Foreclosures - It's Still Bad in Florida

I recently spent a few days inspecting some foreclosed houses and condos in Venice, FL. It's a sad scene to see houses that used to be fine, well-kept homes transformed into abandoned, stinking messes in need of thousands of dollars or even tens of thousands of dollars of repairs. I saw houses that have a lot of potential, but the thought of buying one and sinking a lot of cash into it in an uncertain rental market is scary.

All the real estate investment books say to buy when everyone else is running away - with caveats, of course. You need to buy in an area  that is desirable. It could be a place where there are good jobs, or a place that has great weather and an easy lifestyle.

The west coast of Florida, south of Tampa, meets the desirability requirement. But it's tough when you can only rent consistently for 3-4 months a year. So instead of the normal equation where you would try to come as close to break even as possible with a 12 month rental scenario, that's just not the case in SW Florida. Dec/Jan/Feb/Mar are probably all you can get. And even then, you need to offer a rental that's in the right location - near the beach, in resort-like surroundings, etc. In my opinion, real estate prices need to come down a bit more from where they are right now to make this type of investment workable. Then there's the problem of condos with outrageous ($300+/month) condo fees for a small 1 bedroom unit. That kind of thing just makes it necessary that prices drop even more to make sense from an investment standpoint.

For the single family homes in neighborhoods, hit by job loss and not desirable for snowbird rentals, the outlook is even worse. I'm not sure who's going to be willing to step in and take that kind of risk. I saw some houses that were in quite good condition (these tended to be the ones not yet in foreclosure) - one in particular comes to mind, very neat, clean with updated AC, etc. The price seems low, but again, even with a low price it's a questionable investment due to the horrible rental market for family type houses.

Taxes are still high for most of these places, calculated when the house was worth close to double it's current value. This is a problem for both houses and condos, so until reassessments are done a buyer will be paying a very high tax rate. One has to wonder if the counties will be quick to reassess - they need the money!

As I rode my bike down Manasota Key, a beautiful key along the Englewood coast, it seemed like almost all gulf-front homes had for sale signs posted. I'm not sure who is buying these - they're mostly all well over a million dollars - that's prime beach-front real estate.  

So overall it's a very gloomy picture for Florida real estate.  Maybe it really is the time to buy, but does anyone have the guts to plunge in?

This lovely 2 bedroom brand new condo in Venice is cheap!!!