Monday, July 23, 2012

Investing in Sarasota: An Update from the Field

More and more Canadian real estate investors are finding my website, www.davidbarrhomes.com, and the advice I provide there, a valuable source of information before their visit to view properties in my service area of Sarasota, Manatee, and Charlotte Counties.

A recent buyer presented an illustrative example of what is currently happening in the real estate market, particularly for condos at the entry level price points under $100,000.

Six months to a year ago, the choice for condos under $100,000 was quite easy.  Pick the newest ones that needed no work, and a long-distance buyer had an investment property ready to go for a tenant.  Today, the landscape has changed.  Those newer condo communities now have a dwindling inventory of units for sale, and those prices are increasing.  Combine this with a growing inventory of units for rent, and the previously obvious condo choices no longer make sense for many investors.

What remains for condo buyers looking at entry-level price points are older condos that have roughly the same fixed costs (condo association dues and taxes) with lower rental rates.  The cost drivers such as basic cable, insurance, and grounds maintenance, do not get lower with older condos.

After showing this recent buyer these exact options, my suggestion was to increase the purchase point of entry into the market by looking at single family homes without the cash flow drain of monthly association dues.

Single family homes are in high rental demand, and a single family home close to the beaches and downtown Sarasota makes a lot of sense when calculating cash flow and factoring future appreciation into the investment equation.

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