Are you considering flipping houses in Florida? You've come to the right place.
In this article, we're going to cover everything you need to successfully research, purchase, renovate, and sell homes in Florida.
We'll also touch on the legalities of flip properties, the best cities to invest in, and how to finance this investment (even if you have no money or poor credit).
Florida has a robust and expansive real estate market. Ranked as the top destination for relocating Americans in 2020 and with over 300,000 new residents annually, there's plenty of opportunity for house flipping in Florida.
Read on to learn more.
Here are seven major reasons why you should consider flipping houses in the Sunshine state.
Florida has a significant portion of houses that need some light repairs, touch-ups, or major renovations to be livable once again.
You would be doing the community a favor by taking homes that need some love and making them habitable and easy to love once again.
Some of these homes may look a little ugly, but they are structurally sound diamonds in the rough, just waiting for someone with your skills.
In 2017 alone, over 430,000 people moved to Florida. Data analysts estimate that Florida will grow another 11% by 2023.
This growth is remarkable and something you should strongly consider as a real estate investor.
The top growing cities in Florida, according to this study by Cushman and Wakefield, are the following:
Florida has been making positive economic growth, despite the COVID-19 pandemic for yet another year.
As of October 2021, it has benefitted from eighteen consecutive months of private-sector job growth. It has increased by 5.7% in one year. Just for reference, the national average rate of job growth is usually closer to 0.5% each year.
Florida has many vacant houses that are just begging to become income-earning investment properties. Some of the top cities, including Fort Myers Beach, Siesta Key, Longboat Key, Sanibel, and Marco Island, have vacancy rates ranging from 52.6% to 65.9% vacant.
Of course, these figures do include second homes and empty rental properties. Regardless, there are many real estate investment opportunities awaiting skilled house flippers.
Out of the top 100 United States cities with the most empty homes, Florida contains 33 of those. And out of those 33 cities, 10 of them sit on the west coast.
Florida also has the second-highest number of foreclosure properties in the United States. It is only second to Illinois.
Out of 9,448,159 housing units, 2,847 went into foreclosure. That means one in every 3,319 houses is foreclosed in Florida.
Here are the top five counties for foreclosures in Florida per housing unit (as of Q1 2022):
Florida ranks as the 40th most expensive state when it comes to tax rates, making it an affordable investment location.
Florida does not have an estate or inheritance tax. Nor do people need to pay taxes to the state on intangible goods, such as investments.
There is no state income tax and a meager 6% sales tax. Counties are allowed to charge a local tax, with a cap of 1.5%. The most sales tax you can pay anywhere in Florida is 7.5%.
At the end of a long day or ripping out walls and replacing electrical outlets (or, perhaps, supervising the people you hired to do these tasks), it's nice to enjoy an evening out on the town or a slow day in nature. Florida is just the place for that.
The majority of the year is sunny, warm, and perfect for outdoor enthusiasts.
Florida is also home to some of the most beautiful beaches in the United States. If you have time, go check out Sarasota's Siesta Public Beach, Clearwater Beach, or Pensacola Beach.
This gorgeous state boasts great diversity. Florida is ranked as the 8th most diverse state in the US.
Because of this melting pot, you're sure to find delectable foods and drinks across the entire state. There is a delicious Cuban influence in many of the dishes, and Florida's long growing season means a majority of the food is locally raised.
There are several incentives and loan programs for first-time homebuyers in Florida. While these incentives and loans may not directly apply to you, they do make it easier to find first-time home buyers. If your investment strategy involves flipping single-family homes, you'll love all the assistance available to make your investment sell quickly.
Some of the most helpful Florida Housing assistance programs and money loans include:
Absolutely. Flipping homes in Florida is very profitable. As of Q1 2022, the median single-family home purchase price is $175,600, and the median single-family home resale price is $247,070.
This means that the average revenue per flip is a little over $70,000.
Here's the step-by-step process to get started flipping houses in Florida.
You should only pay 70% of the after repair value, called the ARV, of a property, minus the necessary repairs. This is also known as the 70% rule of house flipping.
For simplicity's sake, let's say a property has a $100,000 ARV and needs about $10,000 in repairs to replace part of the flooring, reroute some simple pipes, and touch up paint.
70% of the ARV is $70,000. After you subtract the $10k in repairs from the $70,000 ARV, you're left with $60,000. So ideally, you won't pay more than $60,000 for the investment property.
Working with a real estate agent is strongly recommended, especially if this is your first flip project. A realtor can help you with so many little details you haven't even thought of; they have good connections and know the best, most profitable homes in the local market. They can also help you navigate changing real estate markets, which is an incredible asset to have in your back pocket.
Even if you have a knowledgeable realtor on your side, it's okay and encouraged to perform a lot of the research yourself.
Start by researching different areas of Florida. For example, South Florida was one of the top places to move in 2021. Thanks to the rise in popularity of working from home, South Florida is booming with new residents who want to purchase homes.
For Florida, consider the rising coastline and generally avoid properties that are right on the water. These properties can be harder to resell and are prone to water damage from floods and hurricanes.
Find flood zones and flood plains, and avoid them like the plague.
Your best move would be to find a neighborhood that hasn't exploded with growth just yet but is very likely to right around the same time you're ready to resell. This is where extensive research and a bit of luck come into play.
Be very honest with yourself here; it will save you a lot of time, money, and headaches in the near future.
Do you know how to perform many of the necessary repairs? If you don't, are you willing to take the time to learn? If you make mistakes, can you afford a do-over or delay in the schedule? How patient are you? Do you have a mentor to help you? Can you afford to hire a mentor?
How long can you commit to flipping properties? Is your timeline flexible or rigid?
Now is the time for you to loosely lock down a timeline and decide how hands-on you want to be with the work involved.
You can purchase the house for an all-cash deal. You can get a more traditional loan with 20% down, or you can even speak to a lender about a flip loan. Hard money lenders are also an option; they can get you set up for a non-conventional loan. Hard money loans are usually due in between six and twenty-four months, whereas traditional home loans last for fifteen to thirty years.
Private money lenders are one of the best ways to get involved with flipping homes. They are basically banks without all the red tape and hoops to jump through. The only downsides to private lenders are their potentially steep 6% to 14% interest rates, points, and other fees involved.
Flipping investors are another option. They can offer the financing and usually have good advice for newbie home flippers. You still need to bring a lot of value to the table, though. Being able to source deals on your own or have a high-value contact list will make you equal partners, which is critical if you want to make this partnership a success.
You should also work on your exit strategy for your flip project. Do you want to use the BRRRR method and use the property as a rental? Or would you rather sell it after the rehab to recuperate your investment and move on to something else? Be thinking about these opportunities, and weigh your options.
You will want to find a mentor, a lender, a realtor, a real estate attorney, general contractors, and laborers (if you want the help). Get these people lined up before you purchase your property so that way you can immediately dig in as soon as the keys are in your hands. This speeds up the timeline and saves you a lot of stress.
You've likely caught onto how many times I mention stress; I do this because while house flipping is a rewarding and profitable real estate business, it is also stressful. Do everything that you can to mitigate the stress when possible.
If you're able, have your general contractor look at the potential property prior to purchasing it. This allows you to better plan for the necessary repairs and to get in touch with the right professionals right away.
Distressed, short sale, foreclosed, and fixer-upper investment properties generally have the highest return of investment. They also usually require more sweat equity or cash to fully rehab, too. Speak to your mentor, real estate agent, and contractor for each property you consider and run the numbers together. The time to flip the property can be just as crucial as the money needed.
If you're new to house flipping or have more time than money, sweat equity is an incredible tool.
Even if you aren't comfortable or capable of doing every manual labor task that the property requires, you can do some of the work. Painting walls, scrubbing floors, cleaning and restaining cabinetry, resealing bathtubs, or even laying down new floors are tasks that most beginners can do.
While an electrician updates the wiring or fuse box, you can regrout floors, powerwash sidewalks, or clean the pool in the back.
You can also take on the burden of the mental labor necessary, especially if you have an investment partner involved. Menial but necessary mental work is part of the process too.
Renting out a flipped home will provide you with a residual income that will pay you every month that you own the property.
Selling a flipped home gets you a quick, immediate one-time lump sum of cash for you to do as you please.
If you choose to rent the property, look into hiring a property manager. A property manager makes your rental income truly passive and can shield you from rental laws and regulations you may not be familiar with, especially if you aren't local to the area.
If you choose to sell the property, make sure you work with a real estate agent at every opportunity possible. They know local home values, local home prices, comparable home sales, how to prep your house to command a higher price, when to put it on the market, list it on the Multiple Listing Service (also known as "the MLS"), how to market it, and how to make it appeal to the new homeowners.
Flipping a home means that they are more costs involved than just the initial sale price of the home.
You'll need to factor in the renovation too.
Here are major expenses that you'll need to prepare for during your real estate flipping process:
Keep in mind that Florida's median price for home purchasing is $175,600. The median resale price is $247,070.
You do not need a license to flip houses in Florida. You do not need a contractor's license to flip houses, nor do you need a real estate license to buy or sell the house.
Your contractor that you hire, if you decide to hire one, does not have to be licensed, though this is generally a good idea. You'll also need access to a licensed real estate agent to buy and sell the home.
With that said, having these licenses are handy, especially if you plan to make real estate flipping a regular part of your investment strategy. Getting your own contractor license allows you to save money on labor, work when you want, get a higher return for your investment via greater sweat equity, and also network with fellow contractors, locally and globally.
These are good general rules to follow when flipping homes in Florida. You don't have to follow them, but they will likely save you time, money, and stress.
Yes, you can flip houses in Florida without using your own cash or credit. Several of the top methods include:
You can wholesale properties, get an investor involved, find a partner to finance the deal, buy properties through auctions, foreclosure, or use a subject to deal to get the property with little to no cash and no credit check.
Do your research according to your desires and needs in a flipped property. Now with that said, here are some helpful pieces of criteria to help you determine some of the more desirable areas to invest in.
The Safest Cities in Florida (with their safety score):
The Best Areas with Highly Rated Public School Education:
The Fastest Growing Cities in Florida:
Our Personal Preferences for Cities to Flip Houses In:
Florida is one of the easiest states to flip houses in.
There is an abundance of vacant, foreclosed, or for-sale houses. The market is booming, the population is growing, and the economy is strong.
Diversity is also good, and the state appeals to many individuals. It has a nice balance of nature, nightlife, city, and country living.
Yes, as of January 2022, the market is ideal for flipping homes in Florida.
The economy is strong, there is a high demand for high-quality homes in a large range of price values, interest rates are low, and the economy is doing very well.
Florida is a fine place to live or flip real estate.
The economy is strong, the population growth is some of the best in the country, and the location is generally good with a desirable lifestyle, many opportunities, and the potential to make a healthy profit.
Regardless of if you want to rent or resell your flipped property, you are sure to learn a lot, make good money, and make lots of helpful connections along the way.
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