As the REO Real Estate market in South Florida continues to grow, the number of Real Estate investors and level of competition is growing. Given the opportunity to purchase REO properties at 25% of the 2005 prices, it is easy to see way savvy Real Estate investors from around the world are coming to South Florida in droves to purchase REO properties. Given the many types of REO investors out there, we have created an explanation of the various types of REO investment opportunities available and some keys to being successful in them.
We have concluded that the REO residential Real Estate market properties can be divided into 6 distinct groupings:

Grouping 1.) $10,000 to 35,000 REO Condo Market:

This REO market can be very profitable and also work intensive. There are a number of variables that have to be considered with this REO grouping, such as location, ease of renting, amount of work needed to get REO property ready for rent, ease of flipping and of course location. We recommend shying away from this market unless one is local and handy. There can be great ROI with these yet many headaches. This REO market tends to have properties in poor location, needs plenty of TLC and many are in 55+ communities where renting is a little more challenging.

Grouping 2.) $45,000 to $60,000 REO condo market:

What a steal! These REO condos are being purchased in droves. As we read this page offers are flying into the Asset Managers of these REO properties. For only $50,000 we have many REO investors walking away with beautiful 2/2's in nice communities that sold in the height of the market in 2005 for over $200,000. They rent very easy for $1,000 to 1,200 per month and besides property taxes have an average of $300 per month in condo dues so the cash flow is excellent and occupancy rate is excellent. Considering the tax benefits and high CAP rate, it is easy to see why they are flying off the shelves so to speak. For the REO investor trained to offer low ball offers to REO asset managers we highly recommend not wasting ones valuable time. Over 95% of the well-maintained 2/2's in this price range go for full price or over and about 90% are purchased by cash at full or over asking price.

Grouping 3.) $99,000 to 199,000 REO Ocean or Luxury Condo market:

For the baby boomer and snow bird that plans on retiring in South Florida on the Ocean, there has never been a better opportunity. Given the nature in which reckless developers pursued this market. There are many tremendous REO properties on the market. For a pure ROI and cap rate the $50,000 market is by far the best. That being said, this market does cash flow and has a nice cap rate. The challenge comes in with the rental market and the cost of condo dues. Florida is famous for crazy HOA or condo dues near the ocean. In addition the increase in rents is smaller than one might expect. A luxury condo can rent from $1,500 to 2,000 a month and with these condos it is expected to ask first last and security, which is harder to get in this market. For a solid investment that will grow in equity and some day turn into a true second home this is the REO market for you.

Grouping 4.) $80,000 to 150,000 single family homes REO properties:

In terms of ROI especially concerning flipping, this REO market is the best. The competition is growing for purchases. Frequently these REO properties are going for over asking price and being bid up on the court steps. The reasons are easy to see. These properties are easy to rent, and with no condo or HOA dues to CAP rate increases considerably. It is not quite as high as the $50,000 REO Condo market, and it is easier to flip. Depending on the end user there can be a 90 day seasoning needed for loans to come through, but with all the benefits for first time home buyers and possible tax benefits these houses will be sold over and over again. Be prepared to make offers on a few of these before one can be secured.

Grouping 5.) $150,000 to $250,000 Single Family House REO Properties:

This REO market is a great investment for the Florida home owner. With all the tax benefits out there, this a great opportunity for the Florida resident to upgrade their home and get the canal front home they dreamed about but could never afford. This market is more subtle than the previously discussed and the difference in prices and location can be much larger. The majority of clients in this arena, plan on living in the house as a primary residence or enjoy purchasing upgrading and flipping to end users with a good ROI.

Grouping 6.) $300,00 and up Luxury REO properties:

For the luxury home and condo purchases what can we say but wow! If owning multi-million dollar properties at a fraction of the cost is your market, than you need to come to South Florida to see what is currently available? Don't expect to get prices at 25% of 2006 prices, but the deals are still amazing. There is a great range of properties out there. The ability to negotiate with REO asset managers is available and the financing as well is expected. There is a niche market for flipping with decent ROI. There is much less competition here and this market is not going anywhere.
As we consult with new REO investors on almost a daily basis is it important to be able to answer some important real estate investment questions. Some of the questions to ask oneself prior to speaking with an expert REO investment specialist are the following:

Will financing be necessary in the REO investment purchase? Depending on the type of purchase financing may not be available.

Are you willing to purchase sight unseen or do you need to fly and personally inspect the property?

Are you interested in having this investment become a second home someday?

If purchasing with cash are you interested in say one$150,000 single-family home or perhaps 3 $50,000 condos instead? There are benefits to both.

Do you want to use a property manager?

Do you plan on flipping or holding?

What is your exit strategy?

Given the state of the economy and the ability to purchase properties in such an attractive market it is easy to see why the REO investment market is booming. For more information on any of the categories feel free to contact Florida Private Investments directly to speak with a REO Real Estate investment specialist.

Please email Peter @ peter@floridaprivateinestment.com
or call us directly @ 561-289-5217

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HELLO WORLD!