Investing in real estate can be a highly profitable endeavor–if the conditions are right. In this article, we outline the top three reasons why Orlando is a prime city for real estate investors, as well as some tips for prospective investors to consider as they build their real estate investment business.
#1: Orlando’s strong economy
Orlando has long been one of Florida’s strongest economies due to its flourishing tourism sector. After a hit during the pandemic, Orlando’s economy rebounded and exceeded pre-pandemic levels. The following factors have contributed to Orlando’s strong economy, making it a top choice for real estate investors.
Strong housing market
The Orlando housing market has been gaining ground over the past few years in terms of median home price and housing inventory. The median home price in April 2024 was $388,500, the highest monthly median home price in Orlando’s recorded history.
Additionally, Orlando’s housing inventory has steadily increased over the past five months, with 10,282 listings (or approximately 3.5 months of supply) in May 2024. This inventory increase is partly due to new construction, with Orlando being the fourth-highest city in the country for new homes per 100,000 people.
Steady population growth
Orlando’s population has been steadily growing over the past few years, primarily due to migration, both in-state and out-of-state. In fact, the Orlando metro area is the third-fastest-growing city in the United States, further illustrating Orlando’s strong economy.
Decreasing unemployment and increasing income
The Orlando unemployment rate has dropped dramatically since the height of the pandemic, from 23.4% in May 2020 to 2.9% in April 2024. Additionally, the median household income has surpassed pre-pandemic levels and continues to trend upward. This combination of low unemployment and increasing income signifies that Orlando’s economy has rebounded since the pandemic and continues to grow.
A top city for real estate agents
According to Glassdoor.com, the median annual pay for Orlando real estate agents is $204,000. Considering the median annual wage for all U.S. workers is $59,288, working in Orlando real estate is a great choice for those looking to become high-earners.
Moreover, Orlando’s home sale price is rising, with the median reaching $407,440 in May 2024. Since the average commission rate in Florida is 5.53%, an agent’s commission for the median sale price in Orlando would bring in nearly $11,000 (if the commission is split evenly between the buyer’s and seller’s agents).
#2: Orlando’s thriving tourism sector
It’s no secret that Orlando is a major tourist destination. From Walt Disney World to Universal Studios to the Kennedy Center, people come from all over the world to visit “The City Beautiful.” Generating approximately $73.6 billion into Orlando’s economy each year and employing roughly 43% of Orlando’s workforce, the importance of Orlando’s tourism sector to the local economy cannot be overstated.
While Orlando’s economy took a hit during the pandemic, it has rebounded significantly, in part due to an increase in direct flights from international ports and more streamlined visa processes. Moreover, Orlando’s official tourism association, Visit Orlando, continues to be at the top of North America’s list of best tourism boards, ensuring people continue to frequent The Theme Park Capital of the World.
#3: Orlando’s diverse real estate market
While Orlando’s economy relies significantly on tourism, its real estate market offers a wide variety of properties. The following outlines the investment potential of the most common property types: residential, rental, and commercial.
Residential
Orlando’s increasing inventory, household income, and home sale price are three indicators of a healthy residential real estate market. Moreover, with mortgage rates slowly decreasing, more and more people are deciding to get off the sidelines and jump into the market. So, now is the opportune time to invest before the market gets so hot that you get outbid for any properties with investment potential.
Rentals
With approximately 75 million tourists visiting Orlando each year, it’s no surprise that Orlando’s rental market is one of the top in the country. The average annual revenue for an AirBnB in Orlando is $30,922 per year. For those looking for longer-term residents, the average rent in Orlando is $1,902 per month. As with most rentals, the key is finding a property in a good location, as many tourists want to be close to the action.
Commercial
In recent years, big tech companies have had their eye on Orlando. In fact, Orlando is the 9th fastest-growing tech hub in the United States. To help house this new wave of innovation and growing startup sector, innovation districts such as Creative Village and NeoCity are catering to this growing tech sector and creating a wealth of opportunity for commercial real estate agents and investors looking to help build the next Silicon Valley.
Tips for Prospective Investors
It’s clear that Orlando is high on the list for real estate investors, but it takes more than favorable economic and market conditions for investors to be successful. Here are some tips to help you build a successful real estate investment business.
Do your research and due diligence
The best real estate investors conduct rigorous research and due diligence on the potential of the investment property and the surrounding area. Researching comps, the average time on the market, average household income, crime rate trends, school district rankings, and a variety of other factors is key to determining a property’s investment potential.
Reach out to local real estate agents
A good real estate agent is a real estate investor’s best friend. Not only do real estate agents help facilitate the buying and selling of investment properties, but they also have extremely valuable insights into up-and-coming neighborhoods and a property’s resell potential. Moreover, they know what buyers are looking for and can help you incorporate more of what is on buyers’ wishlists into your property.
Budget, budget, budget
One of the most common pitfalls for real estate investors is not sticking to a budget. It can be tempting to go for a big “before and after” reveal, but that’s not always what’s the most profitable. For home flippers, a simplified approach to budgeting would be to determine a property’s achievable sale price (your real estate agent can help with this), subtract the current sell price (or what you could potentially get for it), subtract the profit you hope to gain from the investment, and that is your budget for renovations and upgrades. You can follow a similar process for rentals and commercial properties. The key is keeping your feet on the ground and your eyes on your budget!
Always be learning
Top real estate investors don’t just invest in real estate; they invest in themselves! It can be easy to underestimate the value of professional development and continuing education, but those who are eager to learn and expand their knowledge reap the benefits. In a competitive field such as real estate, having a slight edge over your competition can make a huge difference in terms of earned income.
Want to learn more about how to take advantage of Orlando’s hot real estate market? Gold Coast School’s Orlando Real Estate course outlines the ins and outs of Orlando’s real estate market and what you need to know as a real estate investor. Sign up today!