Tuesday, 23 October 2012

The Big Funds Continue To Invest In Distressed Florida Property

The Big Funds Continue To Invest In Distressed Florida Property

Warren Buffet thinks single family homes in Florida are cheap and now a major investment firm has decided they are now such good value they are prepared to invest a cool $150 million in 1,200 repossessed and foreclosed property in South Florida.

As I have been telling for months on this blog, Florida property is extremely attractive to investors right now. A combination of high rental yields, heavily discounted prices and a market that finally seems to be following a sustainable path towards recovery is what has attracted the attention of many of the big investors in the USA

The group of Mexican partners at Vulcan group are pretty clear about why they want to invest in South Florida homes. Their CEO Inaki Negrete said in a press release, “We’re buying properties once valued at $200,000 or more for $75,000 and making them available within six weeks for a reasonable $1,500-a-month rent.”

Buffett one of the world’s greatest investors saw the potential we have been telling you about right back at the beginning of the year and this latest investment only reinforces the idea that Florida property is an extremely good long term bet – certainly in contrast to most property markets in Europe at the moment.

Negrete added; “The residential home market in South Florida is definitely on the rise” and the fund is so optimistic about their investment that they expect to liquidate it in 2017, with a 100 percent increase in the values of the properties in its portfolio, plus an annual rental cap rate above 14 percent.”

For most smaller investors it may not be possible to invest on the scale of the large investment funds, however I think this latest move by Vulcan should alert investors that time is running out when it comes to some of the larger gains as property values steadily increase.

Only last month, a Reuters poll forecast that house prices would rise 2.5 percent next in Florida next year, up from 1.8 percent on their July poll. We also learned in August that month, that the average price of a Miami Condo rose 9.1% to $404,927 from $371,205 a year earlier.

On top of this, average rents are climbing 4.4% annually according to the latest data.

It is not often that we see rising rents and prices happening in one state, yet this is what is happening now as a result of tight lending conditions and the influx of foreign cash buyers from Canada and Brazil as well as the big fund managers.

Is it time to invest in Florida property? You bet it is. Please leave your comments below:

Kind Regards
Brett Williams
Property Expert

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