COMMUNITY INVESTOR
SPOTLIGHT: ORLANDO
‘NEXT BIG THING’ COULD BE COMMERCIAL SECTOR
will mean that the market will have a better chance at recovery. At present, only eight other condo markets in the United States are recov- ering as slowly as Orlando, largely due to buyers’ inability to make a purchase The relatively new SunRail train service specifically has already been credited with creating 250,000 new jobs in the Orlando area and with new property development and rising real estate values along service lines. Although Orlando’s LYNX bus lines A ccording to the Florida Bureau of Economic and Business Research Sta- tistics, the next 50 years could hold some extremely big things for Florida, particu- larly when it comes to population growth. The bureau recently released a report indi- cating that by 2070, the state’s population is likely to have nearly doubled, adding about 15 million residents and increasing the acreage of developed land being put to urban use to 11.6 million. While that kind of influx will certainly affect the entire state, the Orlando area stands likely to be impacted sooner and more positively than other areas in the state, thanks to existing infrastructure that can be expanded and improved to support a growing population and the industrial growth that inherently accompanies it. The Orlando area has always been at- tractive to new residents of Florida thanks to its “Theme Park Capital of the World” title, but its existing transit and commut- er rail systems (LYNX and SunRail) and community master plan give the area a leg up over other parts of the state when it comes to serving a population boom. In this arena, Orlando outweighs even the state’s attractive coastline communities, which are often described as “infrastruc- ture starved” and may find themselves starting from scratch when it comes to serving new residents who are likely, as many Millennials and Baby Boomers are, to place a high value on alternative trans- portation options.
in most developments unless they have cash or private funding. Although many investors will likely wish to purchase condos as rentals for either short- or long-term cash flow, easing restrictions on condo purchases will boost the value single-family home bargains are likely to become harder to find as the market normalizes and more and more investors become active in the Orlando area. “There will still be great opportunity with commercial investing (at that time),” he said. may not have as direct an impact on prop- erty values in the expanding greater Or- lando area, investors should note that the system not only runs extremely frequently in order to accommodate tourists, it also plays an integral role for tourist-industry employees, who tend to rent and buy in proximity to these types of services. Although burgeoning populations always need new places to live, Florida’s entire commercial real estate sector is likely to benefit, as well as the residential sector, if the Florida business bureau is correct in its forecast. Florida has always been a haven for multifamily developments, although the condo market specifically has struggled over the past decade, but a 15-million-per- son population boom will likely necessi- tate multifamily development in the area as well as a variety of other types of com- mercial development, particularly of retail space and industrial space. Amazon.com and Walmart already occupy vast swaths of land in Florida that the companies use as distribution centers, and those compa- nies and others seeking a firm hold in the e-commerce market are likely to continue to expand their presence in the state if these population predictions hold. Furthermore, the timing could not be better for the “early bird” investor to start exploring the commercial market, said Dolmar Cross, director at Maxall Capital. Cross predicted that in the next few years,
BLOWHARDS: HOW HURRICANES ACTUALLY HIT LOCAL ECONOMIES
I t was impossible to miss the media buildup and the tragic pictures of suf- fering that Hurricane Matthew left in its wake in Haiti and other areas of the world. If you lived in Orlando, you probably were shaking in your boots as the entire tourism industry and the Orlando International Airport closed their doors and the state’s governor went so far as to bluntly warn residents in some areas of Florida, “This storm will kill you.” As a real estate investor, owning property in an area of the country where these types of warnings occasionally occur (and make big headlines) may be a stressful thought. However, researchers at the Federal Reserve Bank of Dallas and École Polytechnique concluded that hurricane strikes tend to have a net positive effect on housing prices in an area spread out over a timeline of nearly four years and a relatively small negative effect on real incomes in the much-shorter term. While this may be difficult to digest when you think of the “billions of dollars in damages” that have dominated the headlines just recently, thanks to the 2016 hurricane season, the researchers argue that the bigger issue for any area struck by a hurricane is not long-term economic loss, but short-term economic disruption. An investor who is prepared for this possibility and has strategies in place to deal with property damage and temporary disruption of cash flow may well find that the long-term effects of a hurricane strike in his or her investment region of choice are largely negligible.
rest of the real estate sector has steadily edged toward recovery despite record-set- ting foreclosure timelines, robo-signing lawsuits and general market disarray, the Orlando condo market has continued to struggle in the wake of the housing crash and the Great Recession. One major cause of this struggle lies with federal mortgage restrictions on condominium purchas- es. In the past, the FHA required condo buyers taking out FHA mortgages
the Forest of Arden as it is portrayed in “As You Like It.” Whether this version or one of the other legends is actually true, when it comes to real estate investing in Orlan- do, you certainly can take your pick of strategies and avenues to profit. Not only are investors “getting in early” on new developments in the area in hopes of cashing in as the population continues to grow, turnkey rental aficionados are finding that properties can be purchased, rehabbed and rented out for cash flow to a solid renting population that is, in large part, unlikely to buy in the near future due either to income constraints or a growing modern, mobile mind-set that prefers renting to owning. Perhaps one of the most exciting aspects of Orlando real estate these days, however, is the potential resur- rection of the condo market. While the
to prove that their building was at least 50 percent owner-occupied. In Orlando, where condominium prices are still foundering far below their peak prices, easing those restrictions
60 | think realty magazine january :: february 2017
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