Is the Market Overheated in South Florida?

Question

I live in Port Saint Lucie, and it seems that it is very hard to find any kind of investor opportunities. REOs that need a ton of work are being bid up to near ARV. The Foreclosure auction is a crap shoot, and has all the risks associated with that. What is your opinion of this market? Are we due for a correction? I am looking to buy cash and fix and flip, but wondering if I should just keep my powder dry and wait. What do you guys think?

David O. · Answer

The South Florida market in general (and Miami where I am from) can be quite challenging to find the very good deals. It is all about networking, patience, and persistence, but they can be found. You need good systems and a good process that you execute on consistently. Networking with reputable brokers/agents & wholesalers is a must and extremely important in real estate. All of my best deals have all been introduced to me by agents/brokers and the occasional wholesaler.Also, I constantly monitor the MLS and setup alerts in different areas I am farming and make aggressive offers quickly and methodically. Also remember the execution of your offers. Overall South Florida is an ultra-competitive market. You can judge & critique the price of the property all day by what the seller asking price is, but real deals are made all day by consistently making offers and through delicate negotiations. Many investors will simply judge offers, be afraid to send in deposits or shy away from the contract writing process because they feel like the seller will not accept their offer. However, properties can and do sell for much lower than asking price, you see this all the time.

Account Closed · Answer

The Tampa market is pretty much the same as South Florida. Corrections are all a part of Real Estate Investing...It's going to happen. No one has a crystal ball so we can't tell you when. Prepare for it not run away from the inevitable, that is when Real Estate is on sale. When people are running away that is the perfect time to buy.

Wayne Brooks · Answer

I don't really see any correction, just 5-10 times the number of people trying to wholesale and flip as there used to be.

Account Closed · Answer

@Emmett DempseyAwesome Forum Emmett,You said there are deals to be made ,here in south Florida, if people take action to find them and you are 100% right.At the auctions you can find great deals but there is a ton of competition.Many fewer people are driving neighborhoods, talking to neighbors, farming specific areas and looking for deals.There are many great ways to get deals and its impossible to be the best at all of them so what has worked well for me is to pick 1 or 2 ways to acquire deals. Become the expert in that acquisition technique and build from there.Some people may be able to do a ton of things and be successful at everything. I have always needed to laser-focus on the most important goals and get those done. The same is true with my REI.

Chad U. · Answer

It's been this way since at least 2013, however as @Wayne Brooks mentioned above there are a lot more wannabe investors now. They go to a weekend bootcamp hosted by some of the local ripoff gurus who teach them to scour the MLS, put in offers to get it under contract and immediately send them out via email via one of the guru's wholesale distribution list with a despicable markup. These same gurus are teaching the other half to buy these so-called deals, put in as little rehab as possible, rent them out and wait for appreciation to sell again.

Nelson Jones · Answer

That's a great question. I was going to ask the very same question tonight. It seems that once these properties enter the MLS arena both parties (seller & realtor) are looking for top dollar even if the property's ROI doesn't support it. We're starting to look at FSBO or finding that pre-foreclose before it gets listed.Does anyone know a good method for finding these properties?

Jose R. · Answer

No one knows the answer, but if the beginning of the current 7-10 year real estate cycle was 2010 that would mean we are really close.

Regina Abayev · Answer

A lot of what you're seeing has to do with market dynamics: increased competition, limited supply and REO trading direct to hedge funds/PE through private deals (vs auction or MLS).

Ron J. · Answer

you guys forgot to mention all of the overseas cash money coming to southfla. That's also a very huge factors. It's such a factor that the fbi is investigating overseas sales in Miami. Now they are buying in broward / palm Beach.

Emmett Dempsey · Answer

Great replies everyone. I think there are deals to be made if you are taking action to find them.