Commercial real estate in Florida has heated up to the point that foreign investors and lenders are chasing deals that extend beyond their comfort zones bringing the market to a crest.
U.S. partisan politics aside, foreigners from around the world are much more comfortable having their money here rather than in their homelands where political instability is much greater. South Florida has long been a favorite repository for cash moved from Latin America and South America. However, increased competition has pushed Miami-area prices so high that foreign investors are venturing north into central Florida and Tampa Bay in search of better values and cap rates.
Foreign investors continue to prefer multifamily and hospitality properties because they are familiar with the business models and more comfortable with the tangibility of the asset.
How they invest, however, is changing. The established model is to pay all cash for the first property and leverage the income gained for the second deal. Now, they are joining with others to buy an apartment building, convert it to a condominium, and sell the units to individuals in foreign countries who agree to leave them in the rental pool run by the management company. Why? Foreign investors are more comfortable owning units than shares in an LLC. These transactions are all cash transactions from the seller’s standpoint.