First Generation Wholesaler Fees

here is how a deal I financed went in Fort Myers….  Lehigh Acres

I put up the money to buy at Foreclosure

winning bid 35k

Local guy bidding charged 7k

guy that introduced me to Local guy that bid made 5k

Rehab 10k   and mind you I put up all the money.

Great Britian middle man    15k

sale price to GB investor 80k  I pay closing cost and I made 6k or so..

Not bad on 90 day investment. Although I put up all the money.

FYI house rents for 800 a month.

I did financed a few for this guy… Lenders have to be very careful in florida.. Foreclosure laws are Bitch there.

At the end of the day I felt OK about this one… AS its a 5 year old home ,  the Investor from GB may want to one day use it.

What I do not like is the same numbers or profit margins these GB brokers are doing in Detroit and Memphis. buying in the Hood and War zones and just plain screwing these GB investors.

One of the web sites has a video with the Major of Detroit welcoming the GB investor with OPEN arms. No Kidding…..

No other Major in the country would do that much less be allowed too the corruption in Detroit and Wayne county is off the charts….

Any way

thats my Florida experince.  Its buyer beware in florida big time especially Ft. Myers area.

JLH

The company bidding also finds the house checks title, inspects house before bidding. And cordinate's the rehab.

The 3rd middle man cordinated the sale to the GB marketing company. I put up the money.

Foreclose's in the US of which I am pretty knowledgeable as a hard money lender run in 3 catagories.

1. Deed of Trust State which has non judicial foreclosures and no deficiancy judgements for purchase money owner occuppied

2. Mortgage states that require judicial foreclosures

3. Dual Action states that are typically Deed of Trust state which allow for judgements as well as the property.

Foreclosures cost like any thing else are all over the board.

We can do one in GA or MS for well under 1k and be done in 60 days.

Florida like Indiana for example is a judicial state. And they take a year and cost you thousands.  New York is the worse by far.

Oregon were I live cost about 3k and takes 6 months. Washington the same and CA as well.

The wholesale prices in FT. Myers and Lehigh have gone up I did this deal 2 years ago. instead of 35k for 1st gen purchases they are up about 10k.  These are newer homes but like I have said about ft. myers there are 1 million lots and houses are scattered all over the place and values are the same all over the place.

Just because you see a pretty picture of a house in Le high, does not mean its a great location. There is no sewer or public water to a good portion of the lots and so houses that have their own well and septic are not worth the same as houses were there is public UTLS.  Generally speaking

I own a 4 acre multi family property "bareground" just north of San Francisco in the Town of Rohnert Park.

I bought it 20 some years ago as a path of progress property,

The first 2 elements happened  it got annexed into the city and the zoning came in Multi family.

Then right next door 120 acres got sold for 240 million the largest single land transaction in Sonoma county history. It sold to Texas Station the Casino company in Vegas. They were going to build the largest Indian Casino in CA and the closest to SF.

Well economy went bust and Texas Station went into bankruptcy and the project stalled… Still waiting for it to be built.

Back to LeHigh,

Lehigh Acres has about 500k platted lots of record and Coral has 250k… Platted lots of record. These were all done in the 50's during the land rush to Florida, Thats why you have roads out in the middle of no where and buildable lots scattered over a huge area.

In my area a septic system will run 5k to 25k to install and water well and filter system about 5k. so the 6500 dollar lot will cost you about 20k to get to shovel ready. The 20k lot  you speak of probably has hook up fee's and could have additional assessments that are paid in your tax's.

Lehigh and Coral are the poster child in the US for extremely large subdivision that were built with no infrastructure codes and no long range planning. I was on a State of CA stearing committee that dealt with what they call antiquated subdivisions. In California there are millions of these lots as well that were platted in the 1910's through the 30's. We took a field trip to Ft. Myers ( circa 1985 to meet with local planners)  Primarily in San Bernadino and Riverside counties. These lots have been traded around for the last 100 years…..  Arizona and New Mexico have some large subdivsions as well…. And on the big Island of Hawaii past Kona there are big tracts of lots also 5k to 20k of them that were platted again before environmental regulations took hold. These Hawaii lots were created on a Lava flow, and you use Cistern for Water and dynamite holes in the Lava for Sewage.

There will come a day in Lehigh that lots that do not have city services will be non buildable until such time as services come to them will be my bet. Its not sustainable environmentally not to mention traffic flow to have 500k lots all 1/4 acre or so and have a 50% or greater build out…. This is why for the very long term one would want to be extremely careful what you bought in Lee county Fl.

glad to see that the local area planners have made headway in their infrastructure issues.

Not to be argumentitive however I know for a fact that there are 500k platted lots of record in Lehigh Acres.

My point with the assessment for sewer and water is that in all probability the tax's for a lot with public sewer and water are going to be higher than those lots without, Someone has to pay for those utilities and the most common way for municipalities to do this is through 1910 act or 1915 act Bonds that attach to the tax bill. One would just need to look carefully at your tax bill to determine this.  Just like if they pass a school bond or liberary bond.

Any way no particular axe to grind with this area, Although i do know other Florida clients of mine that will not invest in Ft. Myers B/C of the issues that we are talking about.

And if I was on a limited budget for a retirement home ( used to not be but now who knows:) ) This is an area I would consider, When I bought those 2 foreclosures for 35k each… it was my opinioin that this was probably the most cost effective place to live in the entire world. You get all the US has to offer in the way of medical, stable government, police protection weather ,etc. And these were 5 to 7 year old homes. They were in the country as you say were there are blocks of 100 lots with only a few homes on each. But heck for the price, I don't think you could really touch them.

Now at 85 to 95k there are all sorts of options around the sun belt CA desert AZ desert and FL. And everything being equal in that regard I personally would look to other areas… Just my personal opinion.  One has to remember in the height of our false market these same houses sold at 250k and the lots we are speaking of were selling at 75k to 100k.

I bid on one 120 home package from a bank about the same time, Alabama builder got caught with inventory, the houses were scattered all over Lehiegh.  We bid just under 100k each and did not get the deal and as it turned out these same houses finally went to auctions at the above mentioned 35k which was the bottom of the market. Like I said these same house's now are 40 to 45k and some 50k to first generation buyers. the 85 to 95k you mention is after fix up and Profits to those who are in the turn key business as again has been described above in detail.

Still not bad price points if you like the area. As for a long term investment supply and demand are the factors that really dictate capital growth. the exisiting stock will only rise to what is being sold as new construction at the time and then back off 10 to 20% because they have been used as rentals.

In that case one could no doubt pick up one of these 20k lots build for about 50 to 60 a sq ft. and be in a brand new home at 100k to 120k. So 85 to 95k for the exisiting stock is probably were its going to set for awhile,

In addition one of the main reasons these homes have risen in value is the effect of the off shore investor be it GB  CA or AU.
these countries are creating their own markets in these areas

Anytime you have a highly orginized and financed marketing effort targeted at one product  "turn Key US homes"  the sale price of these items is going to be significantly higher than what would sell for in a local market without these external pressures. Take that buyer away and values drop back to supply and demand within the local community.

the reason certain parts of the west coast have not had these huge price drops is because of this supply and demand.

One only needs to look at San Francisico. Price's leveled and maybe there are a few deals but there is nothing like the 70% to 80% price drop as you saw in FT. Meyers areas.. were a 250k house sold at auction for 35k…. that is simply a supply demand function….. Way too many houses and no real local demand.

Now you can drive 90 minutes inland from San Francisco to whats called the Sacramento and San Jauquin valleys. Where you have the west coast version of equity wipe out.   Stockton, Modesto, Merced and many other smaller towns. Builders went in search of cheap dirt. put up thousands of homes with no real local market demand or jobs to support, Investors came in from the Bay Area like flys on poop, paid what to them was a cheap price just like. The same theory the Aussie is working on, Their houses on the pennensula like Palo Alto, Menlo Park, Cupertino San Jose, values rose incredibly were average prices were close to 1 mil for a modest 3 and 2 built 50 years ago. They look at these central valley homes at 350 to 400 and think what a deal. market collapes these homes lost huge amounts of equity, second generation investors are picking them up in the 100's.

Same scenerio in Los Angeles. prices within 20 to 30 miles of the coast line have generally held with some of the real high end getting wacked, But the inland empire houses have gone from the 300s into the low 100s and under. Same land rush speculation fever that was common in the day.

Would I want to live in Garden spots like San Bernadino, Riverside, Imperial valley heck no….

But I think that gives the audiance a little perspective of whats happened. And make no mistake as I said these 3 countries are having profound impacts on our Real Estate by buying up these properties. I for one am greatful. It creates cash in the market place… most of these need some sort of rehab so hard goods are being bought and wages being paid.

Do the foriegn investors get the best deals, In most cases no way. the locals beat them to it. And of course you have enterprising Aussie's coming here and setting up shop… With you see capital growth in these wipe out areas I have described. Not really in my mind because of the avaliablity of lots and the price to build new… And when the renters start buying houses then the rental market will get back to were it used to be. I think this is 5 to 10 years off though,

agree to disagree.

At least I am right about the utilities.

I think if one use's google earth you will see what I am talking about and its far more than 16k acres. I own a 1k acre tree farm in Oregon and its just a tiny dot compared to Lehigh.

Sorry to hear the broker died on that 100 house package, was  it foul play or what.

I do not dislike Ft. Myers in a general sense, I am just reporting what others that I have done business in Florida say about leheigh and coral. they would never invest there they like the miami side.

And there is no question that the foriegn investor has picked up the pace of buying US properties. They rarely bought them 10 or 15 years ago for cash flow rentals. they bought for second homes as you say.

There is no denying that this has created a huge industry in AU. selling all sorts of Areas of the US.

CheevesFinancial wrote:

I am both an agent and wholesaler.  Come on down to Ft. Myers.  I'll buy the first round of rum runners and I'll show you how good I am in this area .  I think you will have a different perspective other than your google earth or historic number details.

Cheeves we spoke , last week. Lets shoot for a trip in middle of jan. For  my partner and I  both want to shoot down…skip the rum runners and bring on the crown royal…Sorry big boy drink , just kidding ….

I need to go see the 57  lots our cash lender from Hong Kong   picked up..Super cheap I might add…

Lets try to touch base fri and set up some dates..

Thanks

Alex