Florida has been a popular choice for real estate investors since the heady days of the early 20th century Florida land boom. A few decades later, the advent of air conditioning dramatically increased demand for residential real estate from the tip of Florida’s panhandle to Key West’s southernmost point. The rest is history.
Although much has changed, Florida still calls for modern real estate investors. That’s not to say investing in property in the Sunshine State is easy, nor that profits are assured. Indeed, first-time Florida entrants should consider these important considerations before getting too far ahead of their (water) skis.
1. Know What You’re In For
First, perhaps most importantly, understand what investing in Florida real estate entails. The state is commonly divided into three culturally distinct regions:
- North Florida, which shares more in common with neighboring portions of Alabama and Georgia than, say, Miami or Fort Lauderdale
- Central Florida is a rapidly growing region characterized by older cities like Tampa and flourishing exurban communities along the I-4 corridor.
- South Florida is a densely populated region characterized by a heavy Caribbean influence and substantial international real estate investment.
In reality, Florida’s geography and demographics are more complicated, but the three-region framework is helpful for non-Floridians to begin wrapping their heads around this complex state.
2. Location Matters
In Florida, more so than in many other states, location matters. The most important location-related consideration is proximity to water and the ocean or the Gulf of Mexico. Don’t believe it? Ask any Miami real estate expert how fast prices drop as you move away from the waterfront.
Of course, other location-related factors matter, too, like proximity to major highways and centers of employment and access to quality schools. When in doubt, ask a local.
3. Condos Are Great, But They’re Not the Only Game in Town
Non-Floridians would be forgiven for assuming that everyone here lives in a high-rise beachfront condo or gated community. That’s far from the truth; larger cities like Tampa and Miami have plenty of non-HOA, single-family housing stock in established neighborhoods, for instance. Don’t assume that your first Florida real estate investment will be a condo or that condos offer the best value for your money here. Ultimately, your personality as an investor will determine the type of housing you pursue.
4. Project Your ROI (Realistically)
Before you buy, run detailed cash flow and return-on-investment projections to understand better how your investment may perform. Be sure to countenance a variety of economic and market scenarios. Preparation is a key precondition for real estate investing success.
Pick Your Spots
No matter where you choose to invest in real estate — North Florida, South Florida, or outside Florida — it’s important to pick your spots. Real estate investing holds immense opportunity for those willing to do proper due diligence and make rational, informed decisions. But it’s inarguably a high-risk endeavor, and most successful real estate investors will freely admit that they owe their biggest wins to not-insignificant amounts of luck. There’s no shame in pulling back and waiting until you’re truly ready.
