Should You Consider Real Estate Investing in Orlando?

Exciting developments in the Orlando real estate market are getting nationwide attention. Learn why this city ranks high nationally among hot real estate markets.

last updated Monday, September 2, 2024
#real estate investing in orlando #orlando real estate investment

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John Burson

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Many people are loading up moving vans and leaving the heavily taxed and high-cost-of-living states for the sunny state of Florida. This massive post-COVID migration has made a significant positive impact on investment properties in Orlando, FL. In 2022, it helped raise the city's annual listing prices by 20% from a year prior.

Along with the influx of California and New York transplants, the impressive growth of real estate investing in Orlando stems from several significant factors contributing to a hot Orlando real estate investment market. Over this short read, we will detail all the aspects of real estate investing in Orlando.

The Real Estate Market Status and Outlook

Orlando's multifamily market is the most upwardly mobile segment of this city's real estate investment options. For example, multifamily occupancy has grown by 2% over the past year, while 16,000 new units entered the market last year. As a result, Orlando's multifamily market ranks 12th in the nation in multifamily development.

Orlando's housing inventory is tight. However, the new construction of Orlando real estate investment property is gradually increasing the supply. In 2022, new construction permits increased by 25%. Other vital facts about real estate investment properties in Orlando, FL, include the following:

• The median selling home price in Orlando is around $343,000.
• In 2022, Orlando home prices rose 30.1% from the previous year.
• Orlando's sales-to-list price ratio shows its homes sell just above the asking price at 100.59.
• Home prices range from $167,000 in South Semoran to around $700,000 in Lake Nona Central.

Five of the best areas for Orlando real estate investing are Kissimmee, Oviedo, Winter Park, Lake Nona, Orlando, and Winter Park.

Orlando's Rental Market

Investor publications like Fortunebuilders.com consistently rank Orlando in the top ten places to invest in rental property. And the vital statistics indicate it will be on that list for years. In addition, if you become a real estate investor in Orlando, you can benefit from the continual influx of new residents escaping the higher cost of living and taxes in other urban areas.

The median rent for an Orlando three-bedroom home is $2,300 per month. And the rents range from $1,200 to around $3,800 per month. Over the last year, rents have risen by 16% in metropolitan Orlando.
But even more promising is that Orlando renters occupy 55% of the city's housing units. Lake Nona, College Park, Winter Park, Baldwin Park, and Curry Ford West are the five best Orlando areas for investment rental properties.

What's Behind the Rise in Real Estate Investing in Orlando?

Orlando is a Central Florida city and home to the "Happiest Place on Earth." However, the city has even more compelling factors igniting the hot Orlando real estate investment boom. The following are the main drivers in appreciating investment properties in Orlando, FL.

1. The Substantial Increase in the Population in Orlando.
   According to an Orlando.org report, Orlando welcomes over 1,000 new residents weekly. This doesn't even include the over 70 million tourists annually or snowbirds who temporarily reside in the city.
   The Orlando metro area's population of about three million grew by 1.4% in 2022 alone. Experts estimate the population will grow to 5.2 million by 2023. Orlando has an in-migration real estate market, meaning more people are moving in than out. Some of the main reasons people relocate to Orlando are:
   • No state income tax
   • Affordable living
   • Reasonable home prices compared to other major cities
   • Abundant job and business opportunities
2. Job Prospects
   Orlando ranked 23rd on Forbes's list of best places for business and careers and 6th in job growth. Over the past three years, the city's economy got a boost with almost 129,000 new jobs, an 11% increase. In addition, experts project that 500,000 new jobs will materialize in the Orlando metro area, representing a 19% increase.
   ZipRecruiter.com reports that the average annual salary in Orlando is $53,858. This total is close to the national average of $54,132 a year. Although COVID-19 seriously affected business as usual, big companies in Orlando are rapidly recovering. Manufacturing, transportation, financial firms, and business services are leading. Some large companies headquartered in Orlando are General Dynamics, Mitsubishi Power Systems, AT&T, Boeing, and Siemens.
3. The Economic Power of Tourism
   For a real estate investor in Orlando, the tourist trade is a lucrative asset for nourishing a thriving economy. Almost 75 million tourists contribute more than $75.2 billion annually to Central Florida's economy.
   Disney's Magic Kingdom, Hollywood Studio, SeaWorld Orlando, Universal Studios, and Epcot Center are the world-famous theme parks and entertainment centers listed. In addition, the entertainment centres and theme parks employ nearly 41% of the Orlando area workforce, with 463,000 jobs.

Cautionary Issues Concerning Real Estate Investing in Orlando

While Orlando boasts a thriving real estate market, potential investors should know several unique challenges that could impact their investment decisions. This section explores the critical issues that differentiate Orlando from other Florida metros, helping investors navigate the landscape with a well-informed perspective.

Impact of Tourism and Entertainment Venues

Orlando's reputation as a tourist haven, thanks to its world-renowned theme parks and entertainment centers, brings a unique set of challenges:

• Traffic and Infrastructure
  The constant influx of tourists can lead to severe traffic congestion, affecting the quality of life for residents and potentially deterring prospective tenants or buyers looking for more tranquil locales.
• Service Strain
  The high volume of visitors significantly burdens local services and infrastructure, from roads to public utilities, necessitating continuous maintenance and upgrades.
• Noise and Crowd Management
  Proximity to significant attractions often increases noise levels and crowded public spaces, which could decrease the appeal of nearby residential areas.
• Increased Rodent and Pest Activity
  Large crowds and extensive food services in entertainment areas can lead to heightened rodent and pest issues, increasing maintenance costs for nearby properties.

Environmental and Climate Considerations

Orlando's environment also poses several risks that investors must consider:

• High Humidity
  The region's high humidity can cause mold and mildew, particularly in poorly ventilated properties. Investors need to ensure proper maintenance and preventive measures are in place.
• Hurricane Exposure
  Despite being inland, Orlando is not immune to the effects of hurricanes. Historical data shows considerable impact from past storms, emphasizing the need for adequate insurance and disaster preparedness.
• Flooding Risks
  Certain areas are prone to flooding, especially during the hurricane season. Understanding flood zones and appropriate insurance coverage is crucial for protecting investments.

Economic Sensitivity to Global Events

The economic health of Orlando is closely tied to the global tourism industry, which can be volatile:

• Economic Downturns
  Sudden economic shifts, such as the 2020 pandemic, can drastically reduce tourist numbers, impacting the rental and commercial real estate markets.
• Job Market Fluctuations
  Many jobs in Orlando are directly or indirectly related to tourism, making the local job market susceptible to global economic trends, which can influence rental market stability.

Navigating Local Regulations

Investors in Orlando's real estate market also need to stay informed about local regulatory changes, especially those affecting rental properties:

• Short-Term Rental Regulations
  Orlando has specific regulations for short-term rentals, which can affect the profitability of vacation rental investments.
• Development Constraints
  Local development regulations and community opposition to specific projects can impact new construction opportunities and property values.

Is an Orlando Real Estate Investment Right for You?

Now that you have a thorough briefing on real estate investing in Orlando, FL, you have a better basis for deciding whether investment properties in Orlando, FL, can meet your needs. If you choose to move forward, you should get the help of someone with local knowledge of real estate investing in Orlando.

Frequently Asked Questions (FAQ)

Why should I choose Orlando for real estate investment over other Florida cities?

Orlando's real estate market offers competitive prices compared to other Florida metros like Miami and Tampa, providing better value for investment.

What makes Orlando a lucrative market for real estate investors?

The growing population, diverse economic sectors, and strong market fundamentals make Orlando an attractive option for both short-term rentals and long-term property investments.

What makes Orlando an attractive city for real estate investment?

Orlando offers a unique combination of growing tourism, an expanding job market, and no state income tax, making it an appealing location for residential and commercial real estate investments. Its consistent population growth and relatively affordable property prices compared to other major cities in Florida also make it a lucrative market for investors.

How has the post-COVID landscape affected real estate investing in Orlando?

The post-COVID era has seen a significant influx of residents moving to Orlando from high-cost living areas, boosting demand for housing and rental properties. This migration has led to a robust increase in property values and rental rates, positioning Orlando as a resilient and growing real estate market in the post-pandemic world.

What are the best areas in Orlando for investment properties?

Some of the most promising areas for investment properties in Orlando include Lake Nona for its luxury homes and tech-driven community, Winter Park for its charm and stable property values, and Kissimmee for affordable prices and proximity to major tourist attractions.

What types of real estate properties are most profitable in Orlando?

Multifamily homes, short-term vacation rentals near tourist attractions, and residential properties in emerging neighborhoods are currently among the most profitable investments in Orlando. The city's diverse economy and growing population make it suitable for various investment strategies, from long-term rentals to flipping houses.

Can foreign investors buy property in Orlando, and what are the benefits?

Yes, foreign investors can purchase property in Orlando, and many are attracted by the city's stable real estate market and potential for high returns on investment. Benefits for foreign investors include the absence of restrictions on property ownership, the potential for rental income from tourism, and capital appreciation due to the city's ongoing growth and development.

Conclusion

Investing in Orlando's real estate market offers a unique opportunity to capitalize on a growing, dynamic economic landscape. With its appealing mix of affordability, population growth, and strong employment prospects, Orlando is not just a tourist destination but a prime choice for real estate investors looking to expand their portfolios. Whether you're new to real estate investment or looking to diversify, Orlando offers a market with potential for significant returns.

 
 
 

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