Time to buy Florida Multi-Family Property

The construction sector, along with tourism, fuels much of Florida’s job market. As these industries have contracted, consumer spending has dropped and some of these workers, at least for the moment, may have moved out of Florida. The state had a net out-migration of 58,000 this year. This minor drop-off in population is the primary reason to buy Florida multi-family properties right now.

This may sound paradoxical. However, right now, with temporary vacancies, prices are somewhat lower, so Florida multi-family is a good buy. Over time, multi-family is always a good investment for one simple reason: people always need affordable places to live.

Buffet sees signs of life in housing.

According to CNBC, Warren Buffet sees real signs of life for housing, and suggests that we’ve probably gotten through the worst parts of the residential meltdown. Nonetheless, there are thousands of families who, because of that meltdown, will be desperately searching for rental housing.

It is important to understand is that prices for Florida multi-family properties (and multi-family properties everywhere, for that matter) are typically based on a multiple of the rent paid by tenants. If a multi-family building, (a fourplex, for example) has had only 3 apartments rented for the last 5-6 months, the rent multiple that the owner asks for should be somewhat lower, based on the reality of having one empty apartment. This becomes a bargaining chip for the buyer/investor. Of, course, it is up to the investor to find a new tenant.

It is also vital to comprehend that the profit margin for a landlord of a multi-family property increases over time. That’s because rents increase yearly, while mortgage expenses remain stable over time. So if your return on investment this year is 8%, the following year it may rise to 8.5% or 9%. Naturally, this is predicated upon keeping units fully tenanted.

Tenants are easy to find.

In this economy, however, finding tenants should not be difficult. USA today informs us that today’s consumers are trying to save more money. The savings rate is currently up to 5.2% in the second quarter, whereas it was previously as low as of 1% before the economic panic struck. For those who are planning to become landlords in Florida multi-family properties, this is good news. Because it indicates that there will be increasing numbers of tenants who want to - or have to - rent lower cost residences.

In addition, there has been a drop in the number home equity loans granted because of the dip in real estate values. The high jobless rate has many Americans worried about their future ability to purchase a home. Therefore, they will rent in multi-family properties until they have a new job, or until they are certain that their current jobs will offer some stability.

Many of these honest, hard working people have had their credit scores eroded via short sales or foreclosures. They still need to live somewhere, which means they’ll have to rent, but they will have less to spend toward housing. This will lead them to multi-family housing. In addition, as the housing market slowly continues to heat up, construction jobs will resume, tourist trade will increase, and more people will migrate into the state. They will also become your tenants, as they begin their new lives.

If you’re the landlord of a Florida multi-family property, these families will become stable, long term tenants who will care for your property…because it is now their home. With these facts in mind, we can see why now is a good time to consider the purchase of Florida multi-family property.

Writte Marc Jablon, Realty Associates
marcjablon@yahoo.com / 561 / 213 – 6139
www.MarcJablonHomes.com