Rental Market Update for Central Florida

[Alberto Nikodimov]

Hi Everyone!

This is a quick update on the current Rental Market in Orlando and the Central Florida Region.

We are living in exciting times. This is the highest Real Estate Market we have ever seen. Landlords are making record profits, placing excellent residents and expanding their portfolios. IF you are not, perhaps you are doing something wrong and you need to read this article.

Overview of the current market:
- Highest Rental Rates in history. Rental rates have increased on average between 15%-25% in Central Florida.
- Extremely low inventory.
- Highest Renewal Increases. In a normal market an average rent increase is 3%-5%. We are currently increasing rents when renewing tenants with at least 10%-20%.
- Highest Retention Rates. Residents are willing to accept big rent increases because if they go to the rental market and find something else they will end up paying much more. Not to mention that they will be competing against multiple other applicants.
- Rental Properties are flying off the market! Our average days on market in Q4 of 2021 was 6 Days! Q1 of 2022 looks even better and we are not even in the high summer season!
- Very low delinquency percentage! The market has stabilized after the pandemic and delinquencies are very low. A big part of this is the well qualified applicants we get when renting a property.

Pros of Current Market:

- Investors are realizing the highest Profits and Cashflow they have ever seen! KEEP IN MIND THAT IN REAL ESTATE RETURNS ARE INCREASING YEAR OVER YEAR AS LONG AS WE ARE IN A GOOD MARKET.
- Vacancy rates for landlords are much lower than usual. Residents also prefer extending their leases therefore vacancies occur rarely.
- Great time to invest and start having a positive & passive Cashflow instantly.

Cons of Current Market:

- Residents are having a very hard time finding a rental property.
- Tenants with average credit and lower income are likely going to get denied due to the fact that property management companies and landlords are consistently raising their standards of approval due to the high demand.
- High rents increase risk of unauthorized occupants. Applicants always push forward the person with best credit and income. Property managers and landlords must make sure all applicants over the age of 18 are screened. Also, it is important to make sure residents do not allow unauthorized occupants to stay at the property. If you have an unauthorized person living in the property chances are there were not going to get approved if they were going through the regular approval process.

Do you agree with the statements above? 

Are they relevant to your market?

[Shawn McCormick]

Quote from @William Duong:

@Shawn McCormick thank you for the advice. I buy this property for both investment and future usage because my parent will move into this home 5 years from now. Therefore, it is a big one and I hope to be even or a bit negative for 5 years.

I plan to buy more properties in the Davenport, winter haven, Lakeland and sun bridge area by September next year. What is your thought on buying new construction home as a potential long term investment (hold 20-30 years) in those area ?  

 I love new construction as an investment, although there is some speculation involved and with building times taking longer than normal, it is hard to lock in rates. But I believe in Central Florida as a huge growth area since there is so much land still available and demand is still very high. I like the fact that builder force appreciation for you. I would say to get in early (like you did in Hils of Mineola), the prices will continue to rise. Builders raise prices every 2-3 homes they sell to keep appraisals ticking upwards and that equates to equity for you. 

Sunbridge will be on the pricier side due to its proximity to Lake Nona and Neo city. But the same concept will remain. You will still get starter size and priced homes in areas like Groveland, Leesburg, Mascotte on the West side (although these areas don't have great infrastructure or retail yet), Davenport, Haines City, Winter Haven are all already well underway, but again, traffic is an issue there. Clermont, Winter Gardena and Minneola are all established and pricier due to that, but will remain solid for families that can afford it, great schools and access to Disney, Orlando, Airport etc.

Hope this helps.