Foreclosures Make for Hot Florida Property Investments

Ocala, Florida has seen home prices drop lately and the sales of single- family homes have increased as the abundance of foreclosures abound. With the struggling economy and higher unemployment rate, it seems as if now is the time for those wanting to relocate to Florida to purchase that retirement or winter home.

It appears that property prices for residential homes last month in Marion County were at levels that we haven’t seen since the 1990’s. The average median home price decreased from $87,800 in November 2009 to $75,900 in November 2010. That is a significant 14 percent drop and the biggest percentage drop in the Florida metropolitan area.

The home prices in Ocala have been decreasing for about three years now due to the recession and double digits unemployment rate. Home investors at home and abroad are taking advantage of the price decline and buying up investment properties. According to MLS surveys, just last month in November, realtors sold 269 residential homes compared to 251 a year ago in 2009. That is a 7 percent increase in sales mainly due to the amount of foreclosures on the market. The past year has seen many more foreclosures and distressed sales due to the struggling economy.

Almost 630 homes were on the foreclosure list in November, which equals out to one in every 251 homes were looking at foreclosure. With so many foreclosures, investors have taken advantage of such a prime market to buy up homes for short or long term rentals in the hopes of gaining significant returns in the future.

US Sellers Slash Prices as Foreigners Keep Coming

Research shows that the asking prices on almost half of all the properties in 26 US markets, Florida in particular, are being cut by sellers.

Now, real estate investors from Asia, Europe, the Middle East, Russia and South America are finding bargains as a result of the price cuts.

California based online real estate brokerage ZipRealty believes the price cuts on 47.8% of the housing inventory tell only part of the story, according to the firm 25% more sellers have cut their prices this year than last year, and have cut prices twice in most cases.

The median reduction was $19,725 and this was 7.25% of the list price on average. Florida sellers have been wielding the heaviest knife, with Miami, Jackonsonville and Orlando sellers cutting double digit percentages off their asking prices. Miami saw the biggest discounts, with sellers slashing an average 12% off their asking prices. Discounted properties in Orlando are a big hit in the UK.

‘The summer home selling season never kicked in this year, leading anxious sellers to slash prices,’ said a statement from Zip Realty.

Florida is currently seeing a large number of foreign buyers, attracted by the bargains. Foreigners have always been high in Florida, but the gap between Florida and other states has widened because prices are so low.

Foreigners now make up for 10% of the market according to a recent report by the National Association of Realtors, but this is spreading fast according to experts. Marketing campaigns are now targeting foreigners specifically and realtors are offering heavily discounted viewing trips.

Distressed US Investment Property Supplies Increasing

Sales of distressed and bank owned property accounted for some 24% of all US home sales in the second quarter, down from 31% in the first quarter, according to the latest data from Realty Trac.

Of this bank owned properties accounted for 15% of home sales in the second quarter, and properties in some stage of mortgage distress for 9% of sales. This is down from 19% and 12% respectively in the first quarter.

This shows that sales are dropping. But the number of properties sold after receiving a default or auction notice was up 5% from the previous quarter, although it was 20% lower than last year. This would seem to suggest that supply may be rising.

Discounts on distressed and repossessed US properties are also falling, which also suggests that supply may be rising. According to the Realty Trac data, the average discount on sales of properties in default or scheduled for auction was 13% in the second quarter, down from 16% in the first quarter, and 19% in the second quarter of last year.

The average discount on bank owned properties in the second quarter stayed at the running average of 31%.

While supply of distressed and repossessed US properties rising is bad news for the US housing market, because their heavily discounted sale prices are factored into future valuations of other houses in the area, it is not such bad news for the droves of investors from across America and around the world who are getting some seriously good deals on US property.

Azure Overseas are currently marketing the Village at Town Center, a development of luxury condos just a few minutes away from Orlando's main attractions. The price of just £47k for a 3 bedroom unit is evidence of the fantastic investment potential of discounted US properties. Think of the yield you could make renting that out on a PPPN basis.

Repossessed Property Investment Hotting Up in America

The market for repossessed properties in America is really hotting up at the moment, and little wonder. According to RealtyTrac -- the leading tracker of the American repossession situation -- 2009 was a record year for repossessions with 2.8million homes being repossessed, but experts are warning that 2010 could be even worse.

These fears were heightened when a new monthly record was set in March, when RealtyTrac says some 378,000 homes were repossessed, higher than in any month since they began tracking repossessions in 2005.

While investors from the US and around the world are capitalising on repossessed and distressed properties in all corners of the states to make strong yields, certain areas stack up better than others and as such as seeing demand intensifying at a faster rate, and even slight increases in price.

One such area is Fort Myers in Florida. As we know Florida has been one of the worst affected regions in terms of repossessions, but within that Fort Myers has taken a real battering, and was one of the fastest areas into the repossession crisis in terms of repossession volumes.

However, the fundamentals for economic growth are strong in Fort Myers with many businesses noting recovery and the labour market seeing increased stability in recent months. The biggest pull to Fort Myers property for those buying up repossessed and distressed properties though is the price and the value for money.

Perhaps more than anywhere else, in Fort Myers there are plentiful opportunities to buy new and nearly new properties that have been repossessed or face repossession and are therefore at rock-bottom prices. These present the opportunity to rent out the properties almost immediately after they have been purchased, and yields are around 8%-10% net.

One such repossessed property investment package in Fort Myers is currently being offered by Azure Overseas, with a typical deal being a 3 bedroom property in a good area for £50k, which will rent out for £552 per month, with £367 being left after expenses such as management and maintenance (net).

Demand for repossessed property in Fort Myers and America as a whole is predicted to remain strong in at least the short-medium term, because investors feel confident buying property in an established economy market for such low prices. Another factor is the strong dollar which increases rental yields for British investors.