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Personally, as an investor in Brevard, like lio45, with rental properties, I would hope there is no significant drop.
How "tied" are you to the area? If you're like me (living away), you probably could sell off everything anytime you wanted - if you felt pretty sure the market was at a temporary peak.
(Unlike my main portfolio in my home town - this one, whatever happens, even if prices are high and cap rates almost unacceptably low, it will likely always make sense to keep it, there are so many advantages to having those buildings right in the city my business is and where I spend most of my time. But what I have in Brevard should be treated almost as stocks - if it's "time to sell", then I should.)
(BTW I love the Space Coast and will likely keep at the very least one "vacation" property there for myself, whatever happens; I'm just talking about the rest of the portfolio.)
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Here in NY, there is growing concern as many are leaving the city as working from home is a reality and can work for many who do not want to commute. This has created huge fear with a potential for a third of office space and half of the restaurants and cafes that rely on these workers commuting into the city, closing down for good. This has started to happen in NYC. No bailout will cover the rent for these cafes. Nor will major companies not renewing their office space stay. It could be a big mess in NYC in the next six months or so.
Yeah, and it seems that this trend you're talking about might be good for suburbia in general, therefore for Florida in general as well. We're not the only ones who've observed/forecasted it. For example (from the Orlando subforum; bold mine)
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Originally Posted by boy3365
I agree with lio45. Things are steady or slowly moving up at about the same pace. I'm seeing ads from realtors on social media saying that houses they are listing have 4-5 offers, etc. There is a story in the Tampa Business Journal that higher-end real estate there is projected to do well as northern city-dwellers seek out less densely populated areas.
I would add that IMO even "non-high-end" real estate will do well if high-end real estate does, as these submarkets are obviously super connected. Whoever was going to buy a "high-end" property and now can't afford it, will end up buying a slightly lesser high-end one, etc.
How "tied" are you to the area? If you're like me (living away), you probably could sell off everything anytime you wanted - if you felt pretty sure the market was at a temporary peak.
(Unlike my main portfolio in my home town - this one, whatever happens, even if prices are high and cap rates almost unacceptably low, it will likely always make sense to keep it, there are so many advantages to having those buildings right in the city my business is and where I spend most of my time. But what I have in Brevard should be treated almost as stocks - if it's "time to sell", then I should.)
(BTW I love the Space Coast and will likely keep at the very least one "vacation" property there for myself, whatever happens; I'm just talking about the rest of the portfolio.)
Yeah, and it seems that this trend you're talking about might be good for suburbia in general, therefore for Florida in general as well. We're not the only ones who've observed/forecasted it. For example (from the Orlando subforum; bold mine)I would add that IMO even "non-high-end" real estate will do well if high-end real estate does, as these submarkets are obviously super connected. Whoever was going to buy a "high-end" property and now can't afford it, will end up buying a slightly lesser high-end one, etc.
Very true. Suburbia is doing well right now.
Our plan was to move down here about two years ago, after building a decent but manageable portfolio. Then a series of events both personal and business related curtailed the plan. Now the plan likely won't happen for another five or so years. So we are always keeping an eye on things here to see if liquidating makes sense or not. Always weighing both sides. Makes it tough, especially on one property we bought to move into and renovate to our liking, is currently very negative in terms of cash flow.
But we love it here too.
Makes it tough, especially on one property we bought to move into and renovate to our liking, is currently very negative in terms of cash flow.
The property I used to keep for myself (a 3/2 with inground pool, conveniently located), I soon realized it was silly to leave it empty most of the time, so I ended up renting it with 1-year leases, and figured, from now on, any time I'm in Cocoa/Rockledge, I'll just crash / "camp" in whatever's not rented at the time. (There's always been at the very least one or two, even at my peak occupancy rates; in retrospect it made no sense to keep one empty year-round just for whenever I show up down there).
Worse case, I calculated that even if I have to stay at a hotel while I'm there, it's still financially advantageous to NOT keep any property for myself. (Basically - I'm not there enough for it to be worth it.)
So... my suggestion here, why not consider renting the place you were going to move into? Turn negative cash flow into positive cash flow. In a few years you can move into it and even if you then have to repair a few things, no way it won't have been totally worth it (from a cash flow POV).
(Unless there's something I'm missing here, doing that looks like a no brainer with the info I have.)
(Unless there's something I'm missing here, doing that looks like a no brainer with the info I have.)[/quote]
Iio45, none of our properties are willingly vacant. We could never afford that. The negative cash flow one we purchased to move into has a mortgage on it. The monthly rent I can get on it, due to the outdated nature of the house inside, does not command enough rent to cover my expenses. It was bought with the intention to do a major renovation. We already replaced the roof (not on the original plan as inspection was good enough, but insurance companies were not having it), dock, all mesh screens around the pool, paint inside and some electrical work. But we did not replace the 1970's style kitchen or 1960's bathrooms which are clean but dated. We put over $30k into getting the exterior up to snuff, but when we realized we could not move down, we just left most of the interior alone. Our thinking, why spend a ton more to renovate inside to our taste when tenants will likely mess it up over time? With so much in the house dated and the costs keep rising on repairs as well, appliances, AC, sprinklers, pool pump, the list grows as you know it can. We love its location near the end of an east facing canal (no bridges to get onto River). So we debate back and fourth on what to do.
After about a 3 week slowdown in March/April the real estate market in Cocoa Beach and Cape Canaveral came roaring back. Single family homes are especially hot at the moment and the upper price ranges in homes and condos is very active. Our inventory in both has contracted to an all-time low. I'm seeing record high prices for some (not all) property types.
After about a 3 week slowdown in March/April the real estate market in Cocoa Beach and Cape Canaveral came roaring back. Single family homes are especially hot at the moment and the upper price ranges in homes and condos is very active. Our inventory in both has contracted to an all-time low. I'm seeing record high prices for some (not all) property types.
Good to know. I think it pays to update if planning to sell in this market. I have seen this too in most of the metro NY area. Homes that are move in ready and modern inside are commanding top dollar and selling fast. Wasn't sure that was the case down here too.
We love its location near the end of an east facing canal (no bridges to get onto River). So we debate back and fourth on what to do.
Sounds like you're canalfront on the Banana River side of Merritt Island...? (1960s construction is consistent with that guess ) Great location if that's the case, I agree!
Yeah, then I am not surprised rent doesn't cover anywhere near [all expenses + monthly interest AND capital]. In fact, it seems to me it wouldn't be that easy to find a tenant for that type of property (at a reasonable cap rate, I mean)... it's really "meant" to be owner-occupied.
I've been Airbnbing a few of my downtown properties in my hometown (they're in areas where the zoning allows the hotel category, so I've always been kinda legal, unlike many other Airbnb hosts) and (at least pre-Covid) it was really working great. To the point I was toying with the idea of getting a canalfront house on Merritt Island, and a boat, and rent that short-term to vacationers.
Not sure how expensive insurance would be for that though - considering you're supplying a boat to random drunk people who are there to party, all year long, always different people...
In my hometown it works okay (since I'm around to monitor things) but remotely Airbnbing stuff is a different level of challenge, so I dropped the idea - and for FL am sticking to conventional landlording with one local manager (a guy I know / almost personal friend now).
But in your case, maybe that's something you would want to consider...?
Sounds like you're canalfront on the Banana River side of Merritt Island...? (1960s construction is consistent with that guess ) Great location if that's the case, I agree!
Yeah, then I am not surprised rent doesn't cover anywhere near [all expenses + monthly interest AND capital]. In fact, it seems to me it wouldn't be that easy to find a tenant for that type of property (at a reasonable cap rate, I mean)... it's really "meant" to be owner-occupied.
I've been Airbnbing a few of my downtown properties in my hometown (they're in areas where the zoning allows the hotel category, so I've always been kinda legal, unlike many other Airbnb hosts) and (at least pre-Covid) it was really working great. To the point I was toying with the idea of getting a canalfront house on Merritt Island, and a boat, and rent that short-term to vacationers.
Not sure how expensive insurance would be for that though - considering you're supplying a boat to random drunk people who are there to party, all year long, always different people...
In my hometown it works okay (since I'm around to monitor things) but remotely Airbnbing stuff is a different level of challenge, so I dropped the idea - and for FL am sticking to conventional landlording with one local manager (a guy I know / almost personal friend now).
But in your case, maybe that's something you would want to consider...?
Yes to your guess on location.
No to the Airbnb thing, especially since you would need to furnish, update, wifi, electronics and appliances etc, which adds up quickly. Most neighbor's don't like it either and I try to be good landlord neighbor.
Finally, absolutely no to a boat for any renters on my dime. That opens up a whole other level of exposure, liability wise and expense and maintenance of the boat. Let the tenant get their own boat and insurance on it. No thanks for me. The less you include on the rental, the less you need to repair if it breaks.
I had a tenant once that bought an electric dryer for the house. Two years later, offered it to me for about $140 and I bought it thinking it would make the house easier to rent again. Well next tenant moved in, dryer broke a few months later and guess who had to pay to fix it, since it was part of the house when they moved in. Me of course. Next tenant in, I had the dryer, old BBQ gas grill and sink disposal removed. Lesson learned, less is better. Sink disposals by the way are notoriously abused as tenants who think all garbage scraps and bones can go down there. I had many motors replaced and plumbers cleaning lines because of this. None of my houses have these costly devices in them. Throw your scraps out, clear your dish in the garbage and half your plumbing issues disappear.
If you bought it several years ago, you should have made a nice gain on it.
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No to the Airbnb thing, especially since you would need to furnish, update, wifi, electronics and appliances etc, which adds up quickly. Most neighbor's don't like it either and I try to be good landlord neighbor.
Yeah, it has pros and cons. And yes your neighbors wouldn't be huge fans of it. But it brings more $$$ per month - it's probably the only way to get a decent cap rate on a high-end property like yours.
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Finally, absolutely no to a boat for any renters on my dime. That opens up a whole other level of exposure, liability wise and expense and maintenance of the boat. Let the tenant get their own boat and insurance on it. No thanks for me.
The idea was to offer a high-end "vacation experience" product for short-term rentals. An alternative to renting a beach-front hotel room for a week. The target customers would be families and groups of friends/partygoers/vacationers, Canadians and Yankees and Europeans. If the property comes with a boat, then being canalfront makes sense. If not, then the canalfront part (for which you're definitely paying) is totally wasted from an Airbnbing perspective.
I'd absolutely never suggest you should supply a boat to a long-term tenant who's a local - you're right that if they want one, let them get one.
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The less you include on the rental, the less you need to repair if it breaks.
I had a tenant once that bought an electric dryer for the house. Two years later, offered it to me for about $140 and I bought it thinking it would make the house easier to rent again. Well next tenant moved in, dryer broke a few months later and guess who had to pay to fix it, since it was part of the house when they moved in. Me of course. Next tenant in, I had the dryer, old BBQ gas grill and sink disposal removed. Lesson learned, less is better. Sink disposals by the way are notoriously abused as tenants who think all garbage scraps and bones can go down there. I had many motors replaced and plumbers cleaning lines because of this. None of my houses have these costly devices in them. Throw your scraps out, clear your dish in the garbage and half your plumbing issues disappear.
Oh, of course.
I had similar experiences. I once let a tenant move into a place where there was an old semi-worthless but still functioning fridge that was left that technically belonged to me (this is in a jurisdiction where the norm is that tenants always have their own appliances, so, not typical at all) and since that tenant hadn't yet bought all his appliances, I did him the favor of letting him use that "free" fridge which was there already, for the time being. My view was that he would eventually acquire his own fridge, like a normal tenant. He did not, and when that old fridge died, he had legal grounds to force me to replace it as it was arguably "included in the lease". (My mistake had been to not formally donate that old fridge to him when he moved in; we didn't discuss it down to that level of detail so it remained ambiguous.)
I feel if you have a waterfront property, regardless if a boat was included, it would still command interest just for being on the water. I just think the risk and upkeep even for short term use, is not a good idea. There are several boat rental places out here that can work up a short term rental and take on that risk as it is their business. Now if this was a "share" style AirBB where I lived there and you rented a room or two, then I could take you out on my boat and reduce a lot of the risk. I have seen that work, but still not my desire, especially since we are not ready to move down yet.
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and even if you then have to repair a few things, no way it won't have been totally worth it (from a cash flow POV).
