Lesser Known Investment Locations In Florida

As the housing market in Florida Property Market Shows Recovery, it’s the ‘lesser known’ locations taking the investment initiative, says Serena Templeton.

Once upon a time the US housing market was in fine fettle. House prices were on the up and up and life in the greenback economy was good. 2006 marked an abrupt end to the fairytale: a decades-long binge of fevered price appreciation that we’ll never forget nor probably ever truly comprehend. While the market these days is far from fluid with one in five homes still in negative equity, most industry pundits acknowledge that green shoots of recovery are finally beginning to appear notably in States with a pathway to international markets.

Take Florida. Last year’s tally from the National Association of Realtors confirms nearly a third of all U.S. sales to foreign buyers came from the Sunshine State, helping to bolster a still flagging market: (the latest Standard and Poor's indices show that real estate is 30 per cent below its 2006 peak.)

More interesting perhaps, is the shift in investor focus to ‘lesser known’ locations. Prices in Orlando may be down 40 per cent+ on their pre-recession highs, but there’s no stampede to snap up cut-price holiday boltholes. Instead buyers are questioning if ten-a-penny villas with pools really constitute value for money.

Helping the decision making process however, is a weak dollar, giving buyers extra leverage to move to a more select neighbourhood for a reduced outlay. Fundamentals such as good transport links and a superior quality of life are also back on the wish list particularly in locations with a low supply high demand ratio – cue places like Vero Beach, St Petersburg and the Florida Keys.

Buyers should also keep an eye on capitalisation potential, (likely future income return expressed as a percentage of the original property price) and look at areas where values are still largely on an upward track – that way they maximise their chances of bagging a genuine deal.

Top tips for a Stateside steal

• Pre-construction sales can be risky at present, with any number of reasons why a given project will not go through; zoning, density, as well as an inability to reach a minimum threshold of sales by a certain time. Warning signs are under-capitalised finances and a request for high deposits of 20 per cent plus.

• Buyers need to make certain that the cost of any ‘incentive’ to buy is not built into the price of the home-it should be a legitimate perk. Most importantly if the promotion involves financing, buyers should not be coerced into dealing with a particular lender as a prerequisite to the sale. If an offer sounds too good to be true, it probably is.

• Take a good look at expense ratios. How you plan to cover the maintenance and upkeep costs of what you buy is critical to work out in advance. A desirable location is key; low-density build, quality facilities and not a ‘cookie cutter’ proposition are all important factors, particularly when you come to sell. Picture yourself as a prospective client looking to rent your property. Everyone attaches a certain snob value to what they go for. You should be equally discriminating when you’re looking to invest.

• Remember that the true test of investment strength and desirability is whether a local market can hold its value relative to other equivalent areas during an economic downturn. Focus on that and your investment may well have a happy ending.