It's moreso due to liability.  They would have to hire property management, trust those managers to get good tenants, purchase insurance policies, and hope that everything goes right.  Too much risk.  They just want out.  Currently, banks are reluctant to sell assets for much less than appraised value or BPO (Broker Price Opinion)

On big commercial and multi-family, I am seeing 25% discount from current value.  On single family homes, sometimes 5%.  We buy small bulk from banks still and our discounts have become thinner….much thinner in just the last 6 months.

Cheeves Financial
http://www.MyRealtySource.com

Everyone that is looking into financing…..Be sure to look at SEASONING!!!!  Most lenders require 90 day seasoning on assets owned by the seller.  I see very few good deals out there offered from wholesalers owned for more than 90 days.  Point is, you are probably over-paying for something owned for 90+ days anyway.

Just out of curiosity, perhaps when quoting ROI's, we can show some numbers to see how we got there.  A lot of ROI's are based off of fixed expenses.  Soft expenses or usually left out.  For instance if you have:

Taxes:  $3,000
Insurance:  $1,000
Property Mgmt @ 8%: $2,000

Does property management include lawn care?  Does tenant pay for that?  How about turnover or vacancy expense at 5%.  Reserves?  You don't have to put much in reserves if the property is newer, but perhaps everyone should account for them.  A problem I ran into last year….I swore I wouldn't invest in the midwest.  Not because it's not a good market, but I know nothing about.  Just personal preference.  I had a ROI advertised to me at 21%.  My more conservative numbers showed 15%.  At the end of the year, I ended up with 7% due to issues with unforseen repairs.  So when you calculate your numbers, throw in some soft expenses or miscellaneous figures.  In New Jersey and Florida our rule of thumb for 1-4 unit homes is to take your Gross Income and expect that your expenses are going to be about 30% of it.  Just my 2 cents.

A lot in Cape Coral for $5,000, Rick?  If you can get a lot in CC for that you should jump on it.  I am seeing bulk purchases of irrelevent lots being sold for $9,000 minimum.  If you PM me the address, I can give you my thoughts.

net_d2u:  Yes, many properties in CC have chinese drywall.  But CC is very big and "many" is not "that many".  A simple inspection will give you an indication of any issues.  It's actually easy.  The first thing affected by defective drywall is copper.  Check the A/C copper coil and the back of an outlet in each room.  It stinks and it is clearly corroded.  Investors are still buying them though and fixing them…however, nobody really knows what a true "fix" is.  That's why we don't even mess with them.

To remove/replace defective drywall, you are looking at about $15 / square foot which includes replacing a lot of the electrical which is usually recommended.  Who has future liability?  Nobody knows yet, but I don't want to be involved in it one way or the other.  There are PLENTY of good homes to buy without worrying about a drop in the bucket of homes having issues. 

I lived in a Gulf Access home in Cape Coral until 2006.  I am one that likes boating and fishing like many others whose intentions is to live on the water.  To answer your question, yes you can buy Gulf Access lots in Cape for as low as $30,000.  However to increase your probability for appreciation, you want to be in South Cape Coral.  And even in South Cape, you want to be as close to the open water as possible.  When builders start building for homeowners/ tourists again, the first lots that will go will be the ones with closest Gulf proximity.  We have manatees down here that are all over the canals (manatees are gigantic animals that are also known as sea cows)…so you have to go in idle speed in the canals.  If you are more than say a couple miles up the intercoastal, you could have a 2 hour boat ride to the Gulf.  Most prefer to be in the Gulf in about 45 minutes or less.

For you to achieve the better locations, you will need to increase your price to about $75k and you will find something that will improve in value more than the $55k lots.  Also, for that price, you will likely have your assessments of water and sewer hooked up and already paid for.  This is a big deal to Cape Coralites.

On a side not to let you know how the market went in Cape…..In 2004 I paid $255k for a gulf access home…Very old, small home but location was the best.. I sold in less than a year for $315k….Downtown Cape Coral was expected to pass a huge downtown redevelopment plan…Speculation went thru the roof.  In 2005, my house was turned over twice and the highest recent sale was $799,000.  Market tanked and the downtown plans were scrapped…I was kicking myself in the back of my pants, but at least I made something….That poor buyer got stuck when the market tanked because Gulf Access homes plummeted faster than they went up…Today you can buy a very similar house on the same block for $225,000.  Ouch…Anyway, Gulf Access is very appealing..Especially to international second homers. 

Cape Coral has 400 miles of canals…more than Venice, Italy…..Take your pick…but be VERY selective.  Hope this helps

Hi James,
A $40k budget is not something that will really work in SW Florida.  I don't see really anything in that pricerange unless you want to purchase HUD homes which are about $35,000.  There is a poster on here named Judith who is an investor in lower priced homes in Ft. Myers.  I met with her last week and we agreed that if you are in the right area, you can find a really nice rental property.  Judith is from AU and is a seasoned investor in this market.  It is easy to get "on the other side of the tracks" so its important to be on the right side. 

The homes are typically 1970's construction but built of concrete and steel so very good integrity.  My partner and I assisted a local investor with one of these.  Here is how the numbers worked just to give you an idea what to expect with a $40k +/- home in the area.

• $18,000 Acquisition
• $14,000 Rehab (Replaced A/C, Flooring, Paint, New Roof, New Bathrooms, some fixtures)
• $6,000 Overhead / Oversight / Fee
• Total Investment:  $38,000
• Renting for $600 per month or $7,200 annually
• Expenses (Taxes, Insurance, Mgmt = $2,270)
• NOI = $4,930
• First Year Projected Yield 13%

The numbers may not blow your mind, but they are pretty good.  An updated house close to downtown Ft. Myers business district will give you a good speculative asset as well as one that will generate an income.  We have this on the market for sale at the moment and have been getting a lot of foot traffic at $55,000 asking.  I'd prefer that he holds this for 5 years though which is probably what will end up happening.  If you want to see pictures, send me a message and I can send you so you can get a visual. 

But getting back to the condo preference, I don't know of any in the area that would work.  FYI, maintenance is really easy if you have the right management / cooperative tenant.  Getting involved in HOA's is something I don't recommend at the moment unless the community is stable.  If the community is stable, you won't see prices anywhere near the 40's.  Hope this helps a little.

Steve,
I live in Ft. Myers.  What types of property are you buying and what do your cash flow numbers look like?  I am wondering why you buy 60 properties in one town and exclude others.  Just curious

I try to make informative responses to this forum.  Look in my history and you will never see any fluff.  PropVest just tried to call me out that CWAGNER is me?  Pretty insulting to say the least as I have spent hours working with him online to give good information and providing him with more due diligence then anyone he has inquired with.  I want to warn posters that before you do something like PropVest did which is slander, most are intelligent enough to check the senders IP address or where it came from.  He's new here.  I'm not, so I guess he can get a pass on this?  Clearly CWAGNER is not from Florida or at least didn't have a FL IP address. 

Additionally, I disagree with half of the CWAGNER post.  Nice response Casey.  Thanks for your kindness after all I've provided to you.