Current State of the Market- Special Multifamily Edition!
Things are changing quickly in the Brevard market; interest rates are up to over 6% and total inventory is up almost 3x from last year.
Although pricing has started to decline as well, values are holding relatively well compared to many other markets, especially in the more desirable areas of our county. Remarkably sub 800k properties in Cocoa Beach (where I buy) are as scarce as ever.
This is a very exciting time for investors, we don’t pay list price anyways, so motivated sellers have always been more important to us than big price drops. (Although there are some of those too)
That’s why you will see that the properties on this newsletter are “analyzed” at prices below asking price, many sellers feel that this is their last chance to sell with the uncertainty of market, and the “fear narrative” is making it easier to acquire great assets with a lower cost basis than past months.
I invest here because I think Brevard will fare well in the coming recession, as our economy is built on more “recession proof” industries such as aerospace…also our constrained supply (coastal) has amplified the effects of increased demand.
Here are a few potential opportunities I’ve noticed in the past days, underwritten at conservative rent estimates that matches our current climate. Many have “value add opportunity” and please know that with me you have access to the best property managers for both short- and long-term rentals in the area. (IGC for LTR, Ocean Blou for STR’s) We strive to keep you an investor and not a landlord. We can also help facilitate any construction needs to maximize yield on these exciting cash-producing assets.
This week we are focuseing on multi-family, but there are many opportunities in single family rentals as well. (And a lot more to choose from)
Opportunity #1
7 units, LTR or STR opportunity in South Cocoa Beach
7 unit property South Cocoa Beach, (asking 1.35 million)
Unit Breakdown:
5 studios
1 (2/1’s)
1 (1/1’s)
Gross Rent Potential: 10k/month (5 STR on studios, 2 LTR’s with PM)
Potential offer: 1 million (26% reduction)
Repair/furniture costs: $75k
Cost basis: 1,175,000 (including closing costs and repairs)
Un-levered yield on capitol with full property management: 10.2%
Levered yield with 20% down: $50,016 / $375,000 = 13% cash on cash
Bottom line: Solid returns for higher potential appreciation area. (Beachside) Minimum construction downtime, but STR’s do take a little longer to build up occupancy and thus cashflows.
Opportunity #2
2 Units, LTR opportunity in Rockledge, FL
Unit Breakdown: Duplex, 2/2 on each side
Gross Rent Potential: $3200/mo
Potential offer: $300k
Repair costs: $50k
Cost basis: $350k
Un-levered yield on capitol with full property management: 10%
Levered yield with 20% down: 12%
Bottom line: Solid moderate range duplex that should have minimum Capex due to fairly new construction and budgeted initial repairs. Good price range for working class families that tends to have lower vacancy. May be opportunity cash out re fi after improvements are made if capital return is desired.
Opportunity #3
2 Units, LTR opportunity in Indialantic, FL (Beachside)
Unit Breakdown: Duplex, 2/1 on each side
Gross Rent Potential: $4200/mo
Potential offer: $475,000
Repair costs: $10k
Cost basis: $495k
Un-levered yield on capitol with full property management: 9%
Levered yield with 20% down: 8.6% (year one lower due to repairs + closing costs)
Bottom Line: Highly desirable location, but lack of STR opportunity (city restrictions) makes cashflows less than “lower potential appreciation” markets. With that said, property is relatively turn key and a future “re-rate” could really increase cashflows while holding RE in one of the most desirable areas in Brevard. (Of course, there is no guarantee rates will go down)
Thank you for taking the time to read, if you know anyone else who is interested in investing in Brevard Real Estate please invite them to subscribe by sharing this or any of our other newsletters. If you are not subscribed yet, you can do so here.
Want to work with me and my team? Here are some ways we can partner together:
Short Term Rental Property Management: Ocean Blou Properties
Long Term Rental Property Management: IGC Rents
Sales Associate with IGC Realty: Levi@IGCrents.com or 7194521225
