Testing the Hypothesis

In the state of Florida (specific to several major metropolitan areas) there is an opportunity to pursue actions in the real estate market such as buying, developing and flipping properties given the large amount of people moving to the state as well as visiting snowbirds and people vacationing for extended periods of time. The main people with this need for real estate are the ones moving into the state, relocating, or that live in Florida part-time. While most real estate applies, there are certain sectors that more targeted. For instance, most real estate would be smaller single-family homes or large multi-family complexes in a developing area of a city. While the large, custom residential housing market is doing very well, it is a niche market and much harder to get into. The target “what” here are the pieces of real estate that are moving quickly and are being bought by the new or relocating population of Florida. The “why” here is due to the pull factors of Florida. Low taxes, relatively low amounts of restrictive legislation for business, beaches, theme parks, and jobs all play into why this opportunity exists. This need derives from Florida’s rapid and massive expansion in all sectors, especially construction and development.

After conducting interviews, I gained a lot of good insight into my original opportunity. The first interview was with an employee from a large concrete subcontracting company. He generally agreed with all my points but noted the high barriers to entry that can exist in real estate, specifically start-up capital. However, he specifically mentioned from his experience in south Florida that there is currently a “condo boom” going on with numerous high rises being rapidly built in the Ft. Lauderdale to Miami metropolitan area. These condos are being built in hopes of keeping up with the large population growth of these areas. Upon presenting this information to another interviewee, a student in the Rinker program with me, Nathan, he brought up the point that this can cause a lot of competition in the market. While I don’t see a brand-new high-rise as a direct competitor, it does give people a lot more options on where to live opposed to a smaller multi-family complex with less amenities or an older, renovated home. I then talked to my supervisor that I worked under for the past three summers, Eddie. He is the VP of construction at a custom residential home builder located in Tampa. He provided a lot of insight on the way the market is going and more specific trends of population growth and what kinds of real estate is selling. What he told me was that there are a lot of people moving to Florida, we have the 3^rd highest growth rates out of all the states. This means there will be a huge demand for people who need a place to live. What he did tell me that isn’t helpful to my opportunity is that track-home builders are buying and developing thousands of acres with low-cost, low-quality homes that many people can afford and that are typically more attractive than an older, renovated home only because people tend to buy brand new if possible. Talking to a couple other people, they essentially told me the same things. Rich, a trim carpenter from Tampa told me about how he mainly does new construction in homes but does also have some jobs that are remodels for contractors that they intend to sell or use as rental properties. He told me that if the renovation is done right and combined with a reputable contractor, these renovation home can have much greater margins for profit on them than new construction. \

After conducting interviews, I have discovered that there is definitely a huge demand in the Florida real estate market at the time. However, I’m definitely not the only one that sees this opportunity. Everyone that has a part in residential and multi-family residential construction is trying to capitalize on this opportunity. While this makes the competition a lot more, I feel that there is still room in the market for more competitors. I think that but specializing in something that most companies don’t do would be a good way to avoid a lot of direct competition while still allowing plenty of demand. By taking older homes and renovating them, buying properties to rent out or even trying to develop a piece of land in a new developing area can lead to a huge economic opportunity.