Florida - Where should we look?

Question

Good morning BP,

My wife and I are looking to 1031 our Ohio rentals into a property in Florida. We currently have two new constructions under way in Cape Coral with Rent to Retirement. We like Cape Coral but we want to select a different market for this deal to avoid having all of our eggs in one basket. For the 1031, we are looking for a property in the 450-550k range.

Can anyone recommend some strong markets with the potential for cash flow and appreciation in that price range? Any feedback would be greatly appreciated. Thank you!!

Zach Lemaster · Answer

@Michael Simmonds Great to hear!  I would personally recommend more new construction in other areas of FL, TX or looking at areas around Huntsville, AL.  Happy to discuss further if you'd like!  All great areas that have strong growth!

Adrian Lemus · Answer

I agree with Kenny, as a Contractor myself So.Flo. Is booming. This year I have scheduled several builds already in Cape Coral, West Palm and in Miami-Broward a lot of rehabs/remodels

Bernard Joseph S. · Answer

I have a build in Cape Coral, and a few in North Port and Ocklawaha in various stages going on right now through RTR. Some are 1031 properties as well. All recommended for different reasons, but very solid markets. @Zach Lemaster has the magic touch so definitely reach out to him. Just saw some new TX multifam properties they have on their list in San Antonio that look promising. Good luck on your 1031!

Patricia Steiner · Answer

Tampa Bay has the highest net migration in the country with property appreciation of 20+% annually and year-over-year rent price increase of that as well.  It is nothing less than a complete housing crisis here; the demand for housing far exceeds supply.  If you (are able to) buy it, it will sell/rent/flip almost instantly depending on the specific market.  All great stuff.  On the flip side, property insurance in Florida is up 40% over last year and our property taxes are some of the highest in the nation (just because we don't have a state income tax doesn't mean the tax man suffers...it just gets sucked up in property taxes).  There are really no cheap dates here when it comes to price because of the demand.

My recommendation would be to go into a market that has both property and rent price appreciation growth annually, great demand for housing that exceeds supply, and stay in a narrow lane to find the right property at valuation and no more.  A lot of people are making a whole lot of money here but it takes discipline and patience.

Hope this helps...

Ke Nan Wang · Answer

St. Augustine is a great vacation rental area. You can cashflow very well at that price range if you manage them yourself (2 x long term rent). You only need to hire a good and reliable cleaner and that will take care of 90% of the hard manual labor of running a STR business.

Long term rental here we are looking at somewhere around 5.5 to 6% CoC ROI right now after management, assuming you are buying a turnkey hassle free new or near new construction property all cash.

If you purchase a lot and build a rental house on it you can hit about 7% CoC ROI.

Feel free to DM me if you need me to do a deep dive in this market. I own and operate LTR STR Real Estate and Construction company here and have all the real world data you need.

Kenny Hollaway · Answer

I grew up in Cape Coral and moved out a couple years ago. Prices are climbing and so are the rents but Cape Coral was it hard in 2008 and I think that was due to, besides the nationwide reasons, the lack of businesses down there. I personally sold my property there recently and invested in Jacksonville FL. The numbers work a little better there and its a much larger city with tons of business growth so I feel a little safer if there was to be a large pull back on home value and rents.

Kenny Hollaway · Answer

I work all over the state.  Florida is booming all over. Miami is always growing but I see a ton of growth in Sarasota, north Tampa, Jacksonville and Orlando.

Michael Simmonds · Answer

@Bernard Joseph S.Thank you for the reply! I was actually just looking into North Port. We will continue our research there. Thanks again!

Shawn McCormick · Answer

@Michael Simmonds

I'm 'pro' Orlando for appreciation, we have been in double digits for over a decade and inventory levels are falling again (we are back down to less than 2 months). Cash flow is not great here, so appreciation is the better play.

You can pick up new construction for you budget and do well if you want more of that. Also there will be plenty of resales, however, they will be a bit more competitive this time of year. Happy to have a call to provide any insight if you think this would be a good fit.

Where are your Ohio properties? I'm from Toledo and invest there, also lived in Cleveland for 10 years and have contacts that may be interested in picking up your properties there.

Best of luck!

Tommy Adeoye · Answer

Definitely not a financial or investment advice but some general guidance for consideration.

Some of the factors ( A few I think you already are aware of ) I look for when evaluating a market include:

•  Population growth and demographic trends
• Job and economic growth
• Rental demand and vacancy rates
• Property taxes and regulations…@Patricia Steiner laid this out brilliantly.
• Overall real estate market conditions

Based on your budget and investment goals, you may want to consider mid-sized cities with strong economic growth and rental demand, such as Austin, TX( There is a new Samsung plant brewing in Taylor,TX); Nashville, TN; Charlotte, NC; or Raleigh, NC. These markets have experienced significant population growth and job growth in recent years, which can translate to strong demand for rental properties. A real estate data analyst is gradually becoming a developers’ best ally or must I say significant member of his development team.

I have also found qualified and seasoned real estate agent , who has experience with 1031 exchanges to be a valuable resource in providing market-specific insights and recommendations.

In addition, you can also leverage online tools and resources to research and analyze potential investment markets, such as real estate investment websites and databases, local news and economic data, and demographic and rental market reports. Don’t have time, a few reliable freelancers can do the leg work on your behalf.

Overall, As cliche as this may sound, real estate investing involves risk, and I admire your proactive move in evaluating properties before making any investment decisions.

Good luck with your 1031 exchange!

Florida - Where should we look?

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