South Florida Commercial Property – How Much is Too Much?

The South Florida commercial property and residential property market was once the darling of foreign investors. The housing boom saw new commercial properties go up in record numbers, the sub-prime mortgage lenders seemed to loan everyone money to buy them, and as we all know by now, the housing crisis has seemed to reverse all those prosperous trends and left most real estate markets in ruins. Investment property in South Florida isn’t an exception, though it hasn’t suffered as much as the residential market.

Just last month, the overwhelming amount of mortgage-rescue fraud occurring in South Florida real estate and markets across the state prompted lawmakers to take action. The Foreclosure Fraud Act went into effect on October 1st that forbids companies that claim to stop foreclosures or perform any sort of mortgage-related rescue services from performing any kind of service without first drawing up a written agreement with their clients. The Act also made it illegal for them to collect any kind of fee until the services that were agreed upon in the contract have been performed. When special laws have to be passed, the situation is grim.

While investment property in South Florida isn’t hit as hard as the residential market by the foreclosure crisis, there are still problems. The credit crunch still makes it hard for the average buyer, and even the above-average buyer in some cases, to get credit to invest in the available commercial property in South Florida.

The supply and demand are a bit out of joint right now, with more South Florida commercial real estate available and not enough buyers. This causes huge problems for those wanting to sell commercial property in South Florida. Anyone who purchased a property right before the housing crash hoping it to flip it quickly for a profit probably got a nasty surprise, as the only way they’re likely to be able to sell it now is to sell it at a loss, getting much less than they paid for it just two months ago.

But this oversupply serves to make it a buyers’ market, with lower prices and better terms because sellers want to move the property. Unfortunately, the heavy hitters are the ones most likely to be able to buy, given the credit problems plaguing not just the country, but the world. But with the recent bailout, this should start to improve, and buying quickly before things improve enough to raise the South Florida commercial property prices will let you see the best return on your money.

If you think that buying investment properties in South Florida won’t be a good investment because of the oversupply, consider it a longer term investment. Eventually the US will pull out this crisis, lines of credit will get moving again and people will start spending on large items like vehicles and real estate. Once that happens, your commercial property in South Florida will once again be in demand by other buyers, and you’ll be able to make a profit.



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