Forum Replies Created
Jay: To install a well and septic system on a lot with no utilities costs about $10,000 to $12,000, not $25,000, however if you include soft costs such as impact fees and fill dirt, you are right around $20,000. But remember, the well and septic goes in AFTER you initially put a "shovel" to the property.
Also, to clarify, Cape Coral has just under 140,000 platted lots and Lehigh has about 90,000. Your numbers are very skewed in the wrong direction. There are a ton of "buyer beware" areas in SW Florida, but as I mentioned earlier, no more than any other given area of the country.
The $20,000 lot I speak of typically do have hooked up utilities for that price. Your statement about additional assessments are very inaccurate again. You will pay your standard taxes on the lot.
Sounds like you have something against this area. Despite its adversities, infrastructure repair/construction is booming and if you have visited recently which it doesn't sound like you have, you will see massive work. I don't usually look at area accolades but Investor Magazine and CNN ranked us as #1 recovering housing market. That's gotta mean a little bit of something.
Our median went from 82k to 96k in 2 years. Unemployment dropped from 14.9% to 10.2% in 2 years. Get over the vacant lot issue. Big deal. Don't buy rural, what else can I say?? You don't see vacant lots in my area of Fort Myers and Cape Coral for the most part. You have to drive 25 minutes.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeJay: Nice response. I know that FL is one of the worst for foreclosure laws. The judicial process is killer.
As far as being a 1st generation wholesaler / purchaser, yes, prices have gone up. If you look back at my first posts, someone asked me how much duplexes in Lehigh were going for. At the time, they were about $70,000 to $80,000. Now they are $75k to $85k. Agree with your comment about the well / septic. However this is one of the reasons that Lehigh is trading at $Bo0 per square foot and Cape Coral $55 for a comparable house. You get what you pay for and naturally, the Cap Rate is actually higher in Lehigh because it is considered "higher risk" than Cape Coral. That is simple fundamentals. Higher risk means higher yield demands.
I don't know if there are a million homes and lots, but there are a bunch. However, if you visit the area and know the area, lots are actually going up. And they are going up more in the better areas. For instance, if you want city water / sewer in South Cape Coral, you can buy a lot for $20,000. In northern Cape Coral where it is more rural and no utilities, you can buy a lot for $6,500.
Bottom line is there is a ton of attention in this area for many reasons. Unemployment has improved nearly 30% since the bust and rental rates are stabilizing to average income levels.
There is a January vote for a massive casino project in 2 locations of Fort Myers. A Hollywood producer is looking at the vacant old Radisson Hotel to blow it up for a movie, and is in talks with a developer for a high end hotel / casino to take over the site after demolition. Seems like a crazy lie right? We'll see in January if it happens. Sands is the likely casino developer.
Lots going on here!
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeI think the entire international investment strategy is "buyer beware". Fort Myers is no different than New Jersey.. New Jersey is no different from California, etc… You have good and bad ethics everywhere. So this house in Fort Myers sold for $80k to a GB investors which included $45k in middle man fees? Wow….I don't have anything else to say about that. A home for $35k that needs about 10k worth of work is in certain areas of town. Not much upside there in my opinion but you never know. Cash flow, yes. Higher risk, yes. The fundamentals of real estate is demanding a higher Cap Rate in higher risk areas. In better areas, you get lower Cap Rate.
I'm not knocking middle men fees. Everyone needs to make a living, but $45k in fees is great to the middle man, but probably something that was way overpaid by the investor. Cash flow aside, that's not a good deal.
Just curious, why should lenders be careful with foreclosure laws? Are you talking about selling restrictions after purchasing Fannie Mae homes? Holding a note for a homeowner? If you are going to hold a mortgage for someone, I would hope you know about the foreclosure laws. Foreclosing costs a crazy amount of money. I learned the hard way. Probably why I don't hold notes anymore…I'm just not good at that and I'm ok with it.
Jay: the guy who charges you 5k to go to the auction, does he put in ANY money? If not, you are way overpaying for his services. There are reputable companies that will do this for you for about 20% of that.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeA stadium like this in a city that proportionately thrives on tourism IS a game changer. Revenues are going to drastically increase with the Red Sox in addition to JetBlue putting vacation packages together. The Red Sox have been here for years, but this new stadium is creating international hype and if you haven't seen how popular our area is during spring training, try booking a hotel here from January to May. FYI, JetBlue got the naming rights to the stadium and Ft. Myers has long been suspected as being a future hub of JetBlue.
In Lehigh, infrastructure was actually INADEQUATE. Tons of homes were built mostly by investors because they thought cheaper was better and during the boom, Cape Coral became pricey. Today, there is massive infrastructure construction going on tying Ft. Myers and Lehigh Acres together. You can see that all day long driving around or it is right below you when you fly into the airport. Can't miss the major construction going on.
Getting back to the stadium, it won't take our unemployment from 10% to 8%, nor will it have a major affect on income, but everytime something major is developed in this area, small businesses follow and small business is the backbone of our economy. Look what happened when SW Florida Int'l Airport expanded in 2001….look at the Coconut Point and Gulf Coast Town Center affect….lastly, look what Major League Baseball does for this area during the first half of the year, or at least until April.
Most people can't build for $65 a foot because they are not contractors. You and I can do that, but I always say $80 a foot which includes retail cost typically.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeTonybao:
Ummm…South Fort Myers….definately…that's an easy one. Too easy
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeAlso, this article is specific to the highest priced Florida markets. It is laughable. Florida is going to rely on low to mid priced housing for a long time. I'm talking mid $100's to mid $200's. Those areas are mid $200's and up.
Lee County: Median Home Price is $98,000 +/- and adding jobs like crazy. Unemployment has dropped faster here than it has anywhere in the country. Just sayin
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeJayHinrichs-
The Red Sox stadium will have next to zero effect on the housing market? Wow..I'd love to get your reasoning for that. If you look at revenues, last I checked, the Spring Training season brings in tons of jobs and money, about $75 – $100 million per season. Then you have the full time season during the summer for minor league players. Granted it doens't bring in the revenue as to when the big dogs are in town, but it is still a money maker and yes it will have an impact on the economy and housing market. We are driven by the retirees and tourism…It's a fact. We don't rely on job growth as much as say New York City. Fly into Ft. Myers and you will see why snowbirds are zoned in on Lee County. The amount of infrastructure being developed now probably exceeds anywhere else in the country. And home prices are still dirt cheap. Buy here or go buy in the horse country of Ocala. Most will choose Lee County as there are things to do here..As far as your reasoning on the vacant land and how many homes will be built in future, capital growth, etc…look at it this way.. Let's say you buy a "lot" in Lehigh Acres for $4,000. Do you know what impact fees alone are? FYI, an impact fee is basically just a fee to the area that goes toward infrastructure, repairs, etc..among many other things. The impact fees in Lehigh are $10k to $15k.
Now you have let's say $20k before you even break ground. To build a cookie cutter house, you are looking at $80 per square foot, MINIMUM!! So if you build a typical home in Lehigh that is around 1,400 square feet, your construction cost is $112,000 (by the way, new construction homes are typically $130k + not including land). Add your other fees and you are at $125,000. It's called replacement cost.
You can buy a comparable "cookie cutter" home that makes a great rental for about $60-$65k per house. Yes, sure there are cheaper out there…but where is it in town and how much rehab is needed. I think I've been in every home priced under $55k in Lehigh.
So basically you are saying that capital growth could be non-existent, limited, etc when the replacement costs exceed current prices by almost 100%? Please explain. Construction will commence in this area when home values get near replacement cost. We are not there yet so homes have a lot of room to grow. If you look at the income levels versus median home price in the area, the proof is there for you.
Also, I am originally from Hoboken NJ and own http://www.NewJerseyRealEstateGuys.com. I won't get into the markets up there, but I am very familiar with the market up there…Did you use the words "New Jersey, Connecticut, and RURAL" in the same sentence? GEESH!!! Taking the train an hour from NYC will get you to Morris County, Essex County, Westchester County, and even parts of Long Island and Staten Island. Although these are suburbs of the NY Metro market, it is very very very far from RURAL.
Apartment complexes are best categorized like this in NJ or Florida…You have to base your budget on what is currently trading and what they are trading for. Here is where the market is for multi-family residential on a capitalization rate perspective: REITS, investors, etc..are buying at these levels all day long. If you ask any better, you will get killed by the competition.
Class A: 4-6%
Class B: 6-7.5&
Class C: 8-10%Sorry to say "stick up" for SW Florida but these are facts, not opinions of mine. Thanks. If you are ever in town, stop in. We are in Ft. Myers. I'll show you some amazing things happening in this area.
CHEEVES
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeMy practice focuses on Lee County, ie..Cape Coral, Ft. Myers, Lehigh Acres. Buying land in Lehigh is worthless right now unless you have money to put down and forget about for about 10 years.
Cape Coral gulf-access lots are better to buy, however a bit pricier. Land in general in Florida is flat right now and probably will be for a couple of years.
If you have $50k to $70k to spend, buy a single family home in SW Lehigh. If you have $70k to $100k to spend, buy in Cape Coral, preferably the south end.
If you have $100k to $150k to spend, buy in South Cape or South Ft. Myers a rental home. Your ROI will be less than 10% but if you get say 8%, your upside has much more potential than those homes that are ROI'ing at 10-13%. Personal preference.
If you have $200k to spend, do Ft. Myers rehab / flip or rental… For this, I would recommend visiting and getting a team together. We are one of the only firms personally and professionally doing rehabs in Ft. Myers with investors. We are working on our 7th home right now. Go to our website to see a video of a recent one. I will post a "before" video of a home we just bought last week.
Things to watch out for in Florida:
- Shady brokers
- Rental Guarantees ….come on, really????
- Chinese Drywall
- Seller Financing
- Tax Deeds
CHEEVES
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeSparky-
I live in Ft. Myers. I'm curious, where are you looking at homes in the $50k range? Off Palm Beach Blvd near downtown? Or off U.S 41 in North Ft. Myers? Those are the only 2 areas where these home prices exist and was wondering what your strategy was.CHEEVES
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeBeen here. Area is ok, however as far as safety goes, it is pretty safe. Puntarenas used to be one of the main seaports in Costa Rica but is now only a stopover. Seafood is great there with plenty of good restaurants. The only major deterrent I found was that you can't, or it is not advised that you swim in the ocean. The water is cloudy / murky and is considered dangerous with all of the stingrays and just dirty feel to it. Nice area, yet pretty rural…bad beaches. $25k for some land seems cheap, but be sure to find the protected species, vegetation, etc…most importantly if you can actually build on it in the future.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeThere are dozens and dozens of scams on tax liens. Be sure to work with an attorney.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeI'm not giving you any more secrets unless you do business with me!
Glad you liked the videoes. Anything I can do to help, let me know.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeSouth Ft. Myers is 33919 and 33908. In these area codes, I have been very aggressive at buying rehab homes. Buy at $40-$50 per square foot and update them. You will likely be adding about $10-$12 per square foot for updating, depending on extent of work. Resale pricing has been $80-$105 per square foot. So flipping is possible. The most recent one I personally did I am going to rent out and hold for a couple years. This area is very demanded as it is close to everything. Homes are in the $150k range but have a huge amount of upside. Your cash flow won't be as high as other areas, but upside in S. Ft. Myers is huge.
Lehigh Acres is a good market in the right areas, just like Ft. Myers, Cape Coral, etc. There are areas to avoid and areas that homes are flying off the market. Everything in Lehigh is on well and septic. Much of Cape Coral is as well unless you are in the southern part of Cape such as your area that you bought in. Investors buying homes in Lehigh typically have renters before they even close. There is a huge demand for rental units all over the county and Lehigh is not an exception. There is a positive demographic shift taking place especially with the new stadium, proximity to airport, and other "job" areas.
Bottom line is that real estate is going crazy right now and it is even more positive that we are seeing a huge amount of first time homebuyers balancing out the investor and second home demand. Current income levels can support a significant real estate value improvement so I expect this market to show strength throughout the year.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeShillabeer: Sounds like you have a good plan in place. Just be careful with title issues on tax liens. There are dozens of scams with those right now.
Regarding the 20% vacancy in the area, this is just untrue. At least in SW FL it is untrue. The vacancy rate is lower than 10%, and you can see the explanation HERE. See my comment on this page toward the bottom.
You can also see the county's REO status and get an indication of backlog HERE.
Shadow inventory is at such a low level that it is almost irrelevent now. There has been a major shift in sales where the sellers are normal sellers and bank sellers. It's been a 20% shift since this time last year.
The draw to the area is the thriving employment market. There is currently a good shift in demographics also where younger professionals are once again migrating to SW Florida, specifically Lee County.
Zip Code 33990 is SE Cape Coral. Good area for the right price. I invest in South Ft. Myers. I live there and love the area so I find a lot of value in it and the buyer activity is very strong right now. Long gone are the days of offering 20% less than asking price for homes under $150k.
My prediction is that if you buy prior to November of this year, your equity will be 20% by this time next year. It is widely expected that the snowbirds are going to buy in droves next winter season. We are expecting stronger than this past season and it was crazy then.
CHEEVES
http://www.MyRealtySource.comCheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeWhile it is good to know the state by state numbers, the worst is clearly over and if you are going to invest, you need to start looking into sub-market details. For those looking at Texas, Dallas and Houston are WAY different. If you are looking at Florida, Ft. Myers is WAY different than Miami area.
For instance, there is about 20% more shadow inventory in the backlogs in Ocala as opposed to Ft. Myers. Knowing shadow inventory is important and it is challenging to get that information. You won't find it on a google search. A fair approach to it is by looking at a specific timeframe, knowing the amount of foreclosure filings, knowing how many courthouse sales, short sales, REO sales there were in that specific timeframe. It is more complex than that. I am in Florida. There are great areas to invest and terrible areas to invest.
CHEEVES
http://www.MyRealtySource.comCheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeOver the last year, I have had many Australian clients. I'd say 90% are adament that the AU housing market is "different", and that it won't suffer the way the U.S market did. I hope it won't! Geez, the U.S housing correction was terrible for anyone that owned a home, regardless of how much money you have.
Admittedly, I know nothing about the Australian housing market, but as I spoke to an analyst from a banking institution, he directed me to an online article: LINK
This analyst said to me that the Australian housing market is primed up for a massive correction which could be 20-40%. Again, I know nothing, but I read the article and the trends I see in the charts are the same (almost exact) the way the U.S data charts read, regarding income, rental rates, etc…
If I were a betting man….which I am
…..I bet that the AU housing market does not tank as bad as the U.S did. I don't think you guys were exposed to the Subprime stuff we were exposed to. That said, what are your thoughts on this article?? Grab a cup of coffee or a cocktail. It's a long read, but very interesting.CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeAs an FYI to multifamily small and large apartment complex investors, this is where the market is trading at.
Class-A: 4-6% Capitalization Rate
Class-B: 6-8% Capitalization Rate
Class-C: 8-10% Capitalization RateSW Florida is a hotbed for investors of apartment complexes. Effective rents are going up the quickest in the country. Rents expected to increase 3.1% by end of Sept from beginning of the year. That's a good jump in a short amount of time. Depending on area, investors have reported as much as 12% increase in effective rents from this time last year. Here's a video if anyone is interested from our multi-family guy. APARTMENT COMPLEX ACTIVITY
CHEEVES
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeJMCI :
I love that area of Tampa. I just brokered an apartment complex disposition / acquisition and investors love the area because of USF area. Although I'm not a fan of buying single condos in FL at the moment, I like multi-family and single families. I just bought an REO single family home and is working out really well.PropertyShopUSA:
Outstanding article in your link. Very accurate.CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeAs most know by now we are personally invested into Lehigh Acres. With our headquarters in Ft. Myers, we have seen everything transpire, good and bad all around. XDREW, as I mentioned in my previous reply, you can really get lost in Lehigh if you are in the rural sections. Lehigh by size is VERY big. Most of our single family homes are in the Sunshine region and duplexes in northwest part of Lehigh.
When we buy our REO's, you have to budget for repairs. They all need it. Never got one that didn't need some TLC. The good thing is that its mostly systems and cosmetics. Structurs are nearly new being built in 2005 or newer. I'd say about 50% of the units need a new condenser unit (fan looking thing for the A/C on the outside of house). Being that the homes have been sitting, we do a septic system makeover (cleaning of the drains)…Inside, mostly appliances, some flooring, paint, and your good to go, so typically anywhere from $5,000 to $13,000 we have been used to.
That being said, they cash flow very well as long as you do your deferred maintenance on the property, ie..proactive repairs. I have seen way too many investors buy these from inexperienced agents/wholesalers and a week after closing, the septic backs up, the appliances break, etc.
For those that don't know about Lehigh, just look up the Boston Red Sox new facility. It's going to be a HUGE driver for demand. FYI, we were buying multi-family for about $26 / square foot about 6 months ago. Today is about $32 / Square foot. Demand is being driven by the favorable ROI's.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeTo further clarify, I have seen these reports and have dug a little deeper as I have had a few calls from investors who have seen this report. I am a former analyst myself for a bank and know how these "other analysts" put their numbers together. Unfortunately, they mislead using a media blitz to make up a good article with terrible due diligence as reflected in the proof below.
- U.S Census Bureau on Vacant Homes Definition: LINK and LINK
- In the links above, a vacant home is also defined as one being of "temporary use".
- So, these "genius" analysts have not done their due diligence. The vacancy of 20% in the reports INCLUDES homes of TEMPORARY USE.
- Yes, I am a FL real estate guy, but these analysts have not disclosed in their worldwide media campaign that Florida is one of the top second home destinations in the world.
- In this report of 20% vacancy, they are including the second home units…
- Yes there are vacancies… but the number is incredibly misleading.
The vacancy report is misleading and investors need to be aware of the definition of a "vacant home".
Cheeves
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone Me
…..I bet that the AU housing market does not tank as bad as the U.S did. I don't think you guys were exposed to the Subprime stuff we were exposed to. That said, what are your thoughts on this article?? Grab a cup of coffee or a cocktail. It's a long read, but very interesting.
