustine or Daytona Beach area.   Lastly the beaches, depending on where in Palm Coast you are  2 to 15min to a beach.  The draw here is growing and business are seeing it to with more big box stores coming. But there is also many more smaller business filling shopping centers too. What we need is some industrial growth but with the short commutes to Ormond and Daytona warehouse districts, Palm Coast is not on the radar yet.

Lastly, the type of Multi family in Palm Coast is limited to Duplex's.  You will not find Tri or Fourplexes.  Duplex almost lock in step appreciate and some sellers want to think more then single families.  Most duplexes in Town are 3/2 with 1 Car garage.  Many or 3/2 with 2 car and there are a handful of 4/2's.  This provide a large range of options.  I personal have the best ROI on 2/2 duplex with 2 car garage.  I have fence in yards and allow large dogs.

There is so much more info that need to be said here about Palm Coast.  It's not perfect but for right investor strategy it's a winner.  Picture below is two off market duplex a partner and I have under contract.  3/2 no carpet 1298sqft a side with great finished.  Going to be listing  for rent starting at $2000

Let talk more if your interested.

Paul Pratt · Answer

The growth of Florida isn't due to business. Very simple, It is due to retired people moving here. 75 million baby boomers are going to be retired in the next 7 years. What do they want? To be warm, play golf and not be taxed heavily. Florida is the place for them. That is the bulk of our influx.

Brett Merrell · Answer

@Colleen F. thank you for the information .  Very helpful!

Brett

Brett Merrell · Answer

@Krystal SmithThank you for your feedback on the Florida markets.  You provided great insights to understand better what drives Palm Coast.  Thank you.

Krystal Smith · Answer

Ormond Beach resident and real estate agent here. Speaking to Palm Coast... The Ormond/Daytona area prices for both rent and purchase are becoming out of reach for many people who live and work here. Last year's hurricanes pushed people out of homes they could afford (low interest rates and purchase prices, rent that hasn't been raised) and into communities like Palm Coast. About to go show houses to someone in that situation right now. Many people who could afford the rent and work here, once it's time to buy, have to make the choice between more affordable Palm Coast and a short commute or buying a dump in the town they work. Over and over again they choose to commute from Palm Coast. In terms of rental investment this also makes Palm Coast a great option as rent rates have been out of this world in apartments in Daytona and people exit to Palm Coast. It's a solid long term investment.

Why are people coming to FL? That's been covered here already and I think you'll find a lot of data with a quick search online. Just my personal take? Lifestyle!!Happy to chat more if you ever want to. I spend a lot time looking at Florida markets before I decided to invest and eventually live here.

Joseph Beilke · Answer

@Paul Pratt

Paul I will have to disagree with you some what.  As I stated in my first responds Florida has bee a transient state for many many years.  The pattern is something like this.

Family lives in PA has 3 kids.  2 good and 1 Black sheep

Mom and Dad retire around 60.  Move to Florida to play

10-15 years later. Figure out they are to fair from 2 good Kids and grandkids. Also, getting close to not being able to wipe there own butt.  They don't want a stranger in  nursing home doing it.

Mom and Dad move back to PA to be near family, or pass away before being able to move back.

Risen and repeat with thousands of families. This is not a model for population growth.

Florida's population has grown very close to the national average in the past 20 years with only a 5.8% difference when average across 50 States.

https://www.census.gov/data/tables/time-series/dec/popchange...

Our fast growth this past 2 years is namely from the favorable type of lifestyle Florida and its leadership offers.  Such as no income taxes in FL and raising taxes up North, increase in remote work for many business, rent and properties were cheaper then North of NC. Plus Florida is a Business friendly so when they move here, they not only transfer a job, they are creating more jobs.

This equals population growth.

The 2030 Census should be interesting.

According to the U.S. Census Bureau, Florida led the country in new business formations from January 2021 to January 2022, accounting for almost 12% of all new business starts nationwide. Of the 5.8 million applications for new businesses filed in the U.S. last year, Florida tallied nearly 700,000 of them.

https://nypost.com/2022/08/03/florida-beats-ny-in-new-busine...

https://www.businessnewsdaily.com/8811-doing-business-in-flo...

Colleen F. · Answer

@Brett Aguiar I can speak a little to Ocala, it is not commutable to Orlando. I had a family member move down there due to work but they were following a small business that moved there for tax reasons. It has the World Equestrian center and is well known in the horse community.   I think a lot of  horse people and retired go there. They also seem to have a lot of apartment complexes that are like little "gated" islands. And I understand other gated golf communities. Probably land is cheap and you can do what you want I am not sure they have many building requirements.

Brett Merrell · Answer

@Joseph Beilke  Thank you for your detailed feedback re Florida markets.  I would like to connect with you to set up a time for a phone call if you are open to that.  I will connect with you and send you a note..

Thanks

Brett

Brett Merrell · Answer

@Paul Pratt

Thank you for your feedback regarding the retirement drive of Florida.  It is a different market with different drivers.  Thanks

Brett

FLORIDA! What is driving these 3 Florida markets?

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