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Due Diligence & Investment Promotion, Florida Residential Real Estate Market

Navigator Consulting Group has completed a due diligence study on residential real estate in Florida. The Florida residential real estate market is characterised by a loss of approximately 50% of value from its height in 2006 according to the Case Schiller index. Since 2010, however, investment by Brazilian, Chinese and Israeli investors in Florida has resumed, driven by low asset values and rising domestic currencies against the US dollar.

According to the US National Association of realtors, international sales of US property rose to $ 82 billion between April 2010 – March 2011, up from $ 62 billion in the previous year.  By our estimates, approximately $ 25 billion has been invested by foreign investors in Florida in the past 2 years.

Some characteristics of the market under study included:

  • Focus on rental residential real estate with focus on suburban properties with 100 – 300 units. These properties have seen occupancies decline from 90% to 70-75%, and rents for 1-bedroom / 1 bathroom apartments set at between $ 550 - $ 650.
  • Despite the decline, average EBITDA values remain high, with returns of 40-50% possible.
  • Most properties are managed on a stand-alone basis; there is abundant potential for cost savings through economies of scale, synergies and application of modern customer relationship management (CRM) and software monitoring techniques.
  • The property rebound is only just beginning to touch this segment: most foreign property investment remains concentrated in urban high-rise developments, where prices are recovering quickly.
  • Mortgage finance remains available, with 25-30 year loans at interest rates between 5.5-6.5% common.

Our services included:

  • Detailed analysis of suburban residential rental properties in the Tampa, Orlando and Miami areas
  • Financial analysis of selected properties ranging from 100 – 500 units, including property tax rolls, tenant lists and incomes, operating costs, occupancy levels and management practises
  • Analysis of the commercial mortgage market and tax optimisation strategies for ownership and management of residential rental properties
  • Economic analysis of Florida, including housing stock, property foreclosures, business development, foreign and domestic investment in the residential market, government regulation, government investment, and other factors affecting supply and demand
  • Realtor analysis and assessment of investment reporting on selected properties.

Navigator is currently promoting investment in a group of three high quality residential properties in Tampa, Florida. Total units number 544 with a target sales price of $ 36,000 per unit. The total investment amount is $ 19.5 million before closing costs. Annual income is forecast at $ 3.2 million; annual operating costs are $ 1.6 million.

Interested investors are requested to contact Philip Ammerman on pga@navigator-consulting.com