For those who are timing the housing market, three years ago would have been a good time to pick up a home in Riverside, San Marco, Mandarin or the Beaches.
Last year, prices popped in West Arlington, Murray Hill, Southside and parts of the Northwest.
Probably no one has been more attuned to the shift than investors, many of whom work in “B” and “C” markets.
“I’m seeing it and I am cashing in on it also,” said Alex Rose of Green Palm Realty.
The family-owned brokerage manages about 50 rental homes. But Rose also buys about two dozen flips and rehab-rentals a year for himself and other investors.
In 2014, he was easily flipping 1980s houses in the Intracoastal Jacksonville area and Mandarin — places where he could be sure of a quick sale.
But in 2015, the comps didn’t add up. He found himself looking at 1960s houses in West Arlington and Murray Hill instead.
It paid off.
“I had properties that would last zero days on the market,” said Rose. “And, I wasn’t asking a cheap amount of money, either. Our prices were 10 percent above those of neighboring homes that had been renovated.”
The housing recovery that hit Beaches and Riverside properties first is now sweeping through Jacksonville’s “B” markets.
The median sales price in Arlington increased 12 percent last year; Southside, 15.6 percent; and Murray Hill, 25.2 percent.
Compare that to “A” markets like Mandarin, where prices rose 6.9 percent; Riverside, 4.5 percent; or Jacksonville Beach, 2.7 percent.
It’s meant a shift in fortunes and opportunities for investors.
Alex Sifakis is president of JWB Real Estate Capital, a real estate investment company that manages more than 1,000 rental properties in Northeast Florida.
Before 2015, “A” markets had the best appreciation for three years running.
But, “A” markets didn’t fit his business model.
JWB is a buy-fix-rent-and-hold investment company. And rental yields on high-end properties aren’t as good. The company scooped up “B” and “C” market properties instead.
“Actually, what I should have done is bought all ‘A’ stuff back in 2012, sold that for a huge profit in 2014 and then started buying up ‘B’ and ‘C’ stuff and then waited for that to appreciate too,” Sifakis said.
“But, you can never time the real estate market exactly. We went for the strong rental yields, knowing we could get that,” he said.
Prices for mid-market homes were going to pop at some point. Even though Sifakis is not planning to sell, now that they have, it’s been a positive for his company.
“We have a lot more equity than we did a year or two ago,” he said.
With the rebound trickling down to lower price points, Northeast Florida is entering the homestretch of what has long been a buyer’s market for investors.
Nate Trombetti is a Lake Mary-based hard money lender who deals with real estate investors throughout the Southeast.
“Five years ago, this all was a lot better,” he said. “In 2010, investors could almost steal property.”
His clients in Jacksonville were buying houses at $40 to $55 a square foot. They could put $10 a square foot into the rehab and still have a nice spread.
“Those days are over,” Trobetti said.
Now banks are selling rehabs at 85 percent of retail. Fix it up and the buyer is only at par.
It’s more like a normal market, Sifakis said. He expected it to happen sooner than it has.
He sees about 12 to 24 months of shadow inventory left in Jacksonville. After that, investors who want a deal will have to beat the bushes to find motivated sellers.
“They’re not going to be just sitting out there on the MLS in the form of REOs like they are right now,” Sifakis said.
That’s because for the past three or four years, the biggest and easiest motivated seller on the market has been the banks.
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