Fla. institutional investors could turn 29% profit

12/19/2014

Fla. institutional investors could turn 29% profit

MIAMI – Dec. 16, 2014 – During the down real estate market, institutional investors – funds that purchased 10 or more single-family homes per year – bought 33,651 Florida property, according to a study by RealtyTrac.

With little profit in quickly flipping those homes, these investors used a different business model: They rented the homes, many times to people who had a foreclosure, with an eye toward selling the properties once home values rose.

The key real estate question now is: When will they sell?

RealtyTrac's study suggests that some institutional investors could consider selling soon given the profit by doing so. In Florida, for example, these investors own 33,651 homes, and their profit (selling price today compared to purchase cost) would average 29 percent.

However, that profit varies by city. Florida has 18 cities with 100 or more homes owned by institutional investors, according to RealtyTrac. Of those, the highest profit an investor would make if he sold today is 46 percent in the Fort Walton Beach-Crestview-Destin area; the lowest profit would be 10 percent in Cape Coral-Fort Myers.

So far, however, RealtyTrac data suggests that few large institutional investors in the single-family rental market have sold many homes. However, price appreciation has presented an opportunity – and created a motivation – to sell and realize a solid return on investment.

RealtyTrac analyzed more than 200,000 purchases made by institutional investors from January 2012 through August 2014. The markets where these investors would have the biggest motivation to "cash out" based on potential returns from gained equity include Chicago, Palm Bay-Melbourne-Titusville, Orlando, Columbus, Ohio, Indianapolis, Atlanta, Jacksonville and Charlotte.

"With the pop in prices last year and normal historical price increases this year, investors are testing the market with their inventory," says Mike Pappas, CEO and president of Keyes Company, which covers the South Florida market.

Florida cities by number of institutional investors and potential current profit

  • Miami-Fort Lauderdale-Pompano Beach: 12,952 properties, 31% return today
  • Tampa-St. Petersburg-Clearwater: 5,410 properties, 33% return today
  • Orlando-Kissimmee: 4,149 properties, 24% return today
  • Jacksonville: 2,633 properties, 35% return today
  • Cape Coral-Fort Myers: 1,673 properties, 10% return today
  • Lakeland: 1,264 properties, 28% return today
  • Sarasota-Bradenton-Venice: 1,259 properties, 33% return today
  • Port St. Lucie: 782 properties, 25% return today
  • Deltona-Daytona Beach-Ormond Beach: 686 properties, 24% return today
  • Naples-Marco Island: 547 properties, 41% return today
  • Palm Bay-Melbourne-Titusville: 439 properties, 17% return today
  • Punta Gorda: 261 properties, 28% return today
  • Ocala: 248 properties, 29% return today
  • Fort Walton Beach-Crestview-Destin: 200 properties, 46% return today
  • Pensacola-Ferry Pass-Brent: 195 properties, 22% return today
  • Tallahassee: 194 properties, 14% return today
  • Panama City-Lynn Haven: 146 properties, 21% return today
  • Palm Coast: 101 properties, 25% return today
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