Tuesday, February 01, 2011 2:14 PM
Top Ten Reasons to Invest In Florida Real Estate
There are many reasons to invest in Florida real estate and continuing with my top ten series I am including my top ten reasons to buy now.
10. Because you are investing in Florida and the same reasons people leave the north and move here still exist.
9. When renting the investment the renters will be paying off your loan. The current market dynamics have rental vacancies decreasing and consequently rents increasing.
8. Real estate investing although less liquid than the stock market has traditionally been less volatile.
7. History has demonstated the number one way to become a millionaire is investing in real estate.
6. Possible tax breaks (check with your accountant) with possible interest deductions, capital gains tax, and deferring taxes with a 1031 Exchange.
5. Power of leverage to increase your return. Positive leverage is when an investment returns more than the cost to finance. An example of this when an asset is returning 9% of the original purchase price and the cost of financing is 6% then there is a positive leverage of 3%. During the boom years of real estate this had become quite a challenge in Florida because of the high prices people were paying for their real estate investment and the low rate of return they were achieving (Capitalization Rate).
4. Buy the real estate below market and you have an instant profit. If you live in this property for two years then you may qualify for tax free profit. If your property is an investment then after a year you may qualify for capital gains tax. (Verify with your accountant) Owning real estate also gives the investor the opportunity to create a profit by making necessary improvements.
3. It still is a buyer's market so there are still a good quantity of distessed properties and distressed sellers that allow buyers a great bargaining position. Buyers do not have to just settle for foreclosures in disrepair, or short sales with their unknowns, there are many other opportunities that currently exist.
2. Interest rates are at an all time low and by leveraging a purchase can keep the cost of a home or a real estate investment at minimal. When buyers perceive that interest rates are rising then often they buy quickly resulting in less selection of property to choose from. In a buyer's market more investors are willing to offer creative financing such as owner financing.
1. Real estate market is cyclical and currently at an all time low or near an all time low. A cyclical markets also suggests what goes down will go back up (appreciate). The economy appears to be slowly improving and excess housing inventory is decreasing. A buyer who is selective can capitalize on this. In many areas of Florida owning a home is now less than renting! Real estate has been a safe investment over the long term.
The bonus reason and possibly the most important to many people is pride of ownership along with giving people a sense of achievement and stability. Real estate is tangible and can be enjoyed unlike a stock that is intangible. When you need help with your real estate investment in the Tampa Bay Area of Florida visit www.davidcraven.com or contact a real estate agent, David Craven, with twenty years of investment experience in Pinellas County and Hillsborough County Florida.
RE/MAX Realtec Group