Dec 13

I have recently been mulling over real-estate investment oppurtunities in my area.  I have been spending a good amount of my free time researching real-estate investing and attempting to fully understand the process (and have a wonderful mentor coaching me along the way).

The area I live in is a prime example of a good market for real-estate investment.  It has wonderful property appreciation rates, herds of renters, and a whole bunch of “flip-ready” homes.  As I mull that over and continue to learn, I stumbled across a unique investment oppurtunity pitched below:

“As most investors are aware, the SW Florida real estate market has
experienced tremendous growth and appreciation over the last few years.
Although this growth has been extremely rewarding for most investors,
it has also created a significant problem of affordable housing for the
working class community.  Today, affordable housing is considered by many in government and
industry as one of the most significant problems affecting the Florida
market. Shop owners, restaurants, hospitals and schools are finding it
extremely difficult to find employees because of the high cost of
housing.

Although the affordable housing problem is significant, it also
creates an excellent investment opportunity to enter the market during
the front end of an affordable housing growth cycle.  We have found a group who has created a business model that helps
address the affordable housing issue while also providing a significant
investment opportunity to qualified investors.

The proposed investment opportunity is for duplex housing in the cities of Lehigh Acres and Cape Coral in Southwest Florida.  Duplexes are two units, each approximately 1050 to 1200 square
feet, with each unit having 2 bedrooms, den, 2 bathrooms and a 1-car
garage on the smaller unit and 2 car garage on EACH SIDE on the larger
unit.  Currently the all-in cost of the duplex project is approximately
$285,000. The cost includes the land, building, and site improvements,
closing cost and interest during construction. Make NO PAYMENTS DURING
CONSTRUCTION.

The cost of the project can be financed with a construction loan at 85%-90% of appraised value.  The current market price of the duplex today is between $325,000
-thus providing the investor with built in profit before construction
begins. Because the market value is more than 10% higher than the
necessary loan, this is done with very little money out of pocket which
can be as low as just $1500 or as high as $5500.”

 
If this is a totally accurate pitch, it seems like a reasonably good one.  I think I'll be spending the next few weeks looking into the Florida investing and seeing what possibilities exist.  With that being said, I'm not sure I will immediately jump at an oppurtunity like this.  I don't think I'm far enough along in the investing game to fully understand all the possible outcomes, but maybe in the near future.  Regardless, I'd like to hear your opinions on the matter.

If you'd like to check out this offer in more detail, Check It Out Here.

* Important Note: Remember to do a LOT of research before jumping into ANY investment.  Be careful.. you work hard for your money, so work hard to make sure it's a worthy investment.  In general, you should spend an equal amount of time researching an investment as you do earning the money to invest in it!

3 Responses to “Investing in Florida Real Estate: A Good Idea?”

  1. Anonymous Says:

    Hey Dustin – Ryan H. here. Sara and I are going to get into real estate as well. We have a couple of people we talk to and watch do their investing. We have decided that unless we have AT LEAST 50% down, we won't do it. How, might you ask, will we ever be able to afford this? The other thing we have decided to do is only buy low budget homes. Our friends have both shown us that you can make a better % on lower priced flips than big ones. In all of our research, everyone leaves out one important factor – RISK. You will never cash flow a rental unit on an 80% loan (a furnace will break, and roof will leak). You never know when something is going to sell. And in my opinion, you never do long distance land-lording or property investment. Who shuts the water off if the house is empty and a pipe breaks?
    One mentor just bought a house for $25k in a neighborhood with $70-$80k homes, replace the roof, floors, siding and painted it. Sold it for $80k. Low risk, easy to come up with down payment, and tons of equity. If he doesn't sell, it's a $700 a month rental and he, at most would only owe $40k against it.
    These are just my conclusions.
    Prov 13:11 Wealth won in haste will dwindle away, but he who gathers little by little will increase [his riches].
    Slow and steady. Good luck!
    -Ryan

  2. Anonymous Says:

    Ryan,
    Yeah, I'm convinced the low end of the market is the place to be here too, at least to start out. We have a lot of opportunities here because we are in a College town. If you were to fix up a cheap “flipper” and can't get much for it, you can get an almost guaranteed rental with all the College students that swarm the area during school. Even if you can't turn a profit with the rent, you can always deduct losses and depreciation.. which can be really helpful sometimes (up to 25K I think).
    I agree with the 50% thing up to a point, it may be good to start out with (to “learn the ropes”). In the end though, it can be good to use other people's money (ie: the bank) to do your investing… especially for more expensive commercial properties.
    Have no fears: I am approaching this entire process with much caution and won't jump into anything.
    Thankfully, I have a relative here that is a very active developer and real-estate investor and knows the area very well. He started out small and has grown his business such that they now regularly close some of the largest real-estate deals (both commercial and residential) in the area. Point being: he knows the ropes and is totally willing to teach me the process.
    In the end though, I won't be greedy and with some luck… I can make a better life for us (or perhaps just make a better retirement, heh).
    - Dustin

  3. Wanda Phillips Says:

    Finding the best buys in a bargain market is a great idea and targeting affordable housing is typically a safe bet. I am a Realtor and an investor located in the Orlando area, and overall, the Central Florida area sales are slow – it is constantly in the news that homes are sitting six months or more on the market. But – In the exact same market, I have too many buyers looking for affordable housing and not enough homes available. I get 4 or 5 calls a day from tenants looking for an affordable home to rent while there are literally 100′s of duplexes, triplexes and quads for sale at rock bottom prices. All show positive cashflow and many offer seller financing. There is even a tri-plex in great condition for $199k a block from the ocean. It doesn’t make sense that no one is taking advantage of all the bargains – Can anyone offer insight into why investors aren’t buying affordable housing? Is there something I am missing? Or should I be buying?

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