Real estate is a highly appealing investment opportunity—particularly in a consistently robust market like Florida. Unlike typical stocks that have a checkered history of repeatedly crashing, real estate is relatively consistent in terms of return on investment. Historically, real estate has proven time and time again to be one of the safest, secure investments you can make with your hard-earned capital. But whereas stocks are pretty easy to buy, acquiring real estate assets is not as simple as merely clicking on a realtor’s website. The process entails a lot of research, planning and forethought in order to be truly successful in the long-term. Don’t be intimidated, all of that hard work will pay dividends down the road. To get you started, here are some tips on getting started investing in new construction real estate projects in Florida.
Why New Construction?
Before we delve into the details as to why Florida is the ideal real estate marketplace to concentrate your new construction portfolio, let’s first clear up why these properties are tremendous opportunities for reliable and consistent passive revenue streams. For years, buying property during the pre-construction phase has been a popular approach for investors. With the rampant population growth and the rapidly diminishing availability of buildable residential lots, prices are steadily rising. When you purchase property before or during construction, you are essentially acquiring the future of the market’s real estate at the present-day price—which is a pretty hard deal to beat from a profitability standpoint.
Construction project managers typically offer the initial fifty to sixty percent of their units at below-market price points in order to sell them fast and encourage buy-in from potential homebuyers in the future as well as to secure financing for project completion. What’s more, if you buy in these early stages of development, you have the luxury of selecting the best units in terms of location, size and amenities. The key to successful new construction real estate investing is knowing which local markets will experience the greatest degree of appreciation in the coming months and which developments are offering the best value offerings during the pre-construction phase. That’s why sufficient preparation and thorough market analysis are worth their weight in gold when it comes to smart and sustainable investing strategy.
Florida Real Estate Market—Appreciation Matters
When it comes to realizing profits from your real estate investment portfolio—particularly new construction holdings—appreciation is the name of the game. And you’d be hard-pressed to find a more favorable market in terms of consistent home price growth year-over-year than the major Florida markets. Over the past decade or so, the Florida real estate market has undergone considerable growth—experiencing a rate of at least 10% annual appreciation—which is more than double the national market average. If you’re new to the investment game, here’s a quick rundown of one of the most basic, yet essential, principles you’ll need to grasp in order to be successful. Any real estate investment grows in terms of its net worth due to the leveraged value of the initial cash investment. The astounding appreciation rate in Florida in conjunction with today’s all-time low interest rates exponentially amplify the degree of this leverage.
Florida Market Dynamics—Why the South Florida Market is Ideal for Investors
Florida is a diverse real estate market with extraordinary potential for increased development. Cities such as Miami and Palm Beach are now seeing a dramatic influx of new residents due to both the aging baby boomer generation seeking warmer climates for retirement as well as workers who are relocating due to a shift to work-from-home in light of the ongoing COVID-19 pandemic. It’s no wonder that real estate investors from all over are turning their attention to Florida due to its excellent geographical location, limited supply of buildable land, considerable future population growth and impeccable beaches. In particular, the South Florida market, which is sandwiched in between the Atlantic Ocean to the south and east and the Everglades National Park on the west, has a very limited amount of available land but is still anticipating a host of incoming residents seeking housing options. With available land in this market rapidly dwindling, developers are reconsidering the eastern cities they initially looked over. A flurry of development activity in those areas is rapidly ramping up prices and home values as young professionals want to live near employment opportunities. This makes it an excellent time for real estate investors to get ahead of the game and snap up these new construction offerings at a discount price. Being proactive and calculated now when acquiring property will set you up for success—and not to mention a health payday—in the near future.
If you are in need of a hard money loan for your next investment, reach out to Alpha Funding Partners. Our team of experts offer the best combination of rates and leverage and would love to partner with you on your next Florida hard money loan.