Never been convinced of the Florida recovery story or that it was ever going to stack up as RE opportunity over the long term.
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Florida, Nevada, Illinois post highest state foreclosure rates
The Florida foreclosure rate ranked highest among the states for the fifth month in a row. One in every 300 Florida housing units had a foreclosure filing in January — more than twice the national average. A total of 29,800 Florida properties had a foreclosure filing during the month, up 12 percent from the previous month and up 20 percent from January 2012.
- JANUARY 2013 FORECLOSURE RATE HEAT MAP
Florida's strength is also its weakness. It's one of 4 major US export hubs and services Europe and Latin America especially Brazil. Exports are contracting, Europe is a basket case and while Latin America has a few bright spots many are in trouble especially Brazil. The US GDP fraud will become apparent to even the most economically challenged over 2013/2014 as the US continues to grind itself in to the dust.
US energy and GDP are decoupling implying US GDP is not what it seems.
Renting – The American Dream
The next housing bubble?
The Second Housing Bubble Ends With A Bang, Not A Whimper,
- David Stockman WarnsStockman further contends, "It's happening in the most speculative sub-prime markets, where massive amounts of 'fast money' is rolling in to buy, to rent, on a speculative basis for a quick trade. And as soon as they conclude prices have moved enough, they’ll be gone as fast as they came." Critically, he points out we live in a world of boomers looking to be trade-down sellers, not one of trade-up buyers, as "the fast money will sell as quickly as they can and the bubble will pop almost as rapidly as it’s appeared.
- as he explained there is "no real organic sustainable recovery."
It is a matter of understanding why Florida because such a mess. The problem is that each state in America determines policy on how loans are to be dealt with in Texas for example you needed a 20% deposit to buy a property the end result was that the Texas market was not to speculative and what we have seen since the GFC is that prices have remained steady.
In Florida it was far more speculative and property prices were way over the top with condos selling for $300,000 that are today only selling for $75,000 where the real value was $150,000, so you had a huge reaction and a massive over reaction when the GFC occurred.
Now when we look at Orlando its two hours inland which means no or little bad weather which is certainly one of the reasons that they put Disneyland their.
The latest government information is also shows that more people will move to Florida in 2013 than in the last 4 years combines and many of these people are families. Orlando is tipped to have the 8th highest jobs growth in America over the next 5 years. I believe that Orlando is a good place to invest but like anywhere in America it is important to do your due diligence carefully.
Nigel Kibel | Property Know How
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Best Performing Cities 2012
http://www.milkeninstitute.org/pdf/Best-Performing-Cities-Report-2012.pdf
Guess what Orlando ain't on it like the rest of Florida except in the biggest looser categories.
That jobs growth you're talking about (courtesy of the Orlando Sentinel)
"So 80 percent of the net increase," he said, "were in two relatively low-paying sectors."
And the government massaged unemployment rate (benefit terms are linked to official unemployment rates – the rate drops so does the benefit term) to keep benefit costs down
Beginning this month the state is reducing unemployment benefits from 23 weeks to 19 weeks.
Florida is an oversold story. As soon as you kick the tyres and look under the hood you soon discover she's a rusty old banger that needs a lot of TLC and rework to get her back on the road.
We will agree to disagree Freckle.
However it comes down to the type of properties you are looking at. I personally am not interested in cheap houses. I believe there are good opportunities to buy apartment complexes and other commercial properties that can provide capital growth and cash flow. You have to look at the strengths and weaknesses of markets and make decisions accordingly.
I also really like the Texas market however the larger commercial markets are now becoming expensive, but I still think Texas is moving very well.
Nigel Kibel | Property Know How
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Quote:You have to look at the strengths and weaknesses of markets and make decisions accordingly.Show me some tangible real strengths that would indicate sustainable CG and rental growth. To date I can't recall you ever coming up with any real hard data that supports a real world sustainable opportunity.
Tell me Freckle
Have you ever been to Florida or purchased there yourself?
According to the US census bureau
Florida's total population growth of 219,000 during 2010–2011 ranked third behind Texas (421,215, 1st) and California (353,714, 2nd) in the United States. Florida remains the fourth largest state in the country. The data also reveal that if Florida maintains this growth rate and if New York maintains its current growth rate, Florida will surpass New York as the third most populated state in the country sometime in the 2013–2014 timeframe.
Nigel Kibel | Property Know How
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India and China are the most populace countries in the world. India has the worst poverty in the world. China has 100's of millions that live on a few hundred dollars a year.
Your point? Population growth is not a sign of an investment opportunity on its own.
Give me some hard data that supports your contention that Florida is worth a long term investment in property.
Comparing India and the United States is frankly a silly comparison. People are moving to Florida and Texas because of the climate and lifestyle. If you ever want to go to Orlando I would be happy for my business partner to show you around and provide you with whatever you need to help educate you about the market
Nigel Kibel | Property Know How
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If your investing in the US these days it is predominately a cash-flow play. Yes there will one day be CG but, I would not focus or
spend a lot of time attempting to pick when that will be.
In support of where Nigel is coming from in this conversation and the fact that it is my back yard; last week Governor Rick Scott announced that Verizon Communications, will establish a finance and accounting “Center of Excellence” in Lake Mary, Florida. Verizon will receive $6 million in state and local tax incentives plus an additional $1.5 million in workforce training for a total of $7.5 million. A nice bump to the local economy…
According to Governor's office, this new facility will initially create 300 jobs by the fourth quarter of 2014 and bring a $50 million capital investment to the Orlando area. An additional 400 jobs are projected to be added by 2016. Those jobs will have come at a cost of $10,000 each in tax incentives and 750 jobs .
“Verizon’s choice to locate their Center of Excellence in Lake Mary is great news for Florida families" said Governor Scott. "With the second largest drop in unemployment rate in the country, this addition of 750 new jobs with Verizon is more proof we have made the right choices over the past two years to keep our economy growing.”
I guess it comes down to is the glass half full or empty? No matter where you invest if you look at the worst in a market you are going to find it. Having professionals on your team will help to leverage the risk. For those who don't like Florida for investing then honestly that leaves that much more real estate for us that do.
Later gents.
John-USA-CommercialRE
Email MeHi all,
Interesting thread, mind if a lady joins in?
Freckle has a point (geez did I just type that??) Nigel it would be great if you could share your personal experience buying property in Florida. How many properties have you purchased there, and what sort of price range have you purchased in.
Also just going through your posts here you've put Disneyland as a reason to buy, but what other financial indicators have you used to determine that this is a good area, are there reports, or particular indicators that other forumites can look at in order to make a judgment on that area. I know Steve has been buying there for many years, but is that window closing now?
Rob/John, $6 mil sounds a bit small. Glaxosmithkline are investing $60 million on 58 new jobs in one suburb in the Sth Eastern Suburbs of Melbourne. Will these new Verizon employees be minimum wage call centre employees, meaning the rents they can pay are also smaller? Curious to hear your thoughts on this.
Lastly Rob/John, I think it would be beneficial for you to preface your posts after Nigels with something explaining that you are indeed Nigels overseas partner, as some new members may not already know that.
Cheers
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeThanks Dwolfe
Part of the problem is that when Rob does point out he is a business partner they delete his post. However he does have Property Know How on his signature. In regards to properties I have brought a sold a lot especially in Texas however I have not brought in Florida as yet. It is just a timing issue. I have put this idea together so that groups can buy larger apartment complexes. I designed this model so that I could also put my money into these as I feel that this type of product will produce not only cash flow but also capital growth.
We are also trying to obtain up to 80% finance and are currently testing the supplier out. We were also looking at 240 apartments in Atlanta however we found that we could not borrow so we would have had to pay around 1.5 million in cash
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
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How many times do I have to ask?
"Give me some hard data that supports your contention that Florida is worth a long term investment in property."
In other words you have no idea what underpins Florida's economy and you rely on MSM publications and political media releases for the feel good story.
Even the bogus GDP stats foretell the decline of Rome
What you guys fail to realise is that the US economy and by default state economies rely on a direct IV line into the US economies arm kindly provided by the FED. With out QE juice the US economy tanks – much like a drug addict when they don't get their fix.
Every time the Fed turns the tap off the US economy starts to tank.
The biggest asset the Fed has is a big arse printer that runs 24/7. This printer wasn't designed to run 24/7 indefinitely nor can it. So whadaya think will happen when the day comes to pull the plug? I got a fair idea.
The US is like a drug addict now addicted to QE. But like most drug addicts it didn't start out that way. A bit of morphine to control the pain is OK when you're sick. The common sense thing to do is fix the problem so you don't need pain killers anymore. But like a terminal patient who can't be fixed because they really don't know how and anyway the system is much sicker than anyone ever imagined. So they need to up the dose as preceding doses diminish in effectiveness.
Pretty soon like most drug addicts you need a fix just to stay normal but now you know you're not getting any better. The only chance to regain health is radical surgery and a painful rehab process that could take years so like most addicts you opt to stay on the juice but retain all the good intentions to do something soon.
Trouble is soon never comes and over time the addiction remains while the body continues to disintegrate. Death become inevitable but it's going to be a long drawn out painful one at this rate.
The velocity of money (volume of transactions within an economy) suggests things are much tougher for Joe public than many realise.
If this bounces, and I have a hard time understanding how it could given the current dilemma, then inflation is likely to ramp with it implying the Fed may have to move on interest rates which in turn up it's own costs. The Fed is in a no-win situation so they're stuck like a rabbit in the headlights. Hold and hope is there only solution and they're fast running out of time.
An if you thought the US was a bastion of economic propriety compared to the Europeans well you might want to rethink that becausee the Fed is doing everything it can to prevent the EU from sinking into an abyss. So for those who think the world especially the US RE market is a rosy place endowed with infinite opportunity to become rich and wealthy well I have news for you.
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Florida, Nevada, Illinois post highest state foreclosure rates
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