Florida Attracts Wall Street Hedge Fund Managers and More

Sunny Isles Beach real estate

Florida has a lot to offer those who are looking to invest in commercial properties or luxury oceanfront real estate. In addition to having some great beaches, a diverse economy, and wonderful cities such as Miami, those who invest will also find that it also has some favorable tax laws. With some of the recent tax changes that have come to New York and Connecticut, things are looking quite sunny for Wall Street players.

Tax Changes Brings a Change of Thought

The federal tax overhaul put caps on the amount of state and local deductions that individuals can take. Those who are in New York and Connecticut and who want to find ways of avoiding some of the financial fallout have fond that Florida could be a good option. In the past, many of those same individuals would simply write off their state and local taxes when they filed their federal returns. The change to the laws made it far more difficult for them. In fact, currently, they are only able to deduct a maximum of $10,000. This is simply not enough for the hedge fund managers and many of the other wealthy elite in the Northeast.

In Florida, there is no income tax, and the property taxes are low. Those in the Northeast always knew about this, but they had always been able to rely on simply increasing the deduction in the past. The property taxes in the Northeast are some of the highest in the United States. In addition, the cap includes properties in the Northeast. So, purchasing real estate there would not make as much financial sense as in Florida. Now, they are starting to take a renewed interest in the Sunshine State thanks to their taxes. There are some nice advantages to this.

Could NY Firms Be Moving Too?

While most of the attention is on buyers from New York and Connecticut buying and investing in property to help shelter their money and to make the best of the new tax situation in their own state, other changes could be coming, as well. In fact, the change in the taxes could cause some firms from the north to decide to take some of their operations south to Florida. Already, there have been an additional 14,700 jobs created in Florida in the financial sector over the course of the last year. During that same timeframe, Connecticut lost more than 500 jobs.

There are some companies and firms that are looking into moving to Florida very seriously. They have not made a full move yet, but some of the companies are starting out small with some satellite offices to see how things go. Florida could see a nice economic boom that is somewhat unexpected if these changes continue, and if more firms do decide to make the change to Florida.

The advantageous tax situation in Florida is not only helpful for hedge fund managers, of course. Anyone who is looking to buy property, whether it is purely for investment or for a new home will find that the tax situation in Florida can work out in their favor.

Who Is Interested in Real Estate in South Florida?

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South Florida has long held the interest of people who are looking to make quality investments in homes, as well as in businesses. While there is interest from some people who are living in and who are citizens of the United States, such as the many potential investors in New York, most of the investors today are coming from other countries.

The Biggest Investors

You will find that there are buyers from many disparate countries that have a real interest in the properties in South Florida whether they are residential or commercial. People see these as good investments. Two of biggest foreign investors in the area are those who are from Argentina and Venezuela. In fact, citizens of Argentina accounted for 15% of home purchases in the area, followed closely by Venezuela with 11.5%.

Those two countries alone made up more than a quarter of the sales in the area in 2017, but they were certainly not the only countries with a large number of interested foreign buyers. Colombia accounted for 9% of home sales in South Florida, and Canada accounted for another 9% of sales.

The other countries that round out the top ten for foreign investors include Brazil (4.9%), India (4.7%), Peru (3.5%), Philippines (3.2%), Mexico (2.7%), and the Dominican Republic (2.6%). Overall, foreign investment is more than 66% of the total sales in the South Florida area.

Miami is the top market for foreign investors, but there are other parts of the country that hold interest for foreign buyers, as well. Some of the popular locations that follow Miami include Los Angeles, Bellingham, WA, and New York.

Why Is South Florida So Popular?

Of course, when you see just how many foreign investors are interested in the area, it causes people to wonder what it is about the area that makes it so appealing. A number of factors play into this. For many, the conditions are currently favorable when it comes to buying property in the US, and there is great potential still in this market. The economy is strong, and it is likely to continue getting stronger. The property taxes tend to be quite a bit lower, as well, making it even more appealing.

Additionally, there are quite a few options when it comes to homes and the types of properties that are available (check out prices for Miami real estate here). Whether a buyer is interested in a one or two-bedroom condo, a mansion, or a penthouse, there are generally plentiful choices available in and around the Miami area.

What Does This Mean for Brokers?

Given the number of foreign investors who are interested in buying properties that are located in the South Florida area, it makes sense of the brokers to start learning how to cater to and find those buyers. For example, find out what types of properties tend to interest buyers from those nations. Learn more about their culture, and even learn a little bit of Spanish, Portuguese, and Tagalog.

Lennar Acquisition of CalAtlantic

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For more than two decades, Stuart Miller has been the CEO of Lennar, one of the largest homebuilders in the nation. Miller had been with the company through good times and bad, and he was there when the country went through the housing collapse that followed 2007, arguably one of the worst that the nation has ever faced. He has faced down those who tried to defraud the company and was able to increase the revenue of Lennar to nearly $12 billion.

A New Acquisition

In 2017, Miller was looking for more ways that he could help to grow his company. Even though the need for more homes was evident, and it still is, there were some issues. For one, there were labor shortages, which was making it more difficult to get the workers that they needed in order to build their homes. In addition, the price of supplies and materials was rising. Solving those problems was not going to be easy, but Miller had an idea.

He believed that by bringing in another big homebuilder and acquiring them, it could help to increase the number of employees and subcontractors, allow them to have more land, and ultimately, provide the company with more negotiating power. While this proved to be a good option, it was one that did not immediately present any contenders. The companies that were large enough for Lennar and Miller to want to acquire tended to be owned by people who did not want to give up control of their company. Other companies were too small and would not provide the results that they wanted.

However, they did eventually find the CalAtlantic Group, which is based out of Virginia. At the time they considered acquiring the company, CalAtlantic was the fourth largest homebuilder in the United States. They were created when Ryland Homes and Pacific Homes merged in 2015, and Lennar thought that they would be a perfect choice for the acquisition. Lennar did not jump the gun too early though. They studied the company for about six months and finally came to a deal in October of 2017.

They bought the company for $9.3 billion, and they took on the debt from CalAtlantic, which was $3.6 billion. However, this was still a good deal for them. It made them the largest homebuilder in the country, moving D.R. Horton into second place. In addition, they believe that they are going to be able to save about $50 million in construction costs in 2018.

A New Path for Miller

This was one of the last large moves by Miller as the CEO. In April of 2018, he announced that he was going to be moving into the role of executive chairman. The new CEO would be Rick Beckwitt. This would mark the first time in nearly have a century that a Millar was not in the CEO spot at the company.

It will be interesting to watch and see what happens over the course of the rest of 2018 and the years that follow with the new largest homebuilder in the country.

EB-5 Regional Center in Miami Is Shutting Down

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The EB-5 program, having been created by the Immigration Act of 1990, was initiated in Miami in 2014. The goal of the program, which was put into action in the city by Mikki Canton and the Mayor Tomas Regalado, was to bring more foreign investments into the city of Miami.

The EB-5 is a visa program that is specifically for immigrant investors, and it is a way for foreign nationals to get a green card, as long as they invest money in the United States. Under the program, the foreign national is required to invest half a million or a million dollars depending on the location of the project.

Problems With the EB-5 Program in Miami

Many believed that this might be a good way to help spur investment into the economy of Miami. However, the EB-5 regional center in Miami is now being shut down. It turns out that the center did not produce any visas and it did not generate any money. In fact, it appears as though the center did not do anything that it was promised. When the program began, many people thought that it had the potential to create new jobs in the city, and that it would be a good option for real estate developers. While there has been some financing obtained for real estate development, it turns out that there have also been fraud and abuse cases.

When the program started, the first project that came through was Panorama Tower. The project was seeking 99 investors that would add $49.5 million to the development and create thousands of jobs in the process. However, this did not happen. In fact, the project has never received any money from the regional center. Problems like this have led to the closure of the regional center a mere four years after it was created and launched.

Seeking the EB-5 Visa Elsewhere

While this might seem like a problem for the EB-5 visas in general, that does not seem to be the case. It is still possible for those investors who are seeking these types of visas and who do want to make investments in the country to go about getting the EB-5 through other means, namely by checking with centers that have private funding and through the regional office of the state of Florida. Just because the regional center in Miami is gone does not mean that EB-5 visas don’t work or that investors should ignore the city and state. There are other options available that can work for you, as well.

For those who are seeking this type of visa, it is important, however, to always vet the centers and funding groups that you are working with to make sure that they are legitimate and that they can help with the EB-5. Seeking legal aid to help with the verification of these companies tends to be the best course of action for most, and a smarter way to a green card and investments.