PERSON OF THE WEEK: The past few years have not been easy for real estate professionals in Florida, but it appears that the dark clouds that covered the Sunshine State's housing market are finally lifting. This week, MortgageOrb speaks with Cory Fritzler, founder and CEO of Miami-based Investstyle Real Estate and South Beach Rentals, about the current trends in Florida's housing market, as well as learning about his own personal experiences in this tumultuous setting.
Q: How would you categorize today's residential real estate market in Florida?
Fritzler: The inventory of homes and condos for sale on the market is down considerably and is close to levels we have not seen since 2006. But with foreclosures, interest rates and inventory on the decline and home buyer confidence, multiple offers on properties and population growth on the rise, especially in southern Florida, we have been and are well on our way to continue recovering and beating the national average for real estate appreciation and gains in property values.Â
It is simply the laws of supply and demand. I feel we hit rock bottom two years ago and have been gaining momentum on our recovery efforts ever since. The question is whether we are only in a recovery mode or if Florida has regained its solid footing.
Q: Teresa King Kinney, CEO of the Miami Association of Realtors, recently said that Miami is number one for international investors and buyers of U.S. residential real estate. What is it about today's Miami market that attracts international attention? And do you see international buyers paying similarly strong attention to other markets in the state?Â
Fritzler: Miami seems to be gaining more and more popularity each year with international investors, as it seems to have a lot to offer when it comes to weather, activities, glam and glitz – and let's not forget, some pretty good real estate values.
Miami has been featured in numerous music videos and many TV and reality shows, and it has been photographed and written about in conjunction with many popular celebrities in the tabloids and other magazines. It also has numerous international events that draw big crowds including the Winter Music Conference, Art Basil and Ultra Music Festival, just to name a few. Also, most restaurants and businesses are bilingual, which is a big plus for any South American buyers.
Unfortunately, I do not see the international presence growing quite as much in the rest of the state, with the exception of Orlando, where Universal Studios and Disney have a big international draw among families with children.
Q: In 2007, you launched South Beach Rentals, which offers condo rentals for business travelers and vacationers staying in the south Florida area. What have been some of the challenges in running this type of rental business?Â
Fritzler: Back in 2007, I sold my fitness center and tanning salon in the Northeast and did a 1031 exchange with the profit, buying a number of condos in the SoFi area of Miami Beach. We immediately began renting these units out to vacationers. At the time we were among only a handful of people offering such services, and we only had Craigslist to advertise – most of today's vacation rental websites weren't around or didn't have much of an online presence.Â
Before long, as the demand grew, the developer of a new building in Miami handed over to us all of his units to manage and rent out to vacationers. This proved to be a perfect deal for him, as he was able to bring in money to cover his holding costs while still being able to show the units staged and fully furnished for sale to potential buyers in between guests. I still have the same employees with me since the beginning, and many of our original customers have stayed loyal and rent from us each year when they come back to Miami.Â
One of the biggest challenges in the beginning was the wariness of people booking through Craigslist, as there were many threats of scams. But as some of the more popular vacation rental sites started coming out, it began to make the process easier.
Q: According to your corporate biography, you've been buying, renting and selling properties since the age of 22. What advice could you give to today's 22-year-olds (and those who wish they were still 22) about getting into the real estate market?
Fritzler: The biggest piece of advice I could give to anyone looking to get into the RE market is to ‘buy, buy, buy.’ You couldn't be getting into the business at a better time -well, maybe two years ago would have been the best time.Â
The most important thing – as your mother always said before bed – is to do your math. Run the numbers over and over again if you buying as an investment, and don't forget to add in a number for average repair costs. Include mortgage, taxes, insurance, and have repairs against your rental income.
Stay away from hard money and other high interest loans and closing points. Take it slow. Buy, hold and rent it out – the days of flipping and selling quick are over unless you are a big financial institution or a hedge fund that is able to buy many houses discounted in bulk.
Also, keep your sentimental value of your new investment in check. All too often, I see new ambitious investors way overspend on upgrades and repairs for their new home or condo and trying to make everything perfect and nicer than it needs to be. It takes a long time to make that money back and is money you could be using to help buy the next house.
Q: In the event the economy goes back into recession in 2013, how will this impact Florida's residential real estate market?Â
Fritzler: I honestly don't think it will affect the market that much because we are still undervalued and have too much of a pull from International buyers, retirees and those drawn to the beach. It might slow the recovery a little more, but I highly doubt it will pull it down at all.