5 types of Residential Real Estate Investment in Fort Lauderdale. Property types are condo's, townhomes, single family homes, multifamily housing, and condo hotels.
A large portion of my business is made up of buyers and sellers involved with real estate investment in Fort Lauderdale. There are many different real estate investment strategies you can focus on. Some prefer buying land and holding, referred to as "land banking". This is a non cash flowing piece of property that is commonly purchased for future development or land assemblage. There are investors that look for industrial properties, such as warehouse spacing. Those spaces are inexpensive to construct and maintain, and with Port Everglades being so close to Fort Lauderdale, always in demand. Another group may focus on retail spaces, such as low rise strip malls. You also have those looking to invest in office space, which, at the time of this posting, is still a pretty soft market.
The truth of the matter is that most people interested in real estate investment in Fort Lauderdale, are really only interested in residential real estate properties. There's good reason to believe this is a good idea. As I've written about previously, the general trend is that the existing population is returning to urban core's. While suburbs have lost some of their appeal, the desire to live in a city center is very strong. As the economy improves in general, more jobs are created. The office high rises in Downtown Fort Lauderdale will become fully occupied as a result, Those working in Downtown offices will want housing close by. While we've seen a number of new developments get approval, or begin construction, few of those developments are offering fractional ownership. Along the New River and up Federal Highway we're seeing large projects that are rental communities. Unless you have the means to construct something and operate as a rental community, you'll want to look towards smaller projects, or those that offer individual ownership.
Today I'd like to highlight the 5 types of residential real estate investment in Fort Lauderdale that are currently available. In an effort to be realistic, I'm going to use only actively listed properties. As I've noted before, these may not be the best properties currently available. However, they are properties that have been approved for advertisement, which allows me to post about them. There are real estate investment deals in Fort Lauderdale I'd like to post about, but the listings restrict me from doing so. In short, if any of the real estate investment in Fort Lauderdale ideas that I present interest you, please contact me. I'll be able to give you a more refined list of properties either through email or over the phone.
Condo or Condominiums
Sole is located at 533 NE 3rd Avenue in Downtown Fort Lauderdale/ Flagler Village. Unit 447 is a 1 bedroom 1 bathroom unit which is currently listed for $169,900 (price as of the time of this post). The unit is 906 square feet, the building was constructed in 2005. Splendor Realty is listing the unit. If you'd like more information about the building you can read about Sole Fort Lauderdale here.
From an investment standpoint the unit would break down like this:
- $1,400 monthly or $16,800 yearly.
- Taxes $3,398 (based on a $169,900 sale price).
- Monthly HOA fee $358
$16,800-$7694= $9,106 NOI
$9,106 / $169,900 = 5.3% cap rate
Townhome or Townhouse
Townhomes, or townhouses, are incredibly popular with both buyers and those looking to rent. Typically they are multi-leveled and may have a small courtyard, or lawn space. The example I'm going to give today would not be typical in terms of price level. Normally you have to look in a higher price range to find townhomes that are listed for sale. Better Homes and Gardens is listing 499 SE 13th St Unit 6E for $188,999. The unit is a 2 bedroom, 2.5 bathroom townhouse. Most townhomes in the area are 3 bedrooms, so this is a bit smaller than normal.
- 1,600 monthly or $19,200
- Taxes $3,779.98 (based on a $188,999 sales price)
- Monthly HOA fee $195 or $2,340 yearly
$13,080 / $188,999 = 6.9% cap rate
Single Family Home
There has been a large push from institutional clients to purchase single family homes. Several funds are very active in buying in the Fort Lauderdale area. Keep in mind these funds have massive teams of contractors, vendors, and maintenance companies working for them. If you're buying a condo, condo hotel, or townhouse, someone else will take care of the property upkeep for you. The monthly HOA fee will cover all expenses to maintain the property on a daily basis. If you look at buying a single family home, or a number of single family homes, for your investment portfolio you need to consider the costs of upkeep. Further, the average single family home is of older construction, while condo's, condo hotels, and townhomes in Fort Lauderdale were likely built recently.
1518 SW 10th Ave is listed for sale by Mizner/Bass Realty for $244,500. The home is 3 bedrooms and 2 bathrooms. Originally built in 1970, but renovated recently. This is a fantastic home!
- $1,900 monthly or $22,800 yearly
- Taxes $4,890 yearly (based on a $244,500 purchase price)
- Insurance $3,100 yearly (estimated)
- Landscaping $1,560 yearly
- General upkeep and maitnence $2,000 yearly
- (Tenant will typically pay the water bill in a single family home)
$11,250 / $244,500 = 4.6% cap rate
I'm one of the more active agents in the purchasing and sales of multifamily properties in Fort Lauderdale. I know this market very well, and I think there is tremendous upside to investing in multifamily housing. That being said, it's a much more hands on property type than something that has an HOA in place. The premier location for multifamily housing in Fort Lauderdale is Victoria Park. Balistreri Realty has 1633 NE 4th Pl listed for $359,000 (at the time of this posting). The property has 3 units and sits on a 6,250 square foot lot.
- Unit 1 $750 (1 bed 1 bath unit)
- Unit 2 $750 (1 bed 1 bath unit)
- Unit 3 $925 (2 bed 1 bath unit)
- Washer Dryer Income $500 yearly
- Yearly income $29,600
- Taxes $7,180 (based on a $359,000 purchase price)
- Insurance $3,000 yearly (estimate)
- Maintenance, reserves and repairs $3,000 yearly
- Water $2,500 yearly
$13,920 / $359,000 = 3.9% cap rate
A few notes. I haven't built in a management fee, scenario assumes owner will operate the property. The rents in this building are well below market. New owner would be best served by doing $30,000 in improvements and moving rents to market rate. Pro forma calculations based on repaired values show a much healthier cap rate.
Contotel or Condo Hotel (Restricted to Fort Lauderdale Beach)
Condo Hotel's are ideal for someone looking to purchase a property for investment, that they can also live in part time. This is going to be an actual example from a unit owners statement at Gallery One. The building is located off Sunrise Blvd very close to Fort Lauderdale Beach. While there aren't direct ocean views from Gallery One, it is a very popular hotel. The popularity is due to the buildings proximity to Fort Lauderdale Beach, without the nightly room charge of being on Fort Lauderdale Beach. Unit #1215 is currently for sale with an asking price of $225,000. One Miami Group LLC is listing the unit. Again, this statement is not from that unit number.
These statements can be a bit tricky to read, so without going into too much detail we can see that this is a year end statement for 2012. The room was rented 288 nights out of 365. The biggest risk to buying any investment property is vacancy. Condo Hotels are notorious for having low levels of occupancy. This room was occupied 79% of the time, which is outstanding.
Again if you're interested in this type of a unit, we really need to look unit by unit at updated financials in order to see if a condo hotel unit is a good idea for you. In the above example the owner netted $8,113 for the year. At a purchase price of $225,000 we would be looking at a cap of 3.6%. While this is only an example, it's a realistic example of income that you can expect. Of course, if the economy rebounds and nightly rental rates rise, increased cash flow will naturally follow.
I work as a real estate specialist in a small area of Fort Lauderdale. If you’re interested in buying or selling a home in: Rio Vista, Victoria Park, Downtown Fort Lauderdale, Fort Lauderdale Beach, Harbor Beach, Lauderdale Harbors, Sailboat Bend, Tarpon River, Croissant Park, Collee Hammock, Seven Isles, Nurmi Isles, Idlewyld, or Las Olas Isles, please feel free to contact me at (786)443-7203 or through my email email@example.com. I am a Realtor that works on Saturdays to accommodate those with busy schedules.
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Written By Casey Prindle