Real Estate Investing in Southwest Florida
You’ve heard it from someone, or maybe you’ve visited the area and fell in love with the potential. One way or another, you’re interested in investing in real estate in the South of Florida. Maybe you’re new to the world of real estate investing, or you’re a seasoned pro (see our write up here), you’ll benefit from these few tips from the folks who have been here nearly 4 decades. Many blogs and articles will give tips and tricks on how to pick out the perfect investment property, but it’s always important to get familiar with the area you’re looking to invest in to make sure you’re prepared for the different challenges it can offer. Different types of natural disasters, climate, geology, etc can play a big role in what you need to look out for before making a purchase.
Many would agree that picking out a good investment property is status quo no matter where you’re looking to purchase. The basics are good cash flow, appreciation potential, rentability, and low maintenance. However, there are some things to consider that are particular in the maintenance category that potential investors should be weary of.
Seasonal weather plays a major role in how people construct homes, and maintain them. Investors that own property in the north surely know ins and outs about basements while knowing to look for potential leaks, faults in construction, moisture, etc. A buyer from the south looking to invest up north may overlook something like this, and it can cost money and time in the future.
What many of our new investors, at least new to the region, typically fail to understand is just how harsh our summer climate is. Being much closer to the equator, our sunshine is extremely intense; causing extremely hot and humid air mixed with very heavy UV light that can burn skin in minutes. It’s often hard to describe mid-summer day to folks who have never been here during that time.
When getting ready to purchase a property, you want to make sure the following are in order:
A/C Units: Air conditioners here typically have a shelf life of 12-15 years if they are maintained properly. Unlike places in the north, A/C is a REQUIREMENT to have in your property. Without it, inside temps can easily reach into the 90′. Replacing an A/C system is expensive and time consuming with a price tag typically coming in around $4,500. Now that’s a cashflow killer!
Roofs: There’s a few different types of roofs that are generally used; tile, shingle, metal, etc. However, in most cases shingle roofs are used because they are the most cost effective. But, that comes at a price. It’s generally understood shingle roofs have a lifespan of about 20 years give or take. Depending on Hurricanes, quality of construction and maintenance, it’s a bit of a give or take. Repairs can prolong the the time span, but at a certain point, they simply need to be replaced with price tags starting over $10,000 and going up as the square footage goes up.
Settling: Florida is mostly made of limestone, which when dissolves, turns into sand. That’s why we mainly have sandy dirt, rather than thick soil like in the north. If you’ve ever walked on a beach, you could imagine why this poses a challenge for building property on such a substance. Builders are forced to bring in fill, which is simply truck loads of dirt that are then rolled and compacted to give as stable a surface as possible for laying a slab. Even with this process, slabs can wobble and crack as the property settles. Now, this varies from property to property, but a simple home inspection will determine if it is a structural issue or not, and can then be further evaluated. Smaller cases of settling typically result in cosmetic issues, like cracks in drywall and tile floors.
Step Cracks: Caused from settling, step cracks are what form between cinder blocks on the exterior of a home. They’re very ease to spot as they, as their name suggests, form little steps on exterior walls that cause separation between cinder blocks and split the paint and stucco which allows a direct path for moisture to enter inside the home. Many homes with step cracks experienced this when the last hurricane Irma rolled through and forcefully pushed water into the cracks causing mold and mildew issues. A simple fix is to fill them with high quality caulking and paint over.
Well Systems: Well systems are common throughout many regions, and most are familiar with them. However, if you’re not, a well system in laments terms a pipe that is drilled until it reaches ground water, is filtered, and used as water in the home. This equipment is expensive, and required maintenance on a monthly/bi-monthly basis as adding salt to the system is a requirement and is depleted as water is processed and used. It’s important to make sure well equipment is in good shape before purchasing as new aerator tanks and filters can be thousands of dollars to replace.
Pests: A not so obvious issue is perhaps the bugs and pests that come with a sub-tropical climate. One of the biggest issues we see in investment properties is roaches. They can infest a property quickly, and destroy appliances by nesting in the electronics, eat particle board (cabinets), and cause general havoc. We always suggest pest controlling your property at least twice a year to prevent issues with this.
Familiarizing yourself with these 6 items will certainly help prepare you for investing in Southwest Florida, but connecting with local experts is always your best solution. Of course this isn’t an exhaustive list, but having the trust and help of locals can help make sure you make the right purchase so you can build a lasting and top producing portfolio of investments. If you’re interested in the Southwest Florida market, we’re always here to help!