By Krista Taurins, February 2014.
Amusement parks, sunny beaches less than an hour away, perfect weather, and affordable properties. What's not to love?
Orlando is a city of 240,000 people in Central Florida. It is known as "The Theme Park Capital of the World," and its attractions draw over 51 million visitors per year. While most people are well-familiar with the city of Miami in south Florida, relatively few know much about Orlando. It is a great place for investing in real estate.
The housing market
Many people are well-familiar with the Florida housing market, since for the past 8 or 9 years, it has been one of the worst in the US. It has been bad for sellers only-buyers are making out well. Orlando experienced an incredible housing boom around the year 2006, when many people bought houses. In Central Florida, it was very easy to get a mortgage (perhaps too easy), so many people bought homes and investment homes. Times were good. Orlando housing prices seemed to rise every day, and many buyers were able to re-sell quickly at a profit, encouraging more buyers. A "For Sale" sign would go up in a yard, and there would be multiple offers the same day. Few seemed to understand that the trend wasn't going to last, and many people got burned.
Foreclosures and short sales
Things have changed. Housing prices rose quickly, and then crashed back down. Many of those buyers are still upside down-they owe more money on their home than it is worth. Many of them have, unfortunately, lost their homes to foreclosure. Others are forced to do a 'short sale'. This means that the amount of money that the home will be sold for is less than what is currently owed on the property. The only thing "short" about a ‘short sale' is that the lending bank comes up "short" in the transaction. The process can easily take 6 to 9 months from the time an offer is submitted to the bank, so "short" is decidedly, not a reference to time. A ‘short sale' is not for every buyer.
What this means for investors is that many Orlando properties can be purchased for steep discounts. A home that cost $360,000 in 2006, might cost $170,000 today. Banks are getting wiser, and when they foreclose, they often go in and repaint the house, and install new appliances and carpeting. This means that foreclosed homes often feel brand new. Gone are the days of kicked in doors, ripped up kitchen cabinetry and other mayhem caused by angry homeowners facing foreclosure. (I once showed a foreclosure that had "BEWARE" written on the wall in what appeared to be blood. That showing did not result in a sale). Banks are also offering up special incentives to buyers who use their mortgages to buy the homes they have foreclosed on, thereby keeping the mortgage (and interest) in-house.
On the other side, the foreclosures that have hit Central Florida also mean that people who have lost their homes are looking for properties to rent, since they will have to wait a few years before they can purchase again. Landlords, willing to rent their house to a tenant who has had a ‘short sale' or a foreclosure in the past few years, should easily be able to find tenants.
Finally, remember those 51 million tourists? They also need places to live when they are visiting. Disney World attracts tourists from all over the world, and many of them are coming for a once in a lifetime experience and are ready to experience a week or two of luxury. Commonly, people travel in large groups and split the cost of a vacation rental home. Disney has hotels on site, but many are prohibitively expensive ($300 per room per night, for example), and it is easier and less expensive for a large group to split the cost of renting a home ($3000 per week, split by three families, for instance). There are 5-7 bedroom homes for sale near Disney, designed as vacation rentals for tourists, that will net an investor - yes, net - $60,000 to $80,000 per year. One builder will even pay for the cost for your family to come and vacation in Disney if you buy a home, up to $5000. There are rental management firms that will handle the day-to-day activities of maintaining that property. Investors do not need to live here, to make money on property here.
There are also loans available to foreigners. Buyers do not need to be US citizens to purchase a home in the US, and they don't even need to reside in the US. They do, however, need to put down more money up front (usually 25% to 35% of the purchase price) and the interest rate will be higher. Foreign investors need not pay cash in order to buy a property, and can then use the property for their own vacations if they desire.
No matter what kind of property appeals, be it a vacation rental, a long term rental, or a second home, Central Florida has something to offer. I encourage you to explore this beautiful and profitable sunny part of the world.
Krista Taurins is a real estate professional living in Central Florida. She has lived in a few different spots around the world before settling with her family in snow-free Florida. She now helps investors and regular home buyers find the perfect property for them in Central Florida. Her websites are: www.kristataurins.com or-in Russian-www.nedvizhimostvofloride.com.