'Shark Tank' Veteran And Real Estate Mogul Barbara Corcoran Sours On Florida Real Estate
Before Barbara Corcoran became famous for her role on the show "Shark Tank," she made her fortune as a savvy New York real estate investor. During an appearance on "Elvis Duran and the Morning Show," Corcoran advised prospective real estate investors to avoid Florida properties if they're looking for value and upside.
Corcoran Believes The Florida Market May Be Overheated And Other Southern Markets Offer More Upside
It may seem counterintuitive to avoid Florida real estate because the Sunshine State enjoyed a real estate boom during the pandemic — a boom that by all accounts seems to be still going strong. However, that success is exactly why Corcoran is advising buyers to look elsewhere. She talked with Duran at length about the Florida boom and how it's spread from Miami to other markets in the state.
Corcoran believes Florida has gotten so hot that buyers are paying higher prices than ever, which may limit the upside potential of purchases made at the top of the market. A big part of Florida's appeal was being able to buy "a lot of house" in relation to the asking price. This was especially true for buyers coming in from California and New York, many of whom were flush with cash from selling million-dollar homes.
That changes the equation for less well-heeled investors who are considering Florida, and Corcoran's advice is reflective of the new reality. Corcoran knows other parts of the South offer buyers the same kind of low prices and upside that originally attracted buyers to Florida.
"Go anywhere in the South, other than the hotspots," she told Duran. "There's a cheap house to buy, always."
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Corcoran Also Had Advice For Buyers With No Children
A major aspect of building wealth through real estate is buying cheap, and then hoping the property will appreciate significantly past the sale price by the time the mortgage is paid off. This is why Corcoran advises buyers who don't plan on raising children but want a low-priced property to "go anywhere that has a poor school district where the prices are really low."
Numerous real estate markets across the South fit that criterion, and as high interest rates continue to dent buying power, these markets have upside potential that may no longer exist in Florida. Although some Florida real estate is inexpensive in comparison to New York, San Francisco and Los Angeles, the days of buying move-in ready 2,000-square-foot houses for $125,000 in major Florida metropolitan markets are largely in the rear-view mirror.
Another Consideration On Florida Real Estate
Corcoran's advice on Florida is sound for many reasons, some of which extend beyond the price versus upside equation. Florida has been hit by several major hurricanes since 2018, and the insurance market is buckling beneath the strain. Many carriers have left the state rather than continue selling policies, and the insurers who remain are charging hefty premiums.
Some Florida news outlets are reporting that the average home insurance premium in Florida is $6,000 per year. That number is a significant increase from the 2023 average of $4,200 as reported by the Insurance Information Institute. However, even the more conservative estimate would be three times the national average. If insurers keep leaving the state, premiums will continue to increase.
Adding $500 to 600 per month in insurance premiums to the debt service at current interest rates has the potential to make Florida a less attractive investment. When you factor the raw cost of buying prime Florida real estate in with the difficulties in the insurance market, it's easy to understand why Corcoran advises investors on the hunt for real estate with strong upside and a low buy-in price to consider options outside of Florida.
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This article 'Shark Tank' Veteran And Real Estate Mogul Barbara Corcoran Sours On Florida Real Estate originally appeared on Benzinga.com
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