It would appear the property guru´s were correct because whilst the Americans are still finding the US housing market a tough place to be, European property investors, in particular the English, are really pushing the US property market forward. Florida in particular has really attracted a massive influx of investment from UK investors looking for a bargain abroad.
With the dollar stabilising at around US$1.60 to the UK pound, the Brits consider now to be the ideal time to invest. The Brits are capitalizing on the weakened dollar and as the US economy struggles, overseas investors are now driving the prices down and negotiating substantial discounts.
The experts predicted a gold rush back in 2007 when the dollar significantly weakened against the pound. It has taken a while but now with the massive amount of foreclosures available and with prices being up to 70% below market value, the predicted influx of overseas buyers is building momentum.
Florida has been an attractive option for European buyers for a number of years as it is seen as a subtropical paradise with a good climate, a great tourism industry and with a good transport network. In previous times though, most buyers were considered domestic users that were buying for second home purposes as opposed to the serious investors the market has seen recently. These investors are snapping up bargains at greatly discounted prices and then making great returns by way of rental income.
It has been noted that European investors seem particularly interested in the South West region of Florida where the average house price has dropped by 54% according to Standard & Poor’s Case-Shiller 20-City Home Price index.
In this area, of South West Florida the buying opportunities are the seen as the best available. The property market cycle would indicate that we will not see these low prices again for a number of years and the interest from foreign buyers has kept prices from falling even further and is even helping the market turn around.
Last month, the National Association of Realtors forecast that the US property market would undergo a slow but steady recovery from the end of 2011 and throughout 2012 and 2013. This would indicate that now really is the time to buy. If the pattern follows then by 2014, overseas investors will see growing equity in the portfolios as well as increasing rental return. This does indicate though that buyers that don’t act quickly in the first part of 2011 could almost miss the boat on the hottest investment opportunities available.
As the world financial crisis finally shows signs of potential subsidence, many property investors are starting to look to enhance their property portfolios once again. Once of the biggest questions on everybody´s lips are, what should the investment strategy be for 2011?
2011 promises to be the year where some of the biggest investment hotpots start to show some signs of recovery.
A great investment strategy for 2011 is to look at those markets that have reached bottom, and have indicators to suggest that recovery is imminent. These will be the areas that can offer the best discounted prices and the highest potential returns. Choose a market that can offer good rental returns and that has a strong tourism market. This means you must also consider the infrastructures in place and the transport links. Also look at the attractiveness of an area for migration. Do people from other parts of the country flock there for any given reasons whether it be employment or climate.
There are some indicators at the moment that the Florida property market has now reached the bottom and for many consecutive months, home inventory has fallen. This has been as a
result of a combination of the following factors:
- New build properties have now been stopped by many developers as they prefer to sit on their land at the moment, rather than risk being left with excess property stock that they can´t sell at profit.
- In Orlando in the last quarter of 2010 there were just 512 new build starts which is the lowest figure ever recorded
- First-time American buyers squeezed out of the market by the 2004-06 housing price increases are now finally beginning to buy again as they become tempted by below market value prices and stabilised interest rates.
- Overseas investors are also now starting to buy property, many taking advantage of exchange rate fluctuations. Australian investors are seen to be buying up masses of US properties due the Australian Dollar being at around parity which has been unheard of before. This joined with the large discounts on offer make the USA a great investment opportunity for such buyers.
Florida is also an attractive proposition to potential investors due to the other factors that make it a profitable location for investment.
- US market has been falling for 6 years and has reached bottom
- Previous home owners are now forced to rent
- USA is now seeing stabilizing interest rates
- Current migration into Florida from other States is running at 3300 people per month.
- Florida long term residency – accountable for 70% of the property market
- Florida strong rental market – holiday let see minimum vacancies due to the high tourism on offer
The important thing to note when considering Florida or indeed any other location that is only just starting to see signs of recovery in their housing market is that this investment strategy, whilst it will be profitable, is also a long term thing. Any investor believing they can buy and sell within 2 years and make high returns on investment are sadly mistaken. An investor into a recovering market needs to plan to be in the game for at least 8 to 10 years in order to make substantial profit. This means that the strategy proposed for 2011 is all about long term goals and not about making a fast buck.
Researching your next property investment can be confusing, especially at the moment with many parts of the world suffering major financial crisis. It can be unclear to even the most seasoned of investor as to the best places to invest that hard earned cash.
The internet always seems to be the best place to start these days for that ongoing and often laborious research, however quite often the internet can give biased options with blogs and forums written by commercially minded agents that are of course going to tell you that their region is the “best “place to invest.
In reality the best place to start your research is to talk to other investors in your chosen area. These are the people in the know and that have firsthand experience of the returns that can be achieved as well as the pitfalls to watch out for. They can recommend the best realtors to work with and the ones to avoid and they should also be able to offer advice on the reputable property managers too.
You will often find these groups of investors by joining investment clubs. Many property hotspots have local investment clubs that meet regularly to discuss issues with property investments as well as to offer advice to newcomers as to who to deal with, who to trust and who to avoid at all costs.
This group of experts, and we really can call them experts as they have the hands on experience, can be your lifeline when it comes to the thousands of questions you will have about the areas, the rental returns, the local taxes, the community issues, the legal procedures, the best places to advertise your property and the best managers to use etc.
Not only could joining an investment club save you hundreds of hours of trawling the internet, it could also save you thousands of dollars by not making unnecessary mistakes along the way. A good investment club will have access to a network of expert advisors too covering all aspects of your purchase from legal advice to financial and marketing advice. This network will usually be built from those advisors that have come highly recommended from other investors that are the club´s members.
Many investment clubs do charge a joining or membership fee, and whilst this may seem like a waste of money at first, a good club will ensure that the membership fee is returned ten-fold by the time saved in the research as well the investment returns that you will achieve by being armed with the best knowledge and advice available to you.
Investment clubs are becoming more and more popular and many savvy and clued up investors make finding a good club their first priority when they have decided to invest in any given area. Don´t miss out, find a good investment club for yourself today!