Things are happening in the Miami real estate market… Well things are always happening in the Miami real estate market, but BIG things are happening right now. Miami has long been the focal point for real estate investors due to the density and scale of development and the investment opportunity for a variety of asset classes. Real estate investors all over Florida have looked towards the Miami real estate market as a forecast for current and future conditions throughout the state.
Tom Blazejack, of Blazejack & Company knows all of the ins and outs of the Miami real estate market. In addition to nearly 40 years’ experience as a real estate appraiser and analyst, Tom is also a native of Miami. Tom’s extensive appraisal knowledge of commercial and residential properties and intimate knowledge of the Miami real estate market make his consultation highly sought after by investors. This episode, Tom gives us an overview of the Miami real estate market, including development highlights and what investors should expect.
Miami Real Estate Market
2011 purchase of Miami Herald building for $236 million marks return of market
Foreign investment and cash-heavy market
Foreign investors seeking stable properties to invest cash
New deposit requirements for investors and developers insures accountability
Lenders alleviating construction loan costs for developers
Projects moving quicker
Land price increases
Miami seeing $200-300/sqf on new commercial developments but even as high as $3000 in some prime locations
Residential continues to increase… up to $3/sqf in best projects
Development spreading into surrounding Miami
Little Havana, Wynwood, Coral Gables all seeing new projects
In a recent episode, we spoke with an investor who managed a Florida real estate portfolio from outside the country. This week’s episode features an investor who runs a foreign investment firm out of his home-base in Davenport, Florida.
Garrett Kenny started building his investment portfolio in Florida after being introduced to Orlando’s vacation markets in 1996. Since then, he has built his investment firm, Feltrim, into an international name for foreign investment in Florida real estate, handling all aspects of the investment process. This episode, Garrett discusses foreign investment in Florida and hot real estate sub-markets in Orlando.
Foreign Investing in Florida
Most foreign investors can expect to average 6% annual ROI
Easy to find financing options, but many do cash deals
Usually require more up-front from investor for financing
4-4.5% interest rates
Some foreign investors use local banks and mortgage brokers
Some financing may be available through institutions in home countries
Brazil and China emerging as dominant foreign investors in Florida markets
Foreign investors expanding portfolios in Florida real estate
62 million visitors to Orlando area in 2014
Diverse investment opportunity
Vacation rentals, commercial and industrial markets
Top 3 vacation rental areas – Championsgate, Davenport, and Kissimmee
Medical + Technology – Lake Nona
Long-term investing in 30 mi. radius of Disney
Other hot sub-markets
Distressed and repossessed homes
“Class A” properties – Windermere, Winter Park
Tips on Foreign Investment
Having a local knowledge of your desired market is key
Find out about the area before investing
Location, Location, Location
Finding the right location for your investment is important
To find out more about Garrett and Feltrim’s services or about investing in Orlando real estate, visit the firm’s website
When transitioning from residential or simply starting your investment portfolio in commercial real estate, it is important to remember one thing: commercial leases are not the same as residential. Commercial leases are subjected to a much higher percentage of risk if not properly structured.
Elise Batsel has made it her business to ensure landlords are protected in any commercial lease issue from the ground up. As counsel with the Tampa firm Phelps Dunbar, LLP, Elise specializes in commercial real estate land-use and zoning. Elise represents developers and institutional lenders in acquisitions, dispositions, financing and transactions as well as all aspects of commercial leases. In this episode, Elise discusses seven hot-topics all landlords and owner/operators should know about commercial leases.
Commercial vs. Residential Leases
Commercial properties have different costs and expenses that can be transferred to tenants: common area maintenance expenses (CAMs)
CAMs may include: utilities, landscaping, management fees and other costs associated with owning and operating commercial properties
CAM and Triple Net Leases
Triple Net Lease – For landlords and tenants who want stability; does not account for unanticipated expenses or for properties without a familiar investment history
CAM lease – Serves as umbrella to protect landlord/owner from future costs and expenses incurred from property management; specifies expenses and tenant liabilities
Though not frequently addressed in lease, tax implications are a major tenant-landlord discussion that could be beneficial for both parties
Leases can stipulate landlord ownership over tenant-improvements with proper recompense for tenant
Americans With Disabilities Act (ADA)
Commercial real estate considered public accommodations and subject to more ADA compliance regulations
Represents huge liability for landlords not in compliance
Sub-letting and Tenant-Assigned Leases
Landlords can address sub-leasing and assigning terms in commercial leases
Landlords entitled to portion of income from tenant leases
Do not attempt to draft generic commercial leases if self-managing property
There are many changing facets to follow when drafting commercial leases
If drafting your own lease, have attorney or specialist review
Protection Against Bad Tenants
Always ensure strong deposit from tenant
Write effective demand letter to tenant
For any commercial lease, zoning or land-use issues and questions, Elise can be contacted by phone at 813-472-7564 or through email at firstname.lastname@example.org
Winter is coming… And so are national interest rate increases.
The Federal Reserve has recently announced a new national interest rate hike, the first since 2006. Real estate investors are very anxious about the announced rate hike. Many investors are wary that the rate hike may be instituted prematurely in an economy that is not capable of facilitating the effects on real estate markets.
Mark Fleming, Ph. D. serves as the Chief Economist for First American Financial Corporation. With over 20 years’ experience in mortgage and property information, Mark analyzes and forecasts national mortgage and real estate markets. This episode, Mark lends his expertise to our discussion on the new rate hike‘s effect on current real estate markets at a national level, and tells us why investors shouldn’t be so worried.
Federal Reserve Rate Hikes
First rate hike in 9 yrs
2006 – +5% increase
2007 -’08 to Present – 0%
End of Year (2015) – .25% increase
2016 – +1% increase
Instituted to correlate with expected income/wage growth
Long-term, fixed-rate loans not affected
Good for housing markets
House-price appreciation seeing “asset inflation”, especially in Florida
5-6% nationally, higher in FL markets (South Florida)
Out-pacing current wage growth, causing increase in housing rates
Rate hike should slow appreciation growth rate
2016 and Beyond
Rate hike est. 5% increase
House-appreciation (Nationally) projected to slow to 3-4%
Income growth est. 3-4% increase
Commercial real estate to benefit from economic growth
Multi-family to benefit from strong millennial rental market
Jay Smith, CEO of A Snoop Inspections, is a veteran in his field of property inspection. Jay possesses over 30 years in property inspection experience as well as hands-on knowledge of building construction. Jay has an invaluable insight into the key concepts of inspecting properties.
Property inspections can cause even the most seasoned real estate investor to shudder. Not only do inspections have the potential to turn up devastating issues for investors close to finalizing a deal, under-qualified inspectors may cost an investor thousands of dollars in corrective aggravation. Recent changes to insurance policies and coverage in Florida have led to increased concern over property inspections and their impact on real estate investment. Commercial investors need to be especially careful as there are many more aspects to commercial property inspection as opposed to residential. This episode will cover six hot spots or areas of focus for any investor to cover when inspecting properties.
Out-dated wiring methods may preclude properties from meeting current insurance requirements
Aluminum wiring dating mid 1960s-1970s a prevalent issue; Cloth wiring; Knob-and-tube wiring
No safety outlets by water areas source of concern
Major area of concern when inspecting properties. Damage can be detrimental to property and repairs costly.
Look for flat roofs or areas where water pools
Leaks cause major damage
A/C units on roofs – water damage from condensation, impede accessible roof maintenance. New FL building codes require roof-units be on raised platforms
Changes to FL insurance coverage a important concern for new buyers
Standards for coverage have changed over recent years
Require more detailed inspections, won’t insure certain construction methods/materials
Insurance coeerage under previous owner will not extend to new buyer
Costly and potentially dangerous inspection issue
Look for long, horizontal cracks in and around structure
$2000 geo-technical survey
Serious issue in FL
Difficult to asses severity or extent of infestation
Especially an issue in vacant or untended properties
Inspector Due Diligence
In FL especially, determine certifications of inspectors prior to selecting
FL requires Home Inspector license only
International Association of Home Inspectors – largest H.I. association in U.S.
For specific issues, contact specialists (i.e. mold inspector, master electrician, professional roofer)
To contact Jay for information on inspecting properties or to inquire about his own property inspection services, visit his website: www.a-snoop.com or call (813) 345-2600
Florida real estate investors should be familiar with the name McKinley. With over 55 million square feet of commercial and residential real estate in 34 states, McKinley, Inc. is 37th largest real estate investment and management firm in the nation.
Albert Berriz, CEO, Co-owner & Co-Managing Member of McKinley talks with us this week about the firm’s special interest in Florida. The Interstate 4 Corridor, connecting Tampa, Lakeland, Orlando and Daytona Beach is favorite of McKinley for it’s unique position as a major economic engine for Florida. The firm owns and manages 55 multi-family communities along the I-4 corridor. Albert discusses the firm’s attraction to the corridor as a region of of immense population growth.
6.5 million residents (6th largest population concentration by geographic area in U.S.)
1.3 times over growth rate of South Florida
Panama Canal to introduce Port of Tampa to new markets
All Aboard Florida rail project to provide high-speed transit between Orlando and South Florida
Theme Parks in Orlando and Tampa
For any investor seeking to improve their success in the real estate market, Albert believes that a mentor is an invaluable resource for investors. The expertise and understanding of a seasoned investor can provide knowledge and guidance to make actionable investment decisions.
Albert cites Colin Powell as a distinct influence on his development as a leader. Despite his focus in military and politics as opposed to business, Gen. Powell established himself as a true leader in his field and exhibits the qualities of leadership that can be applied to any individual.
Check out Colin Powell’s literature on leadership on Amazon
To find out more about Mckinley’s properties in Florida visit their website
South Florida has always been in a class apart from the rest of the state in terms of real estate development. The South Florida real estate market has lead the state in real estate investment and growth. Despite it’s ups and downs the South Florida real estate market has historically been a market indicator in terms of development and investment activity. South Florida’s unique positioning and heavy influence of foreign investment makes this market an interesting and dynamic one.
Brian Bandell is a senior journalist with the South Florida Business Journal covering real estate, transportation and logistics. For over a decade, Brian has served the South Florida business community. With an expert ear for news, Brian gives us a brief, but detailed overview of the South Florida real estate market and what is in store for future developments in the area.
$7.5 billion in construction starts in Miami and South Florida
Related Group – several condo, residential, multi-family apartments in Miami/Ft. Lauderdale; retail/mixed-use projects in Downtown Miami
Steven McCraney, President and CEO of McCraney Property Company, lives his life by the Helen Keller quote: “Life is either a daring adventure or nothing.” The West Palm Beach developer is an avid outdoors-man and mountain climber, scaling notable peaks such as, Mt Elbrus in Russia, Mt Rainier in Washington and Mt Aconcagua in Argentina. He has now turned his attention to the I-4 corridor and intends to build that area between Orlando and Tampa in to the next great industrial powerhouse. He has multiple projects in various areas of the corridor, but most recently, he is teaming with Northwest Mutual on a $30 million development of 603,000 square feet of warehouse space in Davenport, near US 27 and I-4.
Steven has developed, owned and managed over 3,000,000 industrial properties all over Florida. This episode, Steven discusses the merits of the industrial property market as well as his philosophy to approaching the market. This show is a must listen for stakeholders in Central Florida!
Industrial Property Market is New Retail
Rise of online-shopping leading to emphasis on warehouse/storage space