My partner and I have been starting to analyze some potential BRRRR deals in Florida but I'm having a hard time getting over the fact that most of its major cities are literally in a league of their own in terms of vacancy rates.
Do any active Florida BRRRR or Flip investors have any practical, market specific advice for securing long term tenants/homebuyers? (1-4 units)
Short Term Rental Investors feel free to weigh in too.......
We'll be buying all cash and refi out @ 6 mos
Please keep generalized theory about attracting tenants/buyers out of this thread as I'd like to try and keep this thread hyper specific and useful for investors in Miami, Orlando, Jacksonville, and Tampa.
I've brokered a few loans in the state but they were either 5 + multifamily or beach front rentals that don't really represent what I'm looking for.
The good part about South Florida is there is so much rental demand there isn't much advice needed. All my FL properties are a little north of Miami in Palm Beach County. I just make them look nice (and I don't mean over improving them) and list them myself on Zillow, etc and have a tenant lined up in less than a month every time.
On the flipside I haven't bought anything new in FL for a couple years now and have been investing out of state as it is very difficult to find cash flowing properties here. If you are able to find some that is awesome, renting them should not be an issue.
My properties are in Bradenton FL (just south of Tampa), and I'm having the exact same experience as Mr. Jaworski (previous post). Rental demand is very high (vacancies filled in a month or less) but I am not buying any more in this area right now; the numbers just don't work for me (for buy and hold.)
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I can only speak for Daytona Beach and only from personal experience, but vacancy on low to mid range single family/2-4 units that are in good condition with some updates is non-existent... as soon as it comes on the market, it is rented out. Expect longer time on market for high end single family or luxury rentals and more turn over as those renters often move to become buyers. Also expect longer time on market for questionable areas and older, un-renovated properties. But even then, you will get a lot of interest from tenants with poor rental qualifications.
@Mitchell Jaworski cash flowing properties in South Florida are hard to come to, my advice will be to pair up with a local mortgage broker and secondary real estate agent more investor-friendly. Sometimes these people find you deals before they hit the market. “The strength of the team is each individual member. The strength of each member is the team” -- Phil Jackson
@Alex Bekeza Vacancy Rates can vary from market to market example in Wilton Manors an apartment well price by 20th st on the NE side can have a vacancy rates of days... while an apartment on the same 20th st by on the NW side lets say by 9 AVE can have a vacancy of months or 20%. Rent growth on the NE of 20th st is positive and rent growth by 20th st on the NW side is Negative (according to www.neighborhoodscout.com so just do your due diligence and always remember to involve a real estate attorney IN FLORIDA at the beginning and at the end of your deal, this may help bring any red flags that you were not aware off and save you a lot of time and money. Good luck in your endeavors.
if you offer a quality product at the right price, you should only be vacant in your turnover month for LTR. hold back the cost of a months expenses from your income. we held back 6% per month for vacancy.
STR we don't account for vacancy, because that is the name of the game. understand your break even days, additional hold back expenses, and then calc cash flow.
@David Santana Thanks for the info, I really like the interactive map on neighborhoodscout.com I'll be playing with that more. What I'm hearing from everyone is that you just have to find the right neighborhoods that have a good balance of inventory/demand but the numbers suggest something like several hundred thousand vacant units. But what I've realized is that a lot of those studies include second homes (236,000 units in Miami alone) as vacant which should definitely be accounted for. I'm not sure why all of these studies loop in second homes because it doesn't necessarily create the end figure investors are looking for. In my opinion, second homes should just be calculated separately.
This article is very recent but specific to Miami https://news.wjct.org/post/miami-has-highest-household-vacancy-rate-among-largest-metro-areas-study-finds
The Miami metro area has the highest number of households that are for seasonal or occasional use, followed by New York. Miami-Dade County already has one of the worst rent-to-income ratios in the country, with more than half of all families spending more than 30 percent of their income on rent. Kapfidze said the secondary vacant homes — many of them owned by foreigners — are keeping prices high by tightening the supply of housing.
An oversupply of housing units is causing rents to fall in areas like Downtown Miami, and owners are selling their units for less than they bought them for. Zalewski said developers have overbuilt and South Florida real estate is no longer as attractive for secondary homes for foreigners, in part because of the strengthening dollar.
“Anybody who is looking for a unit and willing to negotiate” can save “because what’s asked versus what the places actually transact at is dramatically different,” he said.
Seems like a lot of stress factors on LTR opportunities there.
Looking forward to more responses from Florida investors.
Hi @Alex Bekeza ,
I took a quick look at the lending tree article and it does highlight that they take into considerations homes that are purchased as secondary homes and are left vacant for the summers. Those numbers may be a bit inflated in regard to tenant vacancy and owners that are purchasing a second home and using it only in the winter. As everyone has stated in the thread it’s definitely going to be the type of product that your offering and neighborhood specific. Best of luck.
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