You’ve heard all the stories about Florida’s real estate woes.  And, certainly, many reasons remain to be cautious about that market.  But maybe it’s time to take another look at this “Fallen Star”.  Here are a few reasons we think the timing is very opportune for this particular strategy:

• New stats reflect renewed interest from buyers. Sales in Miami-Dade and Broward counties in the last quarter of 2008 compared to 2007 were up 51% for single-family homes and 37% for condos.  At the end of last month, the number of homes for sale fell by 4.6 percent
• Houses are once again, affordable. Historically, under normal market conditions, real-estate prices have tended to hover at about 3 to 3 1/2 times a region’s median household income. In South Florida, by 2007, that ratio had grown to twice the national average – 6.4 times household income in the State.  Now, affordability is again within reach.  Current ratios are in the 3.5 to 4 range – very comparable to historic national averages.
• South Florida rocks. Consider, for example, these stats in the Greater Fort Myers area:
  • sales up an astounding 181% in December
  • a total of 1034 properties sold versus 367 during December ‘07
  • median price dropped to $97,750, below 2003 levels.
  • in December, there was 8 months supply of inventory.  One year ago, that number was nearly 23 months.
  • 8,768 single family homes sold in 2008, an increase of 86% versus the prior year.
  • Cape Coral January 2008 sales were up approximately 140%. Over half of them were foreclosure/short sales.  View related article here.

OK, so enough with the market statistics.  Let’s remember the remarkable story that got Florida to that heavenly perch from which it has fallen.  It’s a story of beautiful landscapes and incredible expanses of water; of beaches and sunshine and beauty; of no (or low) taxes.  All those things we dream of when we ponder our retirement.  The current dilemma notwithstanding, for many of us, Florida is still the place to be.  And, as Arnold would proudly proclaim:  “It will be baahk”!

And when it does come back, wouldn’t it be a nice proposition to have acquired a future retirement home (at 2003 prices) that is also serving as an income property – cash flowing and appreciating – while you prepare for its eventual conversion to your very own winter getaway!  If we were to assemble a profile of the typical property available for our clients, it would look something like this:

• Physical Description:  1900 s.f., 4/2 SFR, 2-car garage, aged 0-10 yrs, construction: stucco, city water/sewer, .25 acre lot, Lanai, sprklr, AC,Pool, tile & granite tops.  Taxes 3%.  Ready to rent.
• Financial Profile:
  • Acquisition cost:  $125K ••••  Down pmt:  $25K ••••  Loan Bal: $100K  ••••  6.5% loan (PITI) $949
  • Rental Income: $1450 ••••   GRM:  7.2  ••••  Cap Rate:  8.9%  ••••  Prop Mgmt: 12%
  • 5 yr Performance estimate: Appreciated Value (3% per yr):  $144,900 ••••  Cash Flow:  $44,053  ••••  Rate of Return:  18.1% annually

So, think for a moment.  Can you imagine this kind of investment opportunity elsewhere — not to mention, the chance to escape those winter doldrums in a permanent fashion?    By special arrangement, we have partnered with a major south Florida realtor to offer a turnkey investment package for our investors.  Don’t hesitate .. like Denver, these prices are going in one direction …UP!   For a sample financial analysis or additional  information, drop us a line at www.reinvestroup.net.