What types of properties are working out for you in Orlando, FL?

Question

Hello,

This post specifically addresses investors that have invested in properties in Orlando, FL.

I recently learned that different areas of the world are going to have certain properties that are just more successful than others. For example, buying a single-family home in the middle of Manhattan is virtually impossible; you would probably be better off buying an apartment or townhouse. That said, I wish to ask all of you the following:

What types of properties have you purchased in Orlando, FL, that have worked out for you and brought you monetary success? Is it multi-family homes, single-family homes, condos, etc.?

I look forward to reading your experiences!

Shawn McCormick · Answer

@Jonathan Feliciano The Orland market has been quite strong for several years, IMO, new home construction has set the pace for pricing overall. There are literally hundreds of new home communities and when they build those, they set the appraisal value and raise prices everytime they sell about 5-10 homes, so if you buy early, you have a ton of equity by the time the community is built out. They sell so fast that the demand outpaces the retail market. We have seen year over year pricing increases close to double digits for several years. Check out the graphic I attached showing what the current market is doing. Look at the median price..up 9% over last July...and that is during the Pandemic and last summer was great here..we had more inventory, pricing was high and steady. So...."the best time to buy real estate is always..5 years ago". That being said, it would take something enormous to bring the market to its knees again (in Orlando anyhow). But the values of the properties is inflated because so many people are still buying therefore driving them higher. I think we will see a wave of short sales and foreclosures if the unemployment rate stays high, depending on the elections and what turmoil that is bound to bring, the Fed and what they do with interest rates etc...

Jonathan Feliciano · Answer

@Shawn McCormick

Thank you for the insight into the Orlando market!

I understand that with this pandemic, things have not been easy. Many people have lost their jobs. I've had many of my friends move out of Orlando, and I definitely do see the repercussions of that on the real estate market.

That said, can you tell me a little bit more about the Orlando market prior to the pandemic? Was it great, or was it more or less the same as how you described it now during the pandemic?

Shawn McCormick · Answer

Hi @Jonathan Feliciano. I am a Realtor and investor in Orlando and can tell you that our market is very tight right now so to answer your question about what has been successful is tricky as a few years ago there were still lots of foreclosures, distressed properties to buy and add value to. We have seen 8-12% appreciation for the last couple years so the equity play is tough and although rents rates are very high, cash flow is not as easy because purchase prices have gone up and the 1% 'rule' is hard to accomplish.

It also depends on your level of experience and risk tolerance. What works great for some can be too risky for others. We have a very large presence of Hedge Fund buyers, REITS, International buyers, and investors from all over clammering to be in this market and it has been very competitive.

Multi-family properties are hard to find because most investors hold them long term so there is very little turnover. We only have about 35-50 on the market now and most of those are overpriced or in terrible condition. We have a large vacation rental market too, but that is shakey right now as well. Most of the owners of those are from out of state and because Disney is not getting traffic, they are suffering because they depend on Airbnb etc. You might find some deals in that market because they want to dump their properties, but still getting top dollar as I see it so far.

Hope this helps a bit, let me know if I can answer anything else for you.

Alice Horn · Answer

@Jonathan Feliciano if you're interested in comparing short-term rentals in the mix, happy to provide analytics and info!  We manage over 80 Orando area homes and we are happy to provide feedback.Alice

Steven Torres · Answer

Hey @Jonathan Feliciano

I agree with @Shawn McCormick. Since the Orlando market is really competitive, I recently bought a SFH in Winter Haven applying the BRRRR strategy.

Lake Nona has a lot of new construction and most are SFH. Multi-families at the moment are hard to come by not just in the Orlando market. Your best bet is getting in contact with some off-market specialists.

Best of luck moving forward!

Kristina Bayes · Answer

I've read conflicting reports saying that the house market will drop but others say that the interest rates will stay relatively low.  We are looking to buy and hold for 10-15 years.  Just trying to decide when its best to pull the trigger.

What types of properties are working out for you in Orlando, FL?

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