Good time to buy in Orlando?

Rental Property Investor · Nashville, TN · Member since 2016 · 179 posts · 42 votes

Is it a good time to buy in Orlando? In vegetal how us the Florida market? I am trying to gather info on Orlando and Tampa for investing in SFH

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George Gammon

Flipper/Rehabber · Las Vegas, NV · Member since 2016 · 174 posts · 251 votes

10y

@Chai Jonn

@Mike D'ArrigoI agree the best time to buy was 3-4 years ago. I'd say that about most US markets. But when looking at a bench mark for prices I prefer to look at the inflation adjusted historic norm. I'm in no way trying to be critical of your post. I'm only trying to offer a different type of analysis that I prefer. Hopefully I can add a little value to the thread...

The reason I like to go back in time and look at inflation adjusted prices is it takes us back to a time in our country when the things that affected prices were real wage growth or population growth. Said another way, fundamentals that made an increase in prices sustainable.

Some newer investors may not realize this but throughout our history most banks required a 20%+ down payment, solid credit score, and income sufficient to pay back the home loan. These were rules that stayed consistent for decades, and magically, we never had a massive housing crash. At a national level housing prices went up and down slightly, in real terms, but would always revert back to a mean.

Then in early 2000's prices skyrocketed. Why? Did real wage growth skyrocket?...no. Did our population skyrocket?...no. So if people were spending the same percentage of income on housing and income didn't increase how did prices go up so dramatically? Obviously with increased credit via lowering lending standards and artificially low interest rates (below what the market would set).

The reason I mention this is a rise in prices based on credit expansion is only sustainable if real wages increase (more income means higher mortgage payments are affordable) or interest rates go down (although amount of credit increases the monthly payment is not increased therefore an increase in income is unnecessary).

So what's my point? We haven't had a significant rise in real wages or population, therefore if prices go significantly above their historic inflation adjusted trend line, those prices are most likely unsustainable and will revert to the mean. This is why I prefer this metric when analyzing prices for xyz area instead of an absolute high water mark.

Here's an inflation adjusted chart of Orlando that illustrates my point. Notice where prices are now compared to the 2005/06 high water mark and the historical mean.

What becomes obvious from the chart is the historic norm is about $175,000 inflation adjusted. This gives you the data I would use to determine if prices are high or low. Example: If real prices were at $250,000 I'd say they're high. Another person that looked at the absolute high water mark of $340,000 would say they're low. I'll let the reader determine which camp they fall into but hopefully it provides food for thought.

So, having said all that, it would seem based on my analysis prices are close to their historic inflation adjusted norm (please note prices could be different now, this chart only goes to 2014), therefore now is a reasonably prudent time to buy in Orlando.

Hope that helps,

George

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Dan Oliver
Residential Real Estate Agent · Orlando, FL · Member since 2015 · 139 posts · 106 votes
10y
Orlando is still strong for investors. Banks are tightening the margins just as they are everywhere else, but the inventory continues to flow with good net ROI.
0 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
10y
If you buy right and make a profit at purchase there is never a bad time to buy. There can be a bad time to sell though. In Kellar's book "the millionaire real estate investor" the mantra is: you make your money when you buy. If you purchase 25% under market, the market has to drop that much for you to be "even".
2 Reply
Teddy Sherrod
Investor · Kissimmee, FL · Member since 2016 · 43 posts · 6 votes
10y
yes I must agree with Dan there are
no shortage here in the central florida area .
0 Reply
Mike Hicks
Real Estate Agent · tampa, Florida (FL) · Member since 2013 · 206 posts · 96 votes
10y
If you are a serious investor the tampa area is good (not too sure about orlando), plenty of "competition" but most are tire kickers, and like Dan said, there is plenty of inventory.
1 Reply
Account Closed
Lender · Fort Lauderdale, FL · Member since 2015 · 117 posts · 22 votes
10y
Hi Tampa currently has a very healthy market. We get calls from investors there often.
@Chai Jonn
1 Reply
Chai Jonn
OP
Rental Property Investor · Nashville, TN · Member since 2016 · 179 posts · 42 votes
10y
@Dan Oliver @Teddy Sherrod @John ThedfordThanks for the info. What are some good areas for SFH for a budget of $120k to $ 140K?
@Mike Hicks@Account ClosedI am definitely thinking about Tampa.
What are some good areas for SFH for a budget of $120k to $ 140K? in Tampa
Anyone has idea about Jacksonville Market?
0 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
10y
@Chai Jonn I have been buying in Cape Coral. It is about 2 hours south of Tampa. We have great appreciation in the area as does Tampa. It is difficult to find a deal here but they do happen. If you want to look at our MLS you can do so on my website.
1 Reply
Chai Jonn
OP
Rental Property Investor · Nashville, TN · Member since 2016 · 179 posts · 42 votes
10y
I am visiting Tampa this weekend so wondering how should I go about vetting the areas? I am a new investor so could sure take some advice an guidance. Which areas should I drive by to take a look around
0 Reply
Chai Jonn
OP
Rental Property Investor · Nashville, TN · Member since 2016 · 179 posts · 42 votes
10y
@John ThedfordCape coral is definitely on my list
2 Reply
Account Closed
Wholesaler · Jacksonville, FL · Member since 2015 · 47 posts · 5 votes
10y
@Chai JonnI am currently a resident in Jacksonville and been living here for over 15 years. The hottest zips in the area for that kind of ARV is 44, 10, some 09,and 08. Also Orange Park(Next to J-Ville). I do get wholesale deals in all of these areas.
0 Reply
John Kent
Real Estate Agent · Orlando, FL · Member since 2008 · 551 posts · 159 votes
10y
@Chai JonnOrlando is my market. Generally, when folks talk about Orlando they are referring to the Orlando Metro area (Orange, Seminole, Osceola counties) which covers a lot of ground. There are quite a few different neighborhoods with SFR in the $120k - $140k range depending on your actual property requirements. What kind of investment opportunities are you looking for regular rentals, buy - fix - rent, fix and flip?
0 Reply
Chai Jonn
OP
Rental Property Investor · Nashville, TN · Member since 2016 · 179 posts · 42 votes
10y
@Account ClosedI will PM you shortly
0 Reply
Chai Jonn
OP
Rental Property Investor · Nashville, TN · Member since 2016 · 179 posts · 42 votes
10y
@John KentI am looking at turn key to start off with. I am not experienced with any real estate so far. So sticking to Turnkey for my first 2 investments. I am looking for both cash flow and appreciation, safe, SFH
0 Reply
Chai Jonn
OP
Rental Property Investor · Nashville, TN · Member since 2016 · 179 posts · 42 votes
10y
@John ThedfordCan we get something decent in the range of 120k to 140k in cape coral? This is for renting and appreciation for SFH
0 Reply
Seth Nadreau
Real Estate Agent · Cape Coral, FL · Member since 2015 · 167 posts · 89 votes
10y
I'm also going to recommend Cape Coral... and @John Thedfordknows what he's talking about. His companies signs are all over this city!
1 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
10y
Yes it might take some time but deals can be found.
Send a PM.
@Chai Jonn
0 Reply
Chai Jonn
OP
Rental Property Investor · Nashville, TN · Member since 2016 · 179 posts · 42 votes
10y
@John ThedfordI am ready to wait. Can Wait till buy really low
0 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
10y
@Chai Jonn...you make your money when you buy. I just attended a REIA meeting today and one landlord with 30 years experience stated he has NEVER seen a better rental market ever. I feel the same way. I expect to raise rents at least 10% this year alone. You can access the MLS on my website. Never hesitate to ask questions. Feel free to make any offers...and the owner can accept, reject, or counter.
1 Reply
Chai Jonn
OP
Rental Property Investor · Nashville, TN · Member since 2016 · 179 posts · 42 votes
10y
@John ThedfordSounds good. I will surf through MLS and let you know
0 Reply
Chai Jonn
OP
Rental Property Investor · Nashville, TN · Member since 2016 · 179 posts · 42 votes
10y
@John ThedfordWhich is better? Vacation rentals or just renting it for teneants?
0 Reply
Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
10y
The time to buy in FL was 3 or 4 years ago but Orlando prices are still well below their pre 2006 highs.
0 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
10y
@Chai Jonn vacation rentals are PM heavy on expenses. I do annuals. Much less problems, easier management, etc. You do give up the higher income though. Vacation rentals you MUST have the right property, properly furnished, MUST have a pool, and preferable canal front. So, you have to spend quite a bit more money on purchase price, have higher operating costs, etc. I personally prefer annual rentals, but am sure others may like vacation rentals.
0 Reply
George Gammon
Flipper/Rehabber · Las Vegas, NV · Member since 2016 · 174 posts · 251 votes
10y
@Chai Jonn
@Mike D'ArrigoI agree the best time to buy was 3-4 years ago. I'd say that about most US markets. But when looking at a bench mark for prices I prefer to look at the inflation adjusted historic norm. I'm in no way trying to be critical of your post. I'm only trying to offer a different type of analysis that I prefer. Hopefully I can add a little value to the thread...
The reason I like to go back in time and look at inflation adjusted prices is it takes us back to a time in our country when the things that affected prices were real wage growth or population growth. Said another way, fundamentals that made an increase in prices sustainable.
Some newer investors may not realize this but throughout our history most banks required a 20%+ down payment, solid credit score, and income sufficient to pay back the home loan. These were rules that stayed consistent for decades, and magically, we never had a massive housing crash. At a national level housing prices went up and down slightly, in real terms, but would always revert back to a mean.
Then in early 2000's prices skyrocketed. Why? Did real wage growth skyrocket?...no. Did our population skyrocket?...no. So if people were spending the same percentage of income on housing and income didn't increase how did prices go up so dramatically? Obviously with increased credit via lowering lending standards and artificially low interest rates (below what the market would set).
The reason I mention this is a rise in prices based on credit expansion is only sustainable if real wages increase (more income means higher mortgage payments are affordable) or interest rates go down (although amount of credit increases the monthly payment is not increased therefore an increase in income is unnecessary).
So what's my point? We haven't had a significant rise in real wages or population, therefore if prices go significantly above their historic inflation adjusted trend line, those prices are most likely unsustainable and will revert to the mean. This is why I prefer this metric when analyzing prices for xyz area instead of an absolute high water mark.
Here's an inflation adjusted chart of Orlando that illustrates my point. Notice where prices are now compared to the 2005/06 high water mark and the historical mean.
What becomes obvious from the chart is the historic norm is about $175,000 inflation adjusted. This gives you the data I would use to determine if prices are high or low. Example: If real prices were at $250,000 I'd say they're high. Another person that looked at the absolute high water mark of $340,000 would say they're low. I'll let the reader determine which camp they fall into but hopefully it provides food for thought.
So, having said all that, it would seem based on my analysis prices are close to their historic inflation adjusted norm (please note prices could be different now, this chart only goes to 2014), therefore now is a reasonably prudent time to buy in Orlando.
Hope that helps,
George
4 Reply
Adam BartomeoBusiness Member
Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes
10y
@Chai JonnGlad to hear you are looking to invest in FL. If you plan on getting serious in Cape Coral please let me know. I always have off market deals for investors. Even though I am a licensed agent my customers don't normally pay the MLS prices.
[email protected]239-339-3969
Bartomeo Property Management4.7143 Reviews
Website View Page
0 Reply
Zach Mitchell
Investor · Orlando, FL · Member since 2012 · 183 posts · 155 votes
10y
Depends on where you're looking in Orlando. The graph shown above is the entire MSA. Lake County is not Orlando, Osceola County is not Orlando, Seminole County is not Orlando, see where I'm going here? In the real Orlando there are plenty of areas that are at or above previous peak market highs. I have seen plenty of homes that people bought in 2005-2007 that are now selling above those prices. I don't know how people invest out of their own area, it's hard enough to learn your own backyard. You just need to have a great agent I guess.
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