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.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeAll I can say on Lehigh Acres is what I discovered by following a property from realtor.com to the google maps overview of it. In realtor it looked ok, it was a little beaten up and for 75k you had a good shell .. nice tiles, someone had stripped out the coppers but heck .. thats not too big a job. Following through to a street view in Google Earth (mapping the precise location) … and it was a nice little house … surrounded by miles and miles of swampland !!!!! With not another soul in sight for miles. There are unknowns .. and then there are BIG unknowns. This Lehigh Acres area (which is quoted with good returns by a certain aussie US buyers investment agency) area leaves me hesitant. Its either VERY new or .. very unloved.
Oh .. while we are on the topic of using Google Earth .. beware their dating system and accuracy for photographs. Most photos marked 2010 or 2011 are actually taken several years ago. I worked this out when scanning the SE corridor in Melbourne and the Eastlink (which was finished a yr ago at least) was still being dug up. That would place the photos online circa 2005-6. There are a lot of areas which have been developed since then, and post 2005 buildings that are new that dont show up.
xdrew: Agreed about Google Earth being outdated. I also agree with your Lehigh assessment. You can get lost in the ruralness if you don't know where you are going! That being said, those looking to invest in something not off the beaten path in Lehigh should focus on Sunshine area or other areas that are more established.. But yes, there are areas of Lehigh where houses seem miles apart. In fact if you are "out there" some property managers won't even take the job..Same goes for North Cape Coral though…Just a matter of where you are looking. Lehigh is bigger than what you may think.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeI couldn't agree with you more "CWAGNER2010". I am a local Real Estate agent that specifically works with investors and handle all aspects of Property Management. I don't understand why so many Realtors refuse to work in Lehigh Acres when all I see is incredible potential and cash flow. I agree with you entirely and commend you on your keen intuition in such a short trip. Thank you for having great foresight and you are absolutely right…what will make the difference is having the right team at your side!
cwagner2010 wrote:I just got back from my Florida trip. I am from Connecticut. Been doing online due diligenceand found this forum. Met with several real estate agents, most of which were pretty incompetent or uneducated in the market. I will address the Lehigh Acres market though. Lehigh you have to take for what its worth. Is there crime? Sure, but most of it is non-violent. There were more homes foreclosed on per square milein Lehigh than there were in Cape Coral and Fort Meyers so inevitably things like house components and screens among other things were stolen and probably created an eyesore. Lehigh is not paradise, nor is it the ghetto. It is your traditional lower to mid income demographic. But I was not deterred. What I did see was an opportunity for immediate cash flowand good cash flow. I read someone elses post about Cape Coral and Lehigh. Two TOTALLY different markets, but you get more for your money in Lehigh and your money effectively gains more value there in my opinion. Cape Coral is pretty nice, but prices are higher. If I am a speculator, I like Cape Coral. If I am a cash flow person with hopes of marginal appreciation, Lehigh is also good for that. Fort Myers prices are just high and more high end.
Watch out for Chinese Drywall. And watch out for lower prices. I looked at a home I saw on a public website for $44,000. It honestly didn’t look like it needed a whole lot of work. I was thinking $3,000. Ends up the rehab estimate was over $10,000. I saw 4 realtors. Three of them gave me their opinion on what it would take to fix the home. I called a handyman and a contractor to look and they said the same thing. Cheapest bid I got was $10,350. Oh, and the comment about well and septic? Join 50% of the club in the county. Its common utilities down here and the county doesn’t have the reserves to pay for expansion anytime soon.
After doing due diligence and getting the right property in my opinion, I am happy in Lehigh. I wasn’t really deterred from anything out of the ordinary. Has great potential with a lot going on in and around it. We’ll see though as I do not close for about a month. I guess it could be risky to some, but after visiting it’s a risk I’m willing to take.
In conclusion, work with someone that has experience. How do you find that? I don’t know, but you will determine much by simply talking to them. Your result will probably be a great investment if you have the right team.
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As 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 MeHi All,
FLORIDA obviously presents awesome investment opportunities; but all parts do not fit in this category. Like many others states, there are plenty of vacant properties in some areas of FL, and plenty of rental demand on the other side. Surprisingly, sometime it happens within a small area. Any good area can have bad property.
I have to agree here with previous poster – few areas of the country present more opportunities, and more pitfalls, than Florida. We are big on the areas that we expect to recover the fastest, Palm Beach, Broward County (parts of it) and some other areas in the South West, where the money was going back in the day.
I'm really not big on Orlando and the surrounding area, there are some communities there where you can do deals and we've done a few, but in general it has way too many second homes sitting empty for us to really look at it, and there is a huge shadow inventory there as well. For decent cash flow you can do well in Orlando, but my personal opinion is you will get better growth in other areas.
If you look at the peak prices, as well as prices over a longer period of time, you will see what I am saying about South Florida vs. Central Florida. Important in FL is also to look at the school districts, as public schools in FL are some of the worst in the country.
I don't know enough to speak about Lehigh – Cape Coral is great for speculation in my opinion with the drop in prices, although you'd need to have a long term outlook and be willing to see some short term price swings.
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