Investor’s Debacle Can Become Renter’s Dream in Southwest Florida Housing Market

Joseph Michalak can’t wait to show you his new pad — all luxurious, 3,000 cavernous square feet of it.

The 37-year-old just moved into a lakefront house with Roman columns and Spanish archways, a manicured lawn and a pool in the backyard.

But more than the amenities in his South Venice home, Michalak likes the price tag — $1,500 a month, or about $1,000 less than what he would pay on a monthly Florida mortgage for the $400,000 home.

A few years ago, Michalak would never have been able to afford such digs. But a softening Southwest Florida housing market is proving a boon for renters who suddenly can find swank homes with top amenities at slashed prices.

The phenomenon is driven by investors who gobbled up homes during Florida’s 2004-05 real estate boom and now are unable to sell at a profit. Many have resorted to renting to help pay their exorbitant Florida mortgages.

There’s no shortage of high-end rentals on the market. Websites that list Sarasota rentals have dozens of listings with the word “luxury” in the ad, most for less than $2,000 per month.

Many investors are renting $300,000-and-up homes for $1,000-1,500 per month, said investor Ellie Vratanina of Baltimore. Vratanina, who manages or owns about a dozen properties in Sarasota, shrugs that “you can’t flip ‘em like you used to.”

The real estate market slowdown isn’t driving down rents for people on low or fixed incomes; rents in Sarasota, Manatee and Charlotte counties have risen steadily for the past few years. But for renters looking to upgrade, now is the time.

Renters like Michalak, who works for a California-based communications form, have learned to take advantage of sagging Florida real estate.

He researched online for two months before settling on his home in Island Walk, a massive new subdivision. Going through an apartment complex or mortgage brokers hardly entered his mind because he knew an investor would be more desperate.

“I knew if I went through a broker, they have to have their cut. The difference is in what I am getting,” he said.

Bryan Cobb of Sarasota turned his search for the right rental into a three-month scavenger hunt, scouring websites, newspaper ads and simply driving around looking at “For Rent” signs.

Cobb, a single father who works as a manager for a telecommunications tower operator, was tired of living east of I-75 near neighbors who left boats on their lawns. He wanted a house with a backyard for his 5-year-old daughter, McKenzie. The hunt paid off when Cobb found a 2,000-square-foot home in Sarasota’s deed-of-trust restricted Emerald Gardens for $1,395.

When the Florida housing market began to slow, Cobb knew he’d be able to get more house for less money.

“We did a lot of looking. This house was a step above,” he said.

The effort was worth it. Scott Corbridge, president of the Sarasota-Bradenton chapter of the National Association of Residential Property Managers (NARPM), and the broker for the home Cobb rents, said the home’s owner lowered the rent from $1,510 to $1,395 in order to find a tenant.

Corbridge said he has seen other investors cut rental costs $200-300 per month to attract tenants. But it’s not always easy.

Finding affordable, investor-owned rentals is a crap shoot around Sarasota, Charlotte and Manatee counties, and indeed the entire state.

Classified advertisements in other high-growth Florida counties, such as Palm Beach County, illustrate the same phenomenon.

Some rentals are clustered in new developments; while others are spread around established neighborhoods.

Finding a Gulf Coast deal is as easy as looking in the classified section, where an advertisement touts a remodeled, waterfront Punta Gorda apartment for $720 per month or a half-million dollar condo in downtown Sarasota for about $1,400 a month. That’s a fraction of what the Florida mortgage loan cost would be, and renters are taking advantage.

Many renters find themselves opting for investment properties to get close to destinations they couldn’t afford as buyers: downtown and the waterfront.

Ellen Jacobs of Sarasota, a 60-year-old retiree, rents a $1,000-a-month condo eight minutes from downtown Sarasota.

“If I was buying, I’d be out by I-75,” she said. “Renting “is still not financially smart. But it’s smart for my overall needs and lifestyle.”