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In recent years, international buyers, especially Latin Americans, have had a strong presence in the Florida real estate sector. According to data released by the Florida Realtors Association, more than 50% of all international buyers in Orlando came from Latin America. However, in the midst of the COVID-19 crisis, Florida builders had to develop creative solutions to be able to sell their products.
The majority of the international public invests in search of returns with seasonal rent and also with the objective of protecting the patrimony, since the currencies in their countries of origin gradually suffer, year by year, devaluation against the dollar. Orlando vacation rentals have turned into a lucrative business, as more than 70 million tourists visit Mickey’s Land every year to have fun at theme parks and other attractions. All this traffic practically guarantees an outlet for rent, with an attractive return for the investor.
The trend with international buyers is expected to grow in 2020, but the pandemic has brought some obstacles. One of them was the limitation on credit. Many banks, fearing the crisis, have imposed temporary restrictions on real estate financing for foreign audiences who buy Orlando vacation homes near Disney. Fortunately, these restrictions were temporary and have now been lifted at most banks.
Banks know that buyers invest in the form of leverage. The investor disburses only the amount of the down payment (25% to 35% of the value of the property) and the rest finances in soft installments, with terms and up to 30 years. It happens that the financing portion is, most of the time, paid off with the rent rent itself per season. This form of leveraging investment, using resources from the American bank, is a strategy that has been used for a long time and one of the main factors that make investing in Florida vacation rentals one of the best in the world. No wonder, several buyers are already in their third or fourth home. We have clients in the real estate that are in the 7th house. All purchased within this leverage strategy. Some investors, if added to the number of rooms that each house purchased has, already own a real hotel spread across the city of Orlando.
As the flow of tourists fell dramatically with the pandemic and the rental activity for the season was suspended, along with all other “non-essential” activities, it is natural that the owners have noticed a decline in rental income. Fearing an increase in defaults by homeowners as a result of declining revenue, many banks have imposed credit restrictions on foreigners. Fortunately, rental activities have already been authorized again and the parks are gradually reopening.
In addition to the restriction on credit, borders were also closed. Many Latin American investors were unable to travel to Florida, which also impacted sales for construction companies.
Creative solutions for Orlando Real Estate
Faced with an unprecedented pandemic scenario, some construction companies had to exercise their creativity and come up with smart solutions to facilitate and encourage the purchase of real estate in Orlando.
Lennar Corporation, one of the largest in the United States, is offering incentives of up to $ 35,000 to anyone who buys certain ready-made homes in its portfolio. Other large Orlando construction companies followed suit.
The Grove Resort & Water Park condominium has developed its own financing program. In this way, there is no need to depend on local banks for financing. Several builders and developers in Orlando have already developed their own financing programs as well.
To solve the problem of the physical presence of the buyer, who is unable to travel, the builders created incredible 3D solutions. They are virtual tours with high technology and quality that practically “transport” the buyer inside the houses.
The pandemic also eased bureaucratic purchasing processes. All contracts and document exchanges can be carried out virtually.
The strategy has already borne fruit and everything indicates that the trend is here to stay.
Opportunity
For many international real estate investors, now is the best time to buy in Orlando, a city that has emerged as a new investment destination for buyers of short-term rental properties. Prices are still low compared to other markets.
Latin American economies have grown at an average of just 0.7% per year over the past six years, and the Economic Commission for Latin America and the Caribbean predicts a contraction in the region due to COVID-19. This makes investment in the US and Orlando a good strategy for foreign buyers to combat the devaluation of their currencies and protect their assets.
About AMG International Realty
AMG International Realty is a luxury Real Estate firm in Florida. If you are interested in buying Real Estate in Orlando or Miami, give us a call: +1 (305) 318 6968 (Whatsapp: Heloisa Arazi).
