Podcast episode (host Jason Hartman, guest) discussing U.S. migration trends shifting public attention from Texas to Florida and a focused market profile of Jacksonville, FL. Guest emphasizes Jacksonville’s steady post-2008 growth, affordability, job and population gains, and rising tech presence; promotes a new-construction single-family rental model (building A-level homes in B neighborhoods) citing lower maintenance/repair costs and predictable performance. Episode includes a sample pro forma (1,459 sq ft home, $177,900 purchase, $1,400 rent, $149/month cash flow, projected 27% annual ROI) and practical notes on 1031 exchange timing (45-day ID window, 180-day close) with some new-construction closings available to meet exchange deadlines. Other markets mentioned: St. Augustine (tourism/STR appeal), Ocala (strong rental demand), and southwest Atlanta (townhouse project).
Questions this episode answers
$365 per year (rounded in discussion to about $360).
Ranked #6 by U.S. News for best place to retire; ranked #9 by Money magazine for best large city to live in; also described as the #1 affordable large city in Florida (repeated ranking claim).
A stated 9% increase in population (period not specified) and projected job growth through 2022 of 7.7%.
Chapters
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I am still coming to you today from Puerto Rico and have more Mastermind meetings today and tomorrow and and then headed back to the Sunshine State of Florida. And speaking of which, we have a guest from Florida here with us. You've heard him on the show before. Let's talk about the migration trend and how it is continuing. I got a question for you and this is strictly an impression. It's not a data driven thing that I'm about to say. But years ago we were always talking about how this huge migration trend was moving toward the big state, the Lone Star State. It was, all the discussions were about Texas, Texas, Texas. And I used to say on the show, maybe you heard it years ago, I would say things like if Texas were to secede from the union, it would become the Hong Kong of the United States. You know, in other words, as Hong Kong is to China, Texas would be to the U.S. right. But now it seems to have shifted. Just, it's just my impression everybody's just talking about Florida now. Is it just me or is that what's going on?
Yeah, no, I've seen the same thing. And I think it's interesting, you know, the further we get away from the 08 meltdown, for the most part, Texas kind of sat it out because they were in the, you know, the 86 meltdown. They were on the forefront. But with ours, California and Florida, obviously California was way out of favor. Texas was in great favor during the meltdown. And then all of a sudden now as things have started to turn and recycle, it's kind of slowed down the growth focus on Texas and it's come to Florida. I've seen the exact same thing.
Yeah, it really feels like there has been a shift in the sort of the public discussion about, you know, the hot state, where the growth is, where it's business friendly, where there's just this huge amount of migration and a lot of these Tex markets have gotten more expensive. I mean, you know, we used to sell really inexpensive properties in Dallas, even Austin, which Austin's way too expensive to look at now. You know, in 2004, we were doing a lot of business in Austin. 2005, the prices just continued to increase. And then we did a lot of business in Dallas, San Antonio, of course Houston. We've done hundreds of transactions in these cities. Now it really. I don't know if it's because, you know, when you live somewhere, I mean, I've only lived in Florida for less than a year and a half. You become more conscious of it, obviously, because, you know, it's your home. But really that just seems to be the hot discussion. Everybody seems to be going to Florida, you know.
Yeah, well, I mean, look at. You and I are just two test subjects, really, when you look at it, you were a little tired of California. And I originally came from the Northeast in both those areas. When it comes to the affordability index, just the cost, the lifestyle, it's losing its draw. And Florida is really starting to net in not only from the west coast, but the Northeast. A lot of people. I'm seeing a ton of people where it's same stories as you and I. Oh, we were out there and just made time to make a change. We were up in the Northeast, decided to make a change. And there's some real reasons behind that drive.
Yeah, yeah, there sure is. And you know, Florida has always had that draw for the northeastern states, the New Yorkers. I mean, you know, Seinfeld episodes, many of them about, you know, about his funny parents that lived in Florida and so forth.
Del Boca Vista, I think it was called.
Is that a real. Is that a real place, by the way?
No, I think there's ones really like it. But that I've looked it up before. I have not found a del. Bulk of Vista yet.
Oh, you actually googled that, huh?
I mean, back in the day, being a Seinfeld fan. Yeah.
That was the best written sitcom ever. Really great. By the way, you know, funny aside here I had the opportunity to meet Jerry Seinfeld a couple of years ago. You can see the picture@jason hartman.com in the about section. What I didn't realize about him, I got a couple of photo ops with Jerry after his show in Las Vegas. And what I didn't know about him is, you know, he is worth. Well, according to the Internet, not that you can believe what's on the Internet, but his net worth is. Is $925 million. He's almost a billionaire. That's. Wow, that's incredible. From being a comedian, you know.
Yeah.
Yeah. Wow.
That is an accomplishment.
Making people laugh is a lucrative business. It's a skill I didn't get, but some people have it. Yeah. Any more thoughts about that? And you do a lot of business in the Jacksonville Market and St. Augustine? Of course. A lot of our clients have purchased properties that you offer through our network. Give us some insights into what's going on. And you've got some inventory in Jacksonville you want to talk about, right?
Yeah. And the overall Jacksonville market, kind of our central hub market. I've been here for almost 17 years now. And coming out of the 08 correction, Jacksonville has continued to be the steady eddy. Nothing like a huge bounce bounce. This steady eddy continuing to climb. And there's great fundamentals. So, like, we were ranked this year number six by U.S. news for best place to retire, which is fantastic. We were ranked number nine by best large city to live in by Money magazine, and we were ranked again year after year, the number one affordable large city in Florida. So when all that migration is coming, it's coming our way. In fact, we had a 9% increase in population. And when people start to review it, they say you just have miles of riverfront and beachfront of lots living that attracts people in. And that affordability index which you brought up before, Jason, why are people leaving California? Why are they leaving New York? Well, because of that. And if you can get the lifestyle and the affordability and the jobs, it's really important. In fact, they said job growth here through 2022, and this is interesting, is supposed to continue to grow to 7.7% increase. That's fantastic. And we know when people have good jobs, they can pay rent. And the tech industry, believe it or not, is a big draw here. People don't think of Jacksonville as a tech industry. You know, they have a large port industry, the medical community, the universities. But the tech industry here is really growing, and that's a big draw of all of it, which brings younger people. Right now, the average age in Jacksonville is 46, actually, which to go against Seinfeld seems very young, but a lot of that drive of the lifestyle and tech industry. The numbers and the stats continue to be healthy for Jacksonville. What I like best about it, Jason, is that solid core of affordability and coupling that with our new consumers construction model. It's been a really good combination because the need is there. We're having such good performance on this new construction model because it's in high demand. We're able to start right from scratch. And I've done rehabs for over 20 years, but we found the new construction starting from scratch really gives ourselves and investors, we work with such a powerful grounding and a long term approach with lower maintenance and repairs. In fact, looking over our whole portfolio of hundreds of properties, new construction, do you know that the overall maintenance, repairs, these are properties that, you know, have been out there for a few years? You know, so that would include turns, and that is. Is about $360 a year.
Okay.
Total.
You just passed over something really quick and I want to make sure people get it. So you're talking about the maintenance cost and maintenance and repair cost for these properties that investors own in your portfolio that they. Well, it's their portfolio, but properties they've purchased through you and your affiliated company manages them. So this is brand new construction. And when you said turns, you meant tenant turns, right? When the tenant turns, yeah.
Including tenant turns. Yeah, exactly. So that and maintenance and repairs combined, we sat down and we. And we averaged out all the numbers. So my property manager partner is kind of a spreadsheet geek, which is great. And we went through all of them. And the average price per house for the year was about $360. 365 to be exact. So one of our goals was to curb maintenance and repairs because nobody likes to deal with it, especially looking long term. So that is a phenomenal number that we're seeing with the new construction because we're able to start from scratch. There's a 210 warranty into place. And so it just really gives people a power position.
Okay. Now 210 is an actual company name. That's a home warranty company. Okay. So I just wanted you to know what that means when he says that. So I'm looking at a pro forma of one of these properties. And the projected maintenance and repair cost is $504 per year. So you're actually coming in under that so far at $360. That's great. And let's just go over the property. So we've got in this one, okay. This is just one 1459 square feet. Purchase price, $177,900. So that's 122 bucks a foot for brand new construction. Projected rent of $1,400 per month. Is that all correct?
Yes, sir.
Okay, great. Projected positive cash flow of $149 per month on new construction. Okay. Now I know you can beat that on older renovated properties, but new construction, that's pretty good. The overall return on investment is projected at 27% annually with a real estate appreciation rate projected at 6%, vacancy rate 8% or one month per year management fee, 8% and then maintenance of 3%, which actually the performer is worse than the reality in the case you just mentioned.
Yes, sir. Yeah, that's the beauty of this where it's. There's just measurements that we can really follow. With the new construction, that's been easier and it's been a lesson for me because I own a lot of rehabbed homes. But the new construction, you're just starting from scratch. You're going, you're building that a newer model of home, one that's more durable, one that's more set to tenants preferences. And it's just, it's worked out for all involved.
Now one of the things that a lot of people listening might be concerned about is they're saying, hey, I'm about to start the clock ticking on a 1031 tax deferred exchange. And with a 1031 tax deferred exchange, there are some extremely strict. Well, not extremely. They just are or they aren't time limits. You don't get any exceptions on these. And so you have to identify the property or properties you're buying. Within 45 days after you close on the property, you're relinquishing to do the 1031 tax deferred exchange. And I'm in one of these myself right now, as you well know. And then you've got 180 days to close on the. What's called the up leg property or the replacement property. Right. Or properties. You know, there could be several. And a lot of times with new construction, you can't do a 1031 exchange because you can't rely on the closing to happen in time or you know in advance. It won't happen in time because it's going to take them too many months to build the property and complete it. Right now with these. This is only some of them. You've got, you've got a few that you can do this with that you can do a 1031 exchange because you can. What's your closing date projected? January? February.
Yeah, January, February. So we have a few. When you're finishing out developments, there's always, you know, one or two properties, not a lot that can be built within a short time frame. So that's why it's always good to stay in touch with your counselors, because as these things start to come up, they move very quickly. But we always have one or two at the end of developments. We're not talking a lot, but if People really want to get into a 1031 exchange with new construction in a growth area. We've been able to do that with our market, but you have to be kind of following pretty closely because we don't get many of them. But yes, we can get them. And like you said, a few that we have finalizing out this year. Yeah, they'll be able to close in January, February. So that's very good timing for 1031 exchange where you're not flirting with that pretty serious deadline at all.
Yeah. So if you need a couple of more properties to complete your 1031 tax deferred exchange, go to Jason Hartman.com, reach out to your investment counselor if you're already a client working with an investment counselor at our firm. And if not, just go to jason hartman.com fill out any web form or look at the property section and one of our investment counselors will reach out to you and they can help you with that. What else do you want people to know about the Jacksonville market, about these properties? Whatever.
I think it's important to know. We've been able to keep with our model where 90 plus percent of what we did because 90 plus percent of what I did for myself is in solid, strong neighborhoods as well. B neighborhoods, you can build new construction houses in C minus D neighborhoods. But I just don't believe some people thought that would, you'd be able to with new construction tracked a B plus tenants to a D area. I haven't seen that. So we have been able to keep a model where most people who come to visit us for our tours and we've had a lot of, you know, people through the Hartman network come, they say we have A properties in B neighborhoods. So when we're getting these numbers that we're getting as well, we're really picky. And as, as you saw coming to visit and tour Jason, we have land guys out there with my building partner looking all the time and we throw a lot out if we can't match that criter building an A property in a B neighborhood. That's what we've stuck to with our new construction model. It's really served everybody well.
Cool. Now talk to us just briefly about. I mean it's funny because in the two Florida markets, well, you're in more than two Florida markets really, but in the two that we started with you in, you have the largest city in America, that's Jacksonville by geography and then by geography, and then you also have the oldest city in America and that's St. Augustine where we have some short term rental properties through you. Do you want to mention St. Augustine or your Atlanta or Ocala properties or anything else?
One of the biggest draws to Jacksonville is St. Augustine. It's a part of the greater Jacksonville area. As you know, Jason, we loved it when we toured.
I lived down here.
Yeah, it's just a magic city for draws. Not only for the investment part of, you know, short term rentals, which we do some of, but the Jacksonville. Why are people moving to Jacksonville? They really love to have St. Augustine there. It's next to Disney World. It's the most visited city tourist wise in Florida. It's just because of that draw. So that is a huge draw there. And as you know, we've already. We always try to look for the fundamentals of Jacksonville, you know, as we kind of branch out the web of what we've been doing. We started with that core in Ocala and then southwest Atlanta have just been such strong brothers and sisters to our Jacksonville market that, you know, again, I'm kind of that old dog that learned a new trick. I'm really sticking with the new construction, Jason, just because the numbers and the stats are in. That started as an experiment almost five years ago, but they really do work. We do the occasional turnkey still if I'm pulling something out of my portfolio. But normally the new construction has just served everyone involved so well.
Great, good stuff. Any of the other markets you want to mention?
Ocala has been really good market for us again. We saw, as you know, Jason, the first group of duplexes that we closed on earlier this year. We had projected the year before that they would be renting at a certain level. All of them rented at $75 more per unit. The average days on market out in Ocala was 22 days on market for all units and single family homes.
Now for rent or purchase. That's for rent, right?
That's for rent, yeah, that's for rent. So the rentals are coming in strong. So yeah, it's. We've really been happy with the sister companies and the Atlanta townhouse project in southwest Atlanta, which is one of the hottest areas with a lot of younger kind of hip growth there. We're really excited about that complex that's coming together quite quickly and a number of your people are already involved with that.
Good stuff. All right, thanks for joining us on this again. If you're interested in any of these markets or others around the country, go to Jason hartman.com and we will be happy to help you.
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