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. 

I 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. 

Tonybao:

Ummm…South Fort Myers….definately…that's an easy one.  Too easy

JayHinrichs-
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

http://www.MyRealtySource.com

Sparky-
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

South 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.

As 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 Rate

SW 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