When we first started looking at investing in the US, there seemed to be almost unlimited amounts of opportunities. The opportunities were not limited to a specific area; they were literally all over the country. We would read stories about one investor who made money flipping properties in Las Vegas, another who purchased unit blocks in Detroit, others who invested in Atlanta, etc. Basically it seemed like we could find good properties in a number of places, all of which had advantages and disadvantages. At the end of the day, when we finally picked a place, we made it based on a hunch, I believe that you could invest in a number of areas and be successful, but by selecting Florida as a state, it at least meant one decision was finished and we could focus on the next steps.
So why did we choose Florida?
As I said before, we really only chose Florida as a necessity to make a decision, where the result of the decision was not that important, but it was essential that a decision was made. One of the reasons we chose Florida is that the properties there seemed to experience the biggest gain in value during the real estate boom, and subsequently experienced just about the biggest loss since the bust. For example, the property we purchased for $44,000 in 2012 was sold for $133,000 in 2007 and $110,000 in 2004. So although the value of the house in 2007 was undoubtedly too high for what it is worth, we believe the house is still worth significantly more what we paid for it. And this was a similar situation all across the state, where property values had dropped by upwards of 75% of its value from just a couple of years ago. So expectation of capital gains was a big factor for us, if the value of our property reaches half of what it was in 2007, then that is a 50% capital gain of what we paid for it.
Another factor for us was the properties in Florida seemed to be relatively newer compared to other places we were looking. One option for us was Rochester in New York State, where many properties had very high rental yields, but it was very common for the properties to be nearly 100 years old, and although maintained all those years, still showing significant signs of wear and tear. Whereas in Florida, and typically in the Fort Myers area, there were thousands of houses that were built during the boom, which are now for sale, so there was a good opportunity to get a house that is less than 10 years old and still in as new condition. Actually there were several properties that had never been lived in before. However it should be noted that there are many instances of defective drywall in newer properties called “Chinese Drywall” which should be avoided at all costs. So age of property was a big factor for us, although in the end, we ended up purchasing a house that was built in 1966, so one of the factors that drew us to Florida, we did not really adhere to in the end.
We also knew that tourism is a big industry for Florida, and since there will almost always be tourists of some nature, there would always be associated business that would aid in the economy of the local area. So while several areas seemed to have dying industry (Detroit being a big one), we believed Florida to at least be able to maintain the tourism industry. Part of the tourism aspect is the fact that Florida is a popular retirement area of the US, with a lot of senior citizens looking to escape the cold northern states and into the tropical Florida climate, with an ageing population, we believed that in the future, Florida’s population would only increase and there will always be some demand to live in this area.
There are many other positive aspects, and it should be noted there are also a lot of other negative aspects with Florida compared to other areas in the US. I have not been able to go into them, but above I have outlined our main reasons for investing in Florida, at the end of the day, choosing an area to invest in, when there is so much choice, is just a personal preference and you need to make a decision that you are comfortable with.
Why do we choose Fort Myers?
Again narrowing down a state to a certain area was no easy task, there seemed to almost be unlimited areas where we could obtain the results we wanted. One of the biggest factors was that we knew a fellow successful property investor, Steve McKnight, was investing in the area. Being a very successful and astute investor, we believed that he would have put careful consideration in selecting an area to invest in, so in a way we took that as a reason that it would be a good area to invest in. In a similar way, if you see McDonalds is building a new restaurant somewhere, then it is typically a good place to invest in property too, as the people at McDonalds would have put significant effort in choosing a location, and it is not common that they get these things wrong.
Another factor in choosing a specific area was we found a property manager we really trusted and wanted to work with. Our agent is originally from Australia but now works out of Florida, so she understands our position and knows the issues that we will run into before we experience them ourselves. So as I have said before, rather than finding an agent in a place, sometimes it can be effective to just find an agent and invest in where they operate, as a good agent is worth their weight in gold at the end of the day.
So these are the reasons why we selected the area we ended up investing in, like I said at the start, there seems to be an opportunity everywhere. So it is not always important what decision you make, just as long as you make the decision.
If you want any more information on how we came to select our location, or anything else you wish to ask us, feel free to email us at firstname.lastname@example.org