What do you think it takes to be a successful real estate investor?
Personally, I treat real estate investing like being in a marriage.
I have to know that I want to be with a property till I’m old…
I have to know how to hold on to my properties through thick and thin…
And I have to know WHY I want to leverage a specific market as a long-term investment.
So why am I “married” to investing in Florida real estate?
Because I know the market inside out, and I’ll show you how to do that today.
In this deep dive, I’m going to talk about:
- The criteria I use to determine a good real estate market…
- 7 reasons why I love investing in Florida real estate…
- The risks of investing in Florida real estate…
- Which parts of Florida I love investing in…
- And whether NOW is a good time to invest in the Sunshine State
Without further ado, let’s dive in. .
IS FLORIDA A GOOD REAL ESTATE INVESTMENT?
I wholeheartedly think so…
And as you will see in the rest of this article… Many experts also consider Florida markets to be among the best in the country.
According to a 2023 Multifamily Outlook by top commercial lender, Freddie Mac, “Florida markets make up half of the top 10 markets” in 2023.
And get this…
Even though multifamily growth in 2023 is expected to be lower due to the looming recession…
Many Florida markets will still remain in the top 10 markets for real estate investing in the U.S.!
WHAT MAKES A GOOD REAL ESTATE MARKET?
Before I dig deeper into why I love investing in the Florida market so much, here are some criteria I look at when considering different real estate markets:
- Rent growth potential in the market
- The cost of renting vs. the cost of owning a home in the market
- The strength of the local economy and job market
- Population growth trends in the market
- The balance of supply and demand in the market
- The quality of life in the market
- The flow of capital in the market
I’ll elaborate more on each of these criteria in a moment.
So, with all these market criteria in mind, here are the…
7 REASONS WHY I LOVE INVESTING IN FLORIDA REAL ESTATE.
1. The #1 Thing That Could Increase My Cash Flow Potential
Rent growth refers to how much market rental rates are expected to grow over time.
It’s typically expressed as an annual percentage increase.
Here’s what I recently learned about multifamily real estate investing in top Sun Belt markets, including Florida.
Based on a report by leading commercial real estate firm, CBRE, multifamily rent growth in the Sun Belt is almost double that of the national average over the past 5 years.
These markets include Florida cities such as Tampa and Jacksonville.
Rent growth in these cities is also far outperforming major metros like Boston, Los Angeles, Washington DC, New York, and San Francisco.
And in a multifamily report by another top commercial real estate firm, Cushman & Wakefield, rent growth remains strong — especially in South Florida.
In fact, multifamily rents in South Florida continued to hit record levels in 2022.
In the first half of 2022, effective rents increased by 7.5% in Miami-Dade, 5.3% in Broward, and 0.3% in Palm Beach.
Finally, CBRE also shared in 2022 that “Sun Belt markets still have runway for additional rent growth.”
This tells us that multifamily real estate is thriving in Florida, especially in Tampa, Jacksonville, and South Florida.
It also tells us the potential for our cash flow to grow over the next few years.
That said, nothing is guaranteed, and I would continue to underwrite my deals in this market very conservatively.
2. The Biggest Factor That Increases Demand for My Rental Units
In Sun Belt markets such as Florida, only 47.3% of all homes for sale are likely to be affordable to a family of four.
By comparison, a family of four can afford up to 75.8% of two-bedroom rentals in Sun Belt markets.
This means the number of affordable rentals is nearly DOUBLE that of homes in Florida…
Therefore, there will likely be more demand for my rental properties.
According to Cushman & Wakefield, home prices are at record levels in South Florida.
And since average home prices are increasing at a greater rate than rents, more people are likely to rent.
Let me give you a quick example.
As I write this, the median home price in South Florida is $542,878.
With a 5% down payment, the mortgage would be around $3,200 at that price, which is $900 more than the average rent in the market.
Since more people can afford to rent than buy in the coming years, I believe that Florida multifamily real estate could continue to see great demand in the near future.
3. How the Local Economy in Florida Benefits Multifamily
Sun Belt markets, like Florida, are considered powerhouse economies that attract a wide range of businesses.
Why do you think so many established companies have decided to make Florida their home?
In 2021, The Miami Herald reported real estate investment group Blackstone spent $230 million to buy three buildings in downtown Miami.
Leading global investment firm Goldman Sachs reportedly planned to move its traders and senior executives to West Palm Beach, according to Bloomberg News.
And top data analytics provider, PwC reports that Florida cities like Miami and Tampa are among the fastest-growing markets in the U.S.
They also revealed that the economic recovery in Miami and Tampa has been much quicker and more complete than in other markets.
What about the job market?
According to Freddie Mac, the employment growth rate in top Florida markets is expected to be above the national average in 2023.
Furthermore, wages continue to rise in areas like South Florida… And incomes have increased by 5.9% in South Florida in the past 12 months.
It’s no wonder why I love investing in Florida real estate so much.
A strong economy with new jobs and rising wages means that my tenants could likely continue to pay their rent now and in the future.
Plus a strong economy and a strong job market will also likely attract new tenants as well.
That said, keep in mind that this varies from city to city, and county to county… So later on in this article, I’ll look more closely at the top Florida sub-markets to invest in.
4. Why Local Population Trends Matter Too
PwC also reported that in Sun Belt markets like Florida, populations are both expected to grow far faster than just about anywhere else in the nation.
In fact, according to Cushman & Wakefield, South Florida saw a 47,000 increase in population in 2022, far more than its population increase for all of 2021!
They also reported that household formations in South Florida are also expected to increase to over 37,000 each year for the next five years.
This could mean up to 18,500 new renters per year in South Florida, which represents a potentially great opportunity for investors like you and me.
I also like to follow the migration of people across the U.S. to see where renter demand will be next.
According to Forbes, Florida was the fastest-growing state for the first time since 1957, adding 444,484 new residents to its state in the past year.
Population growth and constant migration help create what I like to call built-in renters.
In my experience, most people who move to a new state do not buy single-family homes…
Instead, they often rent for about two years.
With the rise of new residents moving to Florida… I will likely have a constant influx of built-in renters for my investment properties.
5. How Florida’s Unique Multifamily Supply and Demand Works in Our Favor
I also love investing in the Florida real estate market because of the great balance between rental demand and supply in the state.
Simply put, there have always been just enough renters and apartment units to go around in the entire market.
In fact, Cushman & Wakefield reported that net absorption was almost triple the new multifamily supply added to South Florida markets in 2022…
Meaning that the number of multifamily units rented was almost 3X the number of newly built units…
And yet, overall rental demand and supply remained in balance, according to the report.
Even better, in 2022, rent collections were excellent, occupancy rates were high, and new supply was quickly absorbed.
Freddie Mac also foresees that although vacancy rates might increase somewhat in 2023…
Most top Florida markets have started the year with vacancy rates well below their historical average.
Meaning that apartment buildings in these markets have fewer vacant units than usual…
Making these potentially great deals for you to look at.
Here’s what all this means about the Florida market:
- You’re more likely to have renters who pay rent on time…
- Your apartment buildings are more likely to be close to fully occupied…
- You’re likely to see renters quickly snapping up newly-built units that were added to the market…
Which makes Florida a great place to learn how to invest in cash-flowing multifamily assets.
6. Here’s a Question About Real Estate That Many Investors Overlook…
What is the quality of life in this market?
Quality of life is extremely important to me when I look at markets to invest in.
I always ask myself – is this a place I’d want to live in? Would my family and I be happy there?
And when it comes to Florida, the obvious answer is yes.
In fact, U.S. News ranked Florida as the #10 best state in the U.S… #3 for education… #8 for its economy, and #8 for fiscal stability.
Financial news site WalletHub also compared all 50 states based on affordability, economy, education and health, quality of life, and safety…
And ranked Florida as the #7 best state to live in, ranking #5 for its quality of life and #6 for its economy.
It’s also no surprise to me that some of the top-ranked real estate investing markets for the year are in warmer Sun Belt regions like Florida, according to PwC.
After all, Florida has a great, warm climate and a wide variety of fun things to do with my family.
That’s why I rent an apartment in Miami and have my 10X headquarters located in Aventura.
Even better, we all know Florida is a top tourist destination.
Which makes tourism another major contributor to Florida’s economy…
And such a great, growing economy will likely attract several jobseekers…
Who will also potentially generate more demand for multifamily units.
I also consider the quality of life in specific locations I look at in Florida, because these can vary so much from town to town.
For example, I check if there are good schools, hospitals, gyms, and restaurants in the area that could attract potential renters.
7. Why I Like to Follow the Money
I also like to observe where money — or capital — is flowing across the U.S. real estate market.
And according to Cushman & Wakefield, lots of capital from the U.S. and overseas was pouring into South Florida multifamily real estate in 2022.
This is likely because investors see multifamily as a “safe, stable, and strong asset class.”
Out-of-state private capital investors also continued to dominate the market…
And many first-time investors poured capital into South Florida as well.
So there is definitely plenty of opportunity for you to learn how to invest in Florida, should you choose to do so.
WHAT ARE THE RISKS OF INVESTING IN FLORIDA REAL ESTATE?
While there are many reasons to love investing in Florida real estate, you have to ask yourself what your personal risk tolerance is.
What risks – financial or otherwise – are you able to bear?
Obviously, it’s no secret that hurricanes and floods are common in Florida.
These natural disasters can damage or destroy your investments…
And can also potentially decrease the value of your Florida investment properties.
Again, this ALL depends on which part of Florida you invest in…
So always thoroughly research the property and local market before investing. *See full disclaimer below.
When it comes to hurricane-prone locations like Florida, I make sure to invest in great multifamily assets with sufficient monthly cash flow.
So I choose to buy very LARGE deals, typically 200 to 1,000 units at a time.
These units create enough cash flow that allows me to get high quality insurance.
And I always look for insurance that can take care of hurricane damages to my investment properties as much as possible.
Also, you should note that the real estate investing market in Florida has experienced major booms and busts in the past.
According to Tampa Bay historian Rodney Kite-Powell, “Florida’s economy is built on tourism and [population] growth. When it’s not growing, it hurts everybody.”
However, he also observed that “the market always corrects itself at some point.”
It all depends on an individual’s willingness to take a risk…
Especially when faced with investment opportunities for potential rental income profits in the Florida real estate market.
So remember to do your due diligence, and carefully consider the potential risks and rewards before investing. *See full disclaimer below.
DO YOU KNOW WHAT IT MEANS TO LOVE YOUR MARKET?
Before investing in Orlando, I remember spending lots of time in the area with the community.
I didn’t rely only on reports.
All I did at first was get in my car and drive around Orlando.
I saw the traffic… I saw people spending money… And I saw people flying into the airport.
I learned that Orlando was one of the most visited cities in the United States at the time.
I also knew jobs were flooding in… So I scoped out the job market and learned what it’s like to hire people there.
On top of that, I saw lots of development happening… and new roads were being built.
I visited business owners, car dealerships, and countless investment properties in the area.
Then, I rolled up my sleeves to understand what’s behind the numbers in this rental market…
I looked at the real numbers on T-12s and rent rolls, not just market reports.
I vetted the economy thoroughly and fell in love with the market… and it paid off big time for me.
I’ve had an office there for 20 years now… and great real estate investments in the area.
So no matter what you read in this article…
Remember that it is no substitute for hitting the pavement and checking out the Florida market yourself.
If you want to pick the right properties and potentially create cash flow…
You need to take this process seriously and really get to know your market.
It takes time, energy, resources, and commitment, but it’s always paid off for me.
Even better, once you find a great market you love…
Your cash flow has the potential to grow exponentially in the years to come.
So NEVER underestimate the importance of knowing your market.
WHERE IS THE BEST PLACE TO INVEST IN REAL ESTATE IN FLORIDA?
As you might have guessed by now, I’m a big fan of South Florida cities.
But Florida is not a monolith, so let’s look closer at the best cities in terms of the great multifamily markets.
ORLANDO, ORANGE COUNTY
I mentioned earlier how much I love the Orlando market.
When I visit the area, I see a city that’s alive and growing.
Orlando is visitor-friendly, has a warm climate, and has a bustling business center.
This central Florida city is also home to major tourist attractions and theme parks, such as Walt Disney World and Universal Studios.
It’s no wonder that it welcomes more than 50 million visitors a year
And each visitor brings about $1,000 on average to the city… and $47 billion in revenue a year.
This allows Orlando to support schools and parks, public safety, arts and sports venues, and infrastructure…
In turn, this feeds into making this city a great location, both for potential tenants and investors.
Plus, Orlando has a strong job market too.
According to the National Association of Realtors (NAR) in September 2022:
- The job market grew 5% year-over-year, as compared to the national average of 3.9%…
- Wages grew 7% year-over-year, as compared to the national average of 4.8%…
- And the unemployment rate was 2.7%, well below the national average of 3.5%.
The strong job market makes Orlando a very attractive place for your potential tenants to live in…
Which could support demand for your multifamily units as well.
Orlando’s population also grew by 0.5% in 2022, which was higher than the national average.
In fact, renters formed new households at almost 6X the national average rate, at 15.2%.
So this is a great sign of potential rental demand, which also makes it a great sign for multifamily investors like you and me.
And according to NAR, we’re seeing STRONGER demand for multifamily here as compared to the rest of the nation.
This area has a faster absorption of multifamily units than most parts of the U.S.
Absorption, or net absorption = total number of units on the market – total number of units vacated.
When this number is positive, it means more units are being rented out.
And in Orlando, a whopping 5,543 units were absorbed over the year.
It’s no wonder rent prices rose faster than nationwide… at 9.4% over the past few months.
So that’s great news for investors who are looking for cities with high multifamily demand and potential rent growth.
MIAMI, MIAMI-DADE COUNTY
One of my rules of success is to NEVER depend only on ONE vertical…
And I believe the strength of Miami’s economy can be attributed to this rule.
See, Miami, known as the “Gateway to the Americas”, depends on multiple verticals in its economy.
These include high-performing industries such as tourism, healthcare, finance, and international trade.
In fact, based on a 2018 UBS study of 77 world cities, Miami is the SECOND richest city in the U.S.!
Even better, it is the THIRD richest globally in terms of purchasing power.
As such, Miami and Miami Beach are likely to attract great tenants for your potential multifamily investments.
Also, Miami’s job market is actively growing, which is more good news for potential investors.
According to NAR, the job market grew 5.7% year-over-year in September 2022, which was higher than the national average.
The unemployment rate was also lower than the national average, at 2.3%.
And according to Cushman & Wakefield, the median salary increase was 7.1% year-over-year in October 2022.
A great job market like Miami’s is likely to attract many out-of-town workers…
Which could in turn generate more rental demand for your multifamily investments.
And like Orlando, multifamily demand in Miami is greater than in the rest of the nation.
Renter household formation rate in Miami is 4.7%, as compared to the national rate of 2.6%.
This means renters are forming households in Miami TWICE as fast as the rest of the nation…
Which should give you an idea of how much rental demand you could benefit from in Miami.
Miami also enjoys a healthy balance of multifamily supply and demand.
Cushman & Wakefield reports that year-to-date net absorption is at around 1,800 units…
And completed units are also at around 1,800 units…
Which means that multifamily supply and demand are in great balance…
And any new apartment units on the market are quickly snapped up…
And there is very little surplus of apartment units in this market.
Also, rent prices rose faster in Miami than the national average…
And in September 2022, Miami’s year-over-year rent growth was 10.7% – which is even faster than Orlando’s!
Yes, this growth might slow down due to the recession in 2023…
But with all the other factors working in Miami’s favor…
I believe these rent growth trends could spell a promising future for potential investors…
Especially those who are willing to play the long game and wait for long-term appreciation.
METRO AREA, PALM BEACH COUNTY
Another great market that’s close to Miami would be the Palm Beach Metro area.
A few particularly attractive markets I would consider include West Palm Beach, Boca Raton, and Delray Beach.
So why Palm Beach County?
This area stretches across 47 miles of unspoiled Atlantic ocean beachfront…
And it’s filled with historic landmarks, golf courses, and a thriving arts and entertainment scene.
There is a great school district, as well as plenty of outdoor recreational activities, beautiful architecture, and gorgeous beaches.
Who wouldn’t want to live there?
The location alone makes it an attractive option for your potential tenants.
Like Miami, Palm Beach County also has a thriving economy based on multiple verticals.
According to the Palm Beach County Government’s website:
- The Palm Beach economy draws its strength from tourism, construction, agriculture, and growing high-tech industries (such as bioscience)…
- Tourism supports more than 66,000 jobs in tourism-related businesses….
- More than 7.3 million people visit Palm Beach County annually, and they spend approximately $4.6 billion while they are there…
- Palm Beach County is the nation’s leading producer of sugar and sweet corn. 18% of all sugar in the U.S. is produced here!
Clearly, there is a great economy here that supports a high quality of life for your potential tenants.
It’s no wonder that Palm Beach County also has a strong job market, which makes it even more attractive for potential tenants.
Among the 343 largest counties in the United States, Palm Beach had the largest percentage wage increase at 15.6% in 2021.
It also has the highest average salary in the State of Florida, at $61,040…
And a 2.3% unemployment rate – lower than the national rate.
In one year, Palm Beach County added 16,818 people to its labor force…
And increased employment by 39,441 (as of June 23, 2022).
Such a robust job market is likely to attract jobseekers…
Which could mean more renters for your potential multifamily investments.
In fact, it could be happening already…
As seen from the 1.6 million Florida residents who are New York natives… and make up 8% of Florida’s population in 2022.
Also, of $34 billion in net worth that left the state of New York in 2020… Palm Beach County was the #1 recipient of that wealth migration!
See, most people say, “Follow the money” – but this is a prime example of why I prefer to follow the people instead.
The migration of people tells me where the money is going…
And which places could be great multifamily markets for me to invest in.
In fact, according to Cushman & Wakefield, average effective rents were at a record-breaking $2,326 in the first half of 2022!
However, as of October 2022, 1,500 newly built units were added to the market…
And net absorption was only 139 units…
Resulting in vacancies increasing from 4.5% to 6.4%.
This suggests that the market might be peaking in Palm Beach County…
But that doesn’t mean there aren’t still great deals to be had in the area…
Especially given the fantastic location.
Remember, there are lots of things you can change about a property…
But the one thing you CAN’T change is a GREAT location.
FORT LAUDERDALE, BROWARD COUNTY
Speaking of great locations, let’s talk about one such location in Broward County…
This city is known for its sandy beaches and 165 scenic miles of boating canals…
The tourist industry is also a major pillar of the Fort Lauderdale economy, with its abundance of museums, beaches, and nightlife.
Let’s not forget “The Strip”, a promenade that stretches along oceanside highway A1A…
It’s packed with upscale outdoor restaurants, bars, boutiques, and luxury hotels.
What’s more, a fantastic arts and entertainment district runs along Las Olas Boulevard.
I mean, this is just a fun place to live in – and your potential tenants would likely agree.
However, Fort Lauderdale doesn’t only depend on its tourism industry like it used to…
It now supports a diverse mix of verticals…
Which includes industries like marine, manufacturing, finance, insurance, real estate, high technology, avionics/aerospace, film and television production.
Some industries with a great economic impact on Fort Lauderdale include…
The Fort Lauderdale-Hollywood International Airport, which has a total economic impact of $37.5 billion annually, as of 2021…
And a thriving recreational marine industry that contributes an economic impact of $9 billion in Broward County…
And $12 billion in the entire South Florida region!
It’s no surprise that the city’s job market and economy are outperforming much of the rest of the nation.
According to Fannie Mae’s multifamily report:
- Fort Lauderdale’s economy is outperforming much of the rest of the nation…
- The metro has historically boasted a low unemployment rate…
- And it was no different in Q3 of 2022 at 2.5%… with job growth topping 6.1%…
That said, multifamily demand might be cooling in this market.
Vacancies increased to an average of 5.0% in Q3 2022, as compared to Q2 2022.
While this is on par with the national average, vacancies have been steadily increasing.
This is probably because there were more than 10,500 units underway in its construction pipeline in 2022 – the highest level seen since 2016.
This makes Fort Lauderdale the second-largest apartment market in Florida…
And it is possibly over-supplied right now.
In turn, rent growth is slowing down.
It increased just 1.75% over the last quarter to an average asking price of $2,200.
That said, Fort Lauderdale’s rent growth was still above the national average.
Once again, these statistics only paint part of the picture.
I still believe in the strength of Fort Lauderdale’s diverse economy and premier location.
They will probably continue to fuel employment growth…
And this in turn could sustain rental demand for years to come.
IS IT A GOOD TIME FOR INVESTING IN FLORIDA REAL ESTATE?
This is one of the most common questions I get about real estate investing in Florida.
However, unlike most people…
I focus less on trying to time the market… and more on finding a great deal.
So I never stop doing deals, whether I’m at the top or the bottom of the market cycle…
Because I’m willing to wait for my best investment properties to appreciate over time…
And I’m willing to invest for the long term.
In my experience, even when I buy at the top of the market cycle…
As long as I can weather the next 10 years, I’ll likely be in good shape to sell…
Especially since there is probably going to be a NEW peak in the market cycle, creating exit prices to match that peak.
By the way, real estate prices have roughly doubled in value in Florida every 10 years since 2000, according to the Federal Reserve Bank of St. Louis.
Think about that for a minute.
A $40,000 unit could be worth $80,000 ten years from today…
And maybe another $160,000 ten years after.
So more important than knowing when is a good time for investing in Florida real estate…
Is actually knowing the market… and knowing what risks you can withstand.
Know what you are personally built for…
Know how much stress your system can take…
And know how much stress your finances can take.
CHECKLIST: KNOW YOUR MARKET
Now that you have some idea of why I love investing in Florida real estate…
I hope you will do your own due diligence and research before investing in any market.
Here’s a handy checklist of some key things you need to know about your market, whether or not you choose to look at investing in Florida Real estate:
❏ The history of the market, and all of its ebbs and flows
❏ The cost to build in the market
❏ Local occupancy rates
❏ Who your competitors are, e.g. neighboring buildings, other investors, real estate developers
❏ Your competitor’s products
❏ The local job market
❏ Your competitors’ barriers to entry
❏ The local product supply, inventory, and absorption
❏ The top brokers in the market
And always remember:
To successfully buy in your market…
You need to know where your market is right now… and where it’s going in the future.
Your market could be very different from the market that I’m shopping in.
And that’s why it’s so imperative for you to know your OWN market.
Creating wealth in real estate is not a hobby.
You could get wealthy in the process… but none of that matters if you don’t get to know your market.
Disclaimer: This content is intended to be used for educational and informational purposes only. Before investing, you should always do your own analysis based on your own financial and personal circumstances before making any investment. Grant Cardone is an industry expert who has been investing for over 30 years and his opinion is based solely on his own personal experience and circumstances. Individual results may vary. You should perform your own due diligence and seek the advice from a professional to verify any information on our website or materials that you are relying upon if you choose to make an investment. Investment involves great risk and there is no guarantee of performance or results.
We are not attorneys, investment advisers, accountants, tax professionals or financial advisers and any of the content presented should not be taken as professional advice. We recommend seeking the advice of a financial professional before you invest, and we accept no liability whatsoever for any loss or damage you may incur.