Favorable Economics, Attractions, and Climate
Florida Investor Demographics
In Florida, virtually every nation, culture, and race are represented. A recent poll revealed that
Florida has a sizable Latin American investor population, with 46% of all real estate purchases
coming from foreign investors in Mexico, Brazil, Colombia, Venezuela, and Argentina.
The top four Latin American countries for individuals investing in Florida were:
● Colombia (9%)
● Argentina (7%)
● Brazil (6%)
● Venezuela (5%)
Investors Buy Properties With All-Cash
Latin Americans account for as much as 44% of all-cash real estate purchases. Foreign buyers
were twice as likely to make all-cash real estate purchases than US buyers.
These overseas investors purchased real estate in Florida with cash and gained benefits such
as interest rate savings, reduced closing costs, and outright property ownership.
What Type of Homes are They Buying?
In Florida, foreign investors buy many kinds of rental property, including single-family homes,
multifamily buildings, and vacation homes. In 2021, multifamily investments largely outpaced all other commercial real estate property sectors.
What is a Multifamily Building?
Generally speaking, a multifamily property is defined as more than four units in a single
structure; anything with fewer than four units is categorized as a single family for finance
purposes.
Why are Foreign Investors Investing in Multifamily Residential Properties?
In my discussions with multiple foreign investors, particularly those from Latin America and
Canada, they choose multifamily properties over single-family rentals or other kinds of
commercial real estate for the following reasons – hint: many overlap with U.S. investors.
Diversity of Holdings
Multifamily real estate is an excellent option for investors to diversify their portfolios beyond
conventional investment instruments like equities, bonds, and mutual funds.
Financing is Simpler
Compared to other property types, such as single-family rental homes and commercial
buildings, multifamily properties are substantially easier to finance in part because they are comparatively “recession-proof”. People still need a place to live despite fluctuations in the housing market. Due to this, multifamily is less risky than other asset categories that may be prone to changes in the market and consequently more subject to vacancies and defaults.
Scalability
Multifamily real estate is a faster way to grow wealth and diversify your investment portfolio
when compared to single-family assets. Another factor to consider is that there are economies
of scale when investing in multifamily assets because it is easier and more cost-effective than
single-family properties.
Tax Advantages
Multifamily real estate investments offer additional tax advantages. A Cost Segregation Study
significantly accelerates depreciation and is usually too cost-prohibitive for single-family
investments.
Fewer Competitors
There is less competition when purchasing multifamily assets because you are only competing
against other multifamily investors rather than facing the fierce competition of multiple buyers
bidding against one home.
Investors Can Outsource Management
As an owner of a property, you are typically involved with duties like collecting rents,
make-readies, handing over keys, and taking care of maintenance emergencies and needs. All
tasks become very difficult when you are not near the asset. An advantage of investing in
multifamily is that the daily managing of the property is handled by a professional property
management company. Passive investments are especially attractive to foreign investors because the active investors handle the asset management, which provides the peace of mind of not having to be directly involved in the operations of an asset while still building wealth.
Closing Thoughts
Florida is one of the most booming foreign investment real estate markets in the U.S and its
economy is anticipated to remain strong through 2022 and beyond. Further, high single-family
housing prices, continued lack of single-family inventory, and the additional benefits of
multifamily investing will continue to drive increased foreign investor demand for multifamily
investments.
Florida is definitely a place where more foreign investors are diversifying their
investment portfolio and what better way to invest than in multifamily assets?
Join us and invest #whereitmakescents
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