Investing in Sarasota Florida Real Estate -lucrative and rewarding – only if done right.

“My problem lies in reconciling my gross habits with my net income.” Errol Flynn (1909 – 1959)

Let’s start with a definition of ‘Investment Property’ first: “A real estate property that has been purchased to earn a return on the investment (purchase), either through rent (income), the future resale of the property (appreciation), or both. An investment property can be a long-term endeavor, such as an apartment building, or an intended short-term investment in the case of flipping (where a property is bought, remodeled or renovated, and sold at a profit).” investopedia.com

The Sunshine State has and will always be a magnet for sunshine seekers. When life gets tough, further north people to start thinking about options – other options – different options – may be better options. Some people simply buy a place in Florida and stay for good; some buy a vacation home and travel back and forth; some people buy a home, use it for a specific time frame and rent it out during the remaining time. Yes, and some investors have no intention to personally use the property, or only for a brief period. They are strictly focused on price, income, expenses, appreciation, and return on an investment after the resale of the property. However, there is a subtle side effect: to manage the investment property, most investors like to come down to Florida once in a while. How awful!

Why investing in Sarasota, Florida?

Sarasota is one of the most attractive markets in North America

with almost 300 days of sunshine, a sub-tropical climate, and temperatures averaging year-round 80°F/27°C. Florida is also an international hub thanks to excellent infrastructures,  international airports serving South and Central America, Europe, and the rest of North America. Dynamic cities and leading industries attract businessmen, young families, retirees, and tourists from all over the world. Florida is also the second-largest tourist area in the world. The state’s tourist attractions, such as Busch Gardens, Kennedy Space Center, Sea World, Universal Studios and Disney World, and the famous white beaches attracted almost 87 million visitors in 2011.

People from all over the world come because there are fun activities for everyone to enjoy. Merely relaxing at the beach, jogging, water-sporting, golfing, horseback riding, playing tennis…the sky is the limit. Many towns in Florida offer vibrant entertainment and some of the world’s finest shopping and international eateries. If Florida were an independent country, it would have the 20th largest economy in the world. Growth has been especially strong in business services, tourism, trade, transportation, aerospace, education, healthcare, construction, and, of course, real estate.

How is the Florida Home Market

The housing market in Florida and especially in Sarasota has been on the upswing since 2011. Real Estate remains a good investment. Home prices are on the rise again. Will we see prices like in 2008 when a rusty garden shed sold for $400,000? Maybe? The new generation of homeowners/buyers has (hopefully?) learned the lesson, and if following generations want to repeat the learning process – well, that is up to them.

For those looking to buy a Florida property investment, the most attractive qualities are its unique tourist-driven rental market, and tourists are flocking to Florida like never before. For investors who want to invest in short-term rentals, Florida is ideal because of the many tourists who prefer to stay in a house or condominium.

Is there a rental market in the greater Sarasota area?

There is a substantial long-term rental market in the Sunshine State as well. Baby-boomers are retiring in huge numbers, and a few want to live in a warmer climate like Florida. Some Boomers got hit pretty hard by the recession, and a significant number of people do not even have the financial means to buy a property in the Sunshine State anymore. If they want to feel the sun’s warm rays on their bellies, they have to rent a place – at least for the cold winter months.

So, what are the options an investor is facing? Real estate can create returns in only three ways, rental income, tax deduction, and appreciation of the property. To meet your goal, you first need to get all your ducks in a row. You have to make decisions – and they should be done with a lot of thought. The key term to long-term success when investing in real estate is the location. The chosen area will later determine the type of person who will be renting or buying the property. You want to buy the right property in the right neighborhood on the right street, and this requires local knowledge.

Tourists from Europe like gated communities with pools and tennis courts. They have watched far too many Hollywood thrillers on TV, and now they believe that a bad guy is waiting for them behind every garbage can. They want security while they are gone; therefore, a gated community or a friendly condo/resort complex is their choice. They prefer to be close to the beach and shopping, of course. They like to spend their hard-earned money on designer clothes at the mall. They wouldn’t pay top dollars for rent if their rental property was out in the boonies.

Vacation Rentals vs. Long term rentals

It is a different story if you plan to rent to long-term renters (working families, etc.). They want to be close to schools or to the workplace. Stores need to be in a convenient location because they already spent half of their daily life in an office cubicle with no sun.

Since your investment model requires that you rent out the property. At the same time, you wait for the expected increase in value, you will need professional property management to keep the property occupied and problem-free, which will cost you money again. Return on Investment (ROI) is one of the magic formulas measuring the success of the investment. The price of the property, the incurred costs, the rental income (and eventually, the sales price) are important parameters. Costs, however, come from many sources. There is the initial purchase cost, annual property taxes, insurance, HOA fees, CDD fees, upkeep/repairs, and renovations.

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If you need help in locating a great property in the Sarasota area, just give us a call at 941-244-8341 or email us at info@buypropertyinparadise.com