FUNDING
NEW CONSTRUCTION
The Market for New Construction Rentals in Southwest Florida SOUTHWEST FLORIDA IS RED HOT, AND FUNDING FOR NEW CONSTRUCTION RENTALS IS CREATING EVEN MORE OPPORTUNITY.
by Gary Pinkerton
ou may have been thinking about your real estate investment and wondering, with the state of the
locations have that too, especially in southwest and central Florida. The state is poised to continue a growth pattern in many desirable coastal areas and still has incredible affordability compared to much of the nation.
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economy, where you should look to purchase next. The past two years have seen unprecedented migration from all areas of the United States into Florida, with the southwest Gulf Coast leading that trend. Many economic and lifestyle changes—personal freedoms, tremendous weather, jobs, and the low cost of real estate—are driving the migration and will continue to do so for the near future. (This makes Tampa—the largest metro area and heartbeat of the region—the perfect setting for Think Realty’s next conference and expo on July 21-22, 2022!) There are many reasons southwest Florida is an area where there are immense investment opportunities. The question is: How do we find them and determine whether they are worth our time, energy, and money? Further, when we find these strong performing assets, how do we most efficiently fund them? START WITH THE FUNDAMENTALS Stick with the fundamentals that resulted in your current successes—the reasons you selected the properties in other areas where you already own. Strong in-migration of renters, jobs, a desirable place to live, and affordably priced rental homes to buy are likely some of those reasons. Southwest Florida, whether you live locally or not, checks all the boxes for incredible opportunity in rental properties. Are you looking for strong rent performance that keeps up with inflation? Florida has that. Are you looking for an area that provides a low overall cost of living and low-income taxes (meaning tenants will be more equipped to afford their rent)? Many Florida
BUILD-TO RENT OPPORTUNITIES If Florida is affordable and offers tenants a reasonable cost of living, what else should you consider when purchasing property there? You could buy a turnkey rental property, but another approach that has become more popular in recent years is build to rent. New construction offers the wise investor the ability to make a smart, long-term investment decision with low short-term maintenance risk. When you buy new construction with the intent of renting it immediately, you get all new things like appliances, air conditioning, lighting, water heaters, etc. On top of that, you automatically have a builder warranty on the property covering much of the initial repair work that may occur. By investing in new construction, you are making a wise decision to reduce your risk of unforeseen costs. FINANCING OPTIONS Let’s say you’ve decided to invest in southwest Florida and you know you want to buy new construction. Well, what about financing? Does it still make sense to take a fixed-rate 30-year mortgage with rates rising as they recently have? As of the writing of this article, rates sit near 6% on investment properties, and inflation in the U.S. is above 8%. Simply put, this means that every fixed rate mortgage you take right now at 6% is still a losing deal for the lender. You are
76 | think realty magazine :: july – august 2022
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