Someone made a comment to me yesterday that got me to thinking about preparation. He said to me, “Man you were lucky to find that deal,” referring to a property that I was looking at that had all the right combination of cap rates, location, and “the right things wrong with it”. To me that’s like telling Tiger Woods that he was lucky to be five under par, or telling a hunter that went to the woods and bagged a trophy buck after he spent three months pre-season scouting the area, five hours a week at the practice range and read every book about hunting that there is, that he was LUCKY.
I wrote one of my columns in December of 2004 on “Courting Chance” inspired by my best friend, Dennis, about the same topic. By the way, go and read it then come back. (That mall that we bought back then we just sold for over one million dollars in profit.)
People are not lucky. Luck is where preparation meets opportunity. If I go out on my kayak and run across some red snapper laying in the mangroves, you might consider me lucky to have brought my fishing gear with me. Or lucky that I went to THAT mangrove and just HAPPENED to have my rod rigged up for snapper, not grouper.
I was lucky to have been driving by my rental property the other day, otherwise I would not have run into that prospective tenant that was walking around the parking lot, scoping out space. I was lucky to have gone to the Affordable Housing Conference at The Barbara B. Mann on Thursday, otherwise I would not have run into six or seven people that I were interested in hearing about Cyperlin Center.
My kind o’ luck I have to make happen. Gail stops asking me why we take a different route to go to the same places. Or why I want to drive by my properties. She knows that I am trying my “Luck”. I may see that new property, that new customer, or come up with that new idea.
Ever hear someone say, “I have a gut feeling about this?” Of course you have. There is a reason people get gut feelings. Experience and preparation. Experience and prepared business people may think they are getting a gut feel for something. But what they are really experiencing is the coming together of the elements of preparation.
Real Estate is a wonderful field. I can never stop learning and never stop preparing. There are so many opportunities in today’s market that is literally can boggle the mind. It is more important than ever to be prepared to court chance; to be prepared to get lucky. My old friend used to say you have to kiss a lot of frogs. He meant you have to look at many, many deals in order to find the good ones.
It is very easy to buy wrong in today’s market. But if you are prepared (or hire a good agent that is prepared) there are opportunities to be lucky.
It’s about the money
Or, more importantly, how much it costs to borrow that money. The affordable housing issue can easily be termed an affordable money issue. Would they buy that property if the interest rate was under 5%? If you have a property that you want to sell, we would like to list it and offer 4.99% money to the buyer. Think that will get it sold? Well it will if money is at 7% (Which it is). I went to a focus group this week on the market in Punta Gorda. The group decided that the number one factor in attracting customers today is financing. So I worked on that concept and came up with a plan. Call me or email me if you are interested. (Gregg@ma-realty.com)
Well, it’s now 8:15 on Saturday morning. Time for me to go and get lucky in my kayak.
Gregg
www.investinwaterfront.com
www.cyperlincenter.com
Cell:239-851-5464
© Copyright 2006 Gregg A. Fous All Right Reserved
The website contains copyrighted information and graphics. No portion of this intellectual property may be duplicated, reproduced, or distributed without express written permission of Gregg A. Fous. Any unauthorized use, reproduction, or distribution is expressly forbidden and may result in civil liability.
Tuesday, June 27, 2006
Their Price, Your Terms
I sold Brixton Development last August. Coincidentally, this is when the two trend lines (Sales and Inventory) started taking a sharply diverging path. The sales line went from left to right on a small imperceptible incline while the inventory line took off like a fighter jet at the end of carrier ship runway. Of course I didn’t know it then, and I sold Brixton to concentrate more on commercial opportunities, but the trends are crystal clear when we look back on them. It is always very hard to see future trends when you are standing still in a moment of time.
For example, are you aware that most economists are telling us the rate of real estate appreciation is slowing? Indeed, prices, when we look back at this year, will show that there was still appreciation in the market. Of course there are pockets of depreciation (Why is it always YOUR investment!) but the general trend is still up.
I made two offers this past week. Both still in negotiation. The first was a three bedroom plus den, two and one half bedroom, townhouse with a two car garage; brand new and directly from the developer. I did the research and determined that this is well below current market and resale prices (By about $42,000). By the way the developer is willing to replace the white appliances with stainless steel, put in granite counter tops, and give me paint colors. Keep in mind I have no plans to flip. I will hold for three years. Oh, the biggest selling point? A developer buy down on the loan making my payments below what I can rent it for. I will have some negative cash flow the second two years property taxes kick in, but this will be more than made up for by the tax benefits and the appreciation. The deals are out there. In fact this developer has more. Email Holly@ma-realty.com for details. (Hey, if you’re an agent...you should be able to find these on your own - principals only please!)
The second offer I made was for more land for office condos. This project is out near Riverhall and Veranda. The D.O. is in place and if we are able to finalize the contract we will sell Medical and Office condos out there for about $250/sf. Similar to Brantley Commons that we sold out two months ago in one month’s time. Investors will pick these up as income properties. Email me if you have any interest (Gregg@ma-realty.com)
In today’s market, many sellers are concerned more about price than the extras that come along with it. Developers are mindful of previous sales that they made at a higher price and many are willing to cut deals on just about anything but price.
Their price, my terms.
Let me review for you the points that may be negotiated in preconstruction or inventory condos. Keep in mind, in a soft market like we are in now, sellers and developers are more likely to "deal". One of my mentors, Henry Trounstine, used to tell me that he always liked to give customers the "sleeves off of his vest". By this, he meant give the customer something that leaves you with what you had in the first place. I always keep this in mind when I am negotiating. I like to get things given to me that will not cost the seller anything.
Next time you negotiate, keep these points in mind:
1. Purchase Price
Developers may not want to lower the price, because they do not want to sell to you lower than the guy who bought "first day". But you may be able to negotiate a credit at closing. This way the price recorded is the higher one, but you still get a deal.
2. Earnest Money
Just because the developer says 20% or 30% deposit is required, does not mean he will not take less. Also consider putting your earnest money in your own bank (especially if it is a very large amount). Why? Banks love escrow accounts and why not do your bank a favor rather than the developer's bank?
3. Extras
In new preconstruction condos, this is a bountiful area to negotiate in. Some developers will do many things OTHER THAN LOWER THE PRICE. Your agent should know how much room is here. Upgrades, parking spaces, garages and docks are the big items. Lately I have seen granite, paint, upgraded cabinets, and one year mortgage payments!
4. Rescission Period
In the state of Florida, you have a 15 day right of rescission, after you execute a contract. This is by law. This does not mean you can't negotiate for more time.
5. Condition of Property
You may have the ability to negotiate warranties, cleaning and move in condition.
6. Additional Payments
Consider making additional payments that solidify your offer, especially if the offer is weak in other areas. For example, the developer may want 20% earnest money. You may offer 10% with contract and more later.
7. Remedies for Not Completing the Sale
The contract calls for the buyer to lose his entire deposit if he backs out. If you put in more deposits than required, make sure there is agreement on what happens to that extra amount.
8. Title
Whose name will the title be held in? An LLC? A trust? Can you change your mind prior to closing? Make sure this is spelled out in the contract.
9. Assignability
Most developers will not let you assign a contract (the bank will not let them). But ask.
10. Condo Fees
When do you start paying? This is important in a lease back, for example. Same goes for taxes and insurance.
11. Access to Property
Do you have the right to paint, put in lights, etc., before you close? This is an area that is often out of the hands of the developer, but check into it.
12. Changes to Specs
Make sure you know when the deadlines are for color, carpet, tile, etc. You may be able to get these extended.
13. Closing Date
Developers are not going to want to move this - but here again, it doesn't hurt to ask.
14. Financing.
Ask for a buy down. ANY SELLER (Including private ones) can pay points to buy down an interest rate. Ask for them.
Speaking of financing, for qualified buyers (Usually means a credit score of 740): Market America is offering 5.25% 5/1 ARM on Gasparilla Drive, and Condos at Paramount. We also have two points available for buy-downs for all new contracts at The Citadel.
We would love to become your real estate advisor. Call us at 239-425-0771 or email us with your needs. It’s a jungle out there and we can save you money. Visit www.ma-realty.com.
Thanks,
Gregg
Gregg@ma-realty.com
Cell:239-851-5464
© Copyright 2006 Gregg A. Fous All Right Reserved
The website contains copyrighted information and graphics. No portion of this intellectual property may be duplicated, reproduced, or distributed without express written permission of Gregg A. Fous. Any unauthorized use, reproduction, or distribution is expressly forbidden and may result in civil liability.
For example, are you aware that most economists are telling us the rate of real estate appreciation is slowing? Indeed, prices, when we look back at this year, will show that there was still appreciation in the market. Of course there are pockets of depreciation (Why is it always YOUR investment!) but the general trend is still up.
I made two offers this past week. Both still in negotiation. The first was a three bedroom plus den, two and one half bedroom, townhouse with a two car garage; brand new and directly from the developer. I did the research and determined that this is well below current market and resale prices (By about $42,000). By the way the developer is willing to replace the white appliances with stainless steel, put in granite counter tops, and give me paint colors. Keep in mind I have no plans to flip. I will hold for three years. Oh, the biggest selling point? A developer buy down on the loan making my payments below what I can rent it for. I will have some negative cash flow the second two years property taxes kick in, but this will be more than made up for by the tax benefits and the appreciation. The deals are out there. In fact this developer has more. Email Holly@ma-realty.com for details. (Hey, if you’re an agent...you should be able to find these on your own - principals only please!)
The second offer I made was for more land for office condos. This project is out near Riverhall and Veranda. The D.O. is in place and if we are able to finalize the contract we will sell Medical and Office condos out there for about $250/sf. Similar to Brantley Commons that we sold out two months ago in one month’s time. Investors will pick these up as income properties. Email me if you have any interest (Gregg@ma-realty.com)
In today’s market, many sellers are concerned more about price than the extras that come along with it. Developers are mindful of previous sales that they made at a higher price and many are willing to cut deals on just about anything but price.
Their price, my terms.
Let me review for you the points that may be negotiated in preconstruction or inventory condos. Keep in mind, in a soft market like we are in now, sellers and developers are more likely to "deal". One of my mentors, Henry Trounstine, used to tell me that he always liked to give customers the "sleeves off of his vest". By this, he meant give the customer something that leaves you with what you had in the first place. I always keep this in mind when I am negotiating. I like to get things given to me that will not cost the seller anything.
Next time you negotiate, keep these points in mind:
1. Purchase Price
Developers may not want to lower the price, because they do not want to sell to you lower than the guy who bought "first day". But you may be able to negotiate a credit at closing. This way the price recorded is the higher one, but you still get a deal.
2. Earnest Money
Just because the developer says 20% or 30% deposit is required, does not mean he will not take less. Also consider putting your earnest money in your own bank (especially if it is a very large amount). Why? Banks love escrow accounts and why not do your bank a favor rather than the developer's bank?
3. Extras
In new preconstruction condos, this is a bountiful area to negotiate in. Some developers will do many things OTHER THAN LOWER THE PRICE. Your agent should know how much room is here. Upgrades, parking spaces, garages and docks are the big items. Lately I have seen granite, paint, upgraded cabinets, and one year mortgage payments!
4. Rescission Period
In the state of Florida, you have a 15 day right of rescission, after you execute a contract. This is by law. This does not mean you can't negotiate for more time.
5. Condition of Property
You may have the ability to negotiate warranties, cleaning and move in condition.
6. Additional Payments
Consider making additional payments that solidify your offer, especially if the offer is weak in other areas. For example, the developer may want 20% earnest money. You may offer 10% with contract and more later.
7. Remedies for Not Completing the Sale
The contract calls for the buyer to lose his entire deposit if he backs out. If you put in more deposits than required, make sure there is agreement on what happens to that extra amount.
8. Title
Whose name will the title be held in? An LLC? A trust? Can you change your mind prior to closing? Make sure this is spelled out in the contract.
9. Assignability
Most developers will not let you assign a contract (the bank will not let them). But ask.
10. Condo Fees
When do you start paying? This is important in a lease back, for example. Same goes for taxes and insurance.
11. Access to Property
Do you have the right to paint, put in lights, etc., before you close? This is an area that is often out of the hands of the developer, but check into it.
12. Changes to Specs
Make sure you know when the deadlines are for color, carpet, tile, etc. You may be able to get these extended.
13. Closing Date
Developers are not going to want to move this - but here again, it doesn't hurt to ask.
14. Financing.
Ask for a buy down. ANY SELLER (Including private ones) can pay points to buy down an interest rate. Ask for them.
Speaking of financing, for qualified buyers (Usually means a credit score of 740): Market America is offering 5.25% 5/1 ARM on Gasparilla Drive, and Condos at Paramount. We also have two points available for buy-downs for all new contracts at The Citadel.
We would love to become your real estate advisor. Call us at 239-425-0771 or email us with your needs. It’s a jungle out there and we can save you money. Visit www.ma-realty.com.
Thanks,
Gregg
Gregg@ma-realty.com
Cell:239-851-5464
© Copyright 2006 Gregg A. Fous All Right Reserved
The website contains copyrighted information and graphics. No portion of this intellectual property may be duplicated, reproduced, or distributed without express written permission of Gregg A. Fous. Any unauthorized use, reproduction, or distribution is expressly forbidden and may result in civil liability.
Effect of High Costs on Real Estate
The Effect of High Costs on Real Estate Prices
Cost versus Selling Price
Is the high cost of land and materials affecting the price we have to pay for new construction? Of course. Does the “market” care what the original cost of something is when the market price is settled? No. Supply and demand set market price, not the cost of goods. This is a simplification, but I would like to talk about the rising cost of raw materials and land and its effect on the real estate market today.
The continuing increases in land, labor, and raw material costs will provide support for the prices of existing properties, simply because the comparables in the market place will remain high. If a new condo or home will cost thirty percent more to build, then the existing inventory will have price support in the market place.
The Southwest Florida real estate market is unique (from the rest of the country) because demand from baby boomers will continue to provide absorption. There will be a 12 to 18 month absorption lag, but I do not believe there will be substantial deflation in home prices. There are pockets of “bargains” but these bargains are relative to current prices not to historical ones.
Does it really matter what the cost of something is when we make an offer? Perhaps. As buyers of Real Estate, we always want to know what someone paid for the property we are trying to buy from them. For example, say you are looking at a five year old home. The ask price is $500,000. You learn from county records that the seller paid $250,000 five years ago. You also learn that a very similar house sold for $600,000 two weeks ago. I imagine you would ignore what the seller paid for his home. It looks like a very good deal based on the market price. What he paid is immaterial.
But let’s say that instead of seeing a similar house that sold for $600,000 two weeks ago, you see one that sold for $400,000 two weeks ago. Again, you are more concerned with market forces than what he paid for it, but with the knowledge of the sellers cost you can be confident at least that his equity is large and a lower offer may be palatable to him.
The cost factor provides more of a yes/no; go/no go decision than an aid in establishing price.
For a developer or builder, if the cost to build a new mid-rise on the river is $500,000 per condo and the market is telling him that he can only sell them for a small margin above this price, he will decide not to proceed with the project. The same thing applies to single family homes. If a builder has to pay $80,000 for a lot and it will cost him $200,000 to build the home that he can only sell for $300,000, you can be assured that he will not proceed. On the other hand, if the builder had the lots in inventory and only paid $5000 per lot, would he pass the savings on to his buyer, or would he market the home at the comparable going price? He would market at the comparable selling price, for sure. BUT….this builder, by the way, has a great deal more flexibility in a down market. It is with these builders today that there are some opportunities.
What should we as buyers do? My position is that prices will not decrease, at least not in general and not long term. I suggest you take advantage of projects that have the flexibility of the builder that paid only $5000 for the lot, or the developer that locked in his raw material prices long ago. Existing homes will be bargains, existing condo projects like Paramount, Grande Isle, or some of the properties featured on our website are worth looking in to.
New projects that compete with these projects have costs that are in some cases TWICE what it cost to build these. This means that these existing projects, once absorbed – and it could take up to 18 months – will equalize in price. They are a very good value today. (Check out Citadel)
I had a good response from those of you that are interested in finding out more about syndicates that we may put together. I am not looking for investors at this point but would like to start building a data base of qualified investors that may want in the future to join forces with us in some major acquisitions. We have not sent questionnaires out but will do so soon, so be patient. I would like to talk to those interested personally and get to know you. If you are interested, email me at Gregg@ma-realty.com and I will contact you soon.
Cyperlin Center construction docs are now in the hands of the subs. BBL will be building this project and hopes to break ground in September. I still have two ¼ floors available.
Thanks for your emails and comments. As always, I can be reached at Gregg@ma-realty.com
© Copyright 2006 Gregg A. Fous All Right Reserved
The website contains copyrighted information and graphics. No portion of this intellectual property may be duplicated, reproduced, or distributed without express written permission of Gregg A. Fous. Any unauthorized use, reproduction, or distribution is expressly forbidden and may result in civil liability.
Cost versus Selling Price
Is the high cost of land and materials affecting the price we have to pay for new construction? Of course. Does the “market” care what the original cost of something is when the market price is settled? No. Supply and demand set market price, not the cost of goods. This is a simplification, but I would like to talk about the rising cost of raw materials and land and its effect on the real estate market today.
The continuing increases in land, labor, and raw material costs will provide support for the prices of existing properties, simply because the comparables in the market place will remain high. If a new condo or home will cost thirty percent more to build, then the existing inventory will have price support in the market place.
The Southwest Florida real estate market is unique (from the rest of the country) because demand from baby boomers will continue to provide absorption. There will be a 12 to 18 month absorption lag, but I do not believe there will be substantial deflation in home prices. There are pockets of “bargains” but these bargains are relative to current prices not to historical ones.
Does it really matter what the cost of something is when we make an offer? Perhaps. As buyers of Real Estate, we always want to know what someone paid for the property we are trying to buy from them. For example, say you are looking at a five year old home. The ask price is $500,000. You learn from county records that the seller paid $250,000 five years ago. You also learn that a very similar house sold for $600,000 two weeks ago. I imagine you would ignore what the seller paid for his home. It looks like a very good deal based on the market price. What he paid is immaterial.
But let’s say that instead of seeing a similar house that sold for $600,000 two weeks ago, you see one that sold for $400,000 two weeks ago. Again, you are more concerned with market forces than what he paid for it, but with the knowledge of the sellers cost you can be confident at least that his equity is large and a lower offer may be palatable to him.
The cost factor provides more of a yes/no; go/no go decision than an aid in establishing price.
For a developer or builder, if the cost to build a new mid-rise on the river is $500,000 per condo and the market is telling him that he can only sell them for a small margin above this price, he will decide not to proceed with the project. The same thing applies to single family homes. If a builder has to pay $80,000 for a lot and it will cost him $200,000 to build the home that he can only sell for $300,000, you can be assured that he will not proceed. On the other hand, if the builder had the lots in inventory and only paid $5000 per lot, would he pass the savings on to his buyer, or would he market the home at the comparable going price? He would market at the comparable selling price, for sure. BUT….this builder, by the way, has a great deal more flexibility in a down market. It is with these builders today that there are some opportunities.
What should we as buyers do? My position is that prices will not decrease, at least not in general and not long term. I suggest you take advantage of projects that have the flexibility of the builder that paid only $5000 for the lot, or the developer that locked in his raw material prices long ago. Existing homes will be bargains, existing condo projects like Paramount, Grande Isle, or some of the properties featured on our website are worth looking in to.
New projects that compete with these projects have costs that are in some cases TWICE what it cost to build these. This means that these existing projects, once absorbed – and it could take up to 18 months – will equalize in price. They are a very good value today. (Check out Citadel)
I had a good response from those of you that are interested in finding out more about syndicates that we may put together. I am not looking for investors at this point but would like to start building a data base of qualified investors that may want in the future to join forces with us in some major acquisitions. We have not sent questionnaires out but will do so soon, so be patient. I would like to talk to those interested personally and get to know you. If you are interested, email me at Gregg@ma-realty.com and I will contact you soon.
Cyperlin Center construction docs are now in the hands of the subs. BBL will be building this project and hopes to break ground in September. I still have two ¼ floors available.
Thanks for your emails and comments. As always, I can be reached at Gregg@ma-realty.com
© Copyright 2006 Gregg A. Fous All Right Reserved
The website contains copyrighted information and graphics. No portion of this intellectual property may be duplicated, reproduced, or distributed without express written permission of Gregg A. Fous. Any unauthorized use, reproduction, or distribution is expressly forbidden and may result in civil liability.
Sunday, June 04, 2006
Making Money in a Down Market
Making Money in a Down Market – or How to make Lemonade
This past Friday I attended the bi-weekly Commercial Investments Professionals meeting (CIP). This is a rather informal breakfast networking meeting where 45 to 60 of some of the best commercial brokers and investors in town get together to share property and market information, to make deals, and to meet their fellow professionals. The meeting starts at seven o'clock in the morning with breakfast and an hour of socializing, then promptly at eight someone leads an invocation, the pledge of allegiance, and then we often will have a 15 minute speaker about a topic that may help us all, (Perhaps the county appraiser or commissioner etc.) and then one of the agents leads us though a presentation of flyers that have been brought in by the various brokers on properties that the brokers are selling. We end the meeting with ten minutes or so of "wants" or brand new "haves" for which there are no flyers. By nine in the morning we turn our cell phones back on and are on the way to our cars and off to work some more.
I joined the group during its first year and soon after that joined the board. I became the secretary. My main job was to send email notifications of the meetings every two weeks. It was then that I started putting my picture and links on every signature on every email I sent out. This was not common back then. In fact no one else that I knew was doing it at the time. I am sure it was not my idea, but I am just as sure that many in the group began doing after I did. My goal was to be recognized by all in my peer group. It worked.
Most of the attendees at CIP, by the way, are quietly the most successful real estate agents and investors in Lee County. The informal information exchange that happens over coffee is one of the many things that gives these guys and gals the edge. I know it is one of the main reasons I have earned high seven figures since I joined - just on deals that I learned about at this meeting, and all this for four hours a month, before normal working hours.
Yesterday I got up during the "wants" session. I told my fellow professionals what I am now buying. I told them I want them to bring me their listings for occupied buildings that they are having trouble selling because they are trying to sell them as income property and the leases may not be long term enough for the investors to get financing. You see, a normal income property, say a warehouse, may sell at a cap rate of 8% . But if the existing lease has only two years to run, most banks will not loan the investor enough money for him to buy it. Hence the price gets lowered or the seller has to wait for an end user buyer. And end users normally will not buy two years in advance of their needs.
You residential folks may be thinking, "Why do I care about this?" But stick with me while I try to being this point home. My goal is to buy properties that do not cash flow well unless I put a great deal of cash down, but I only want to buy properties that are undervalued, not based on the income approach but on the replacement cost approach. Why?, because I believe very strongly in the fundamentals of the market.
I know, for example, that I can buy a new preconstruction commercial one story building for $240 per square foot. It will be vacant until I find a tenant. I know that it will cash flow (make sense on an income approach to value). I also know this will happen only after perhaps the first year after I pay leasing commissions, get through the vacancy period, and pay off my loan costs. I also know that the bank will finance my purchase because of either my financial strength, the fact that the building is new, and/or the fact that I have the construction period to locate a tenant. It is not easy to find these deals, but Market America Realty and Investments has them and in fact have sold over 18 of them in the past eight weeks to our clients. I love them as investments. There are just not enough available.
Alternatively, I can find existing older buildings, in good locations, in fair to good shape, with short term leases, but can pay considerable less than $240 a square foot THAT A NEW BUILING COSTS TO BUILD. Or perhaps I can purchase an old multi story office building at $280 a square foot when a new vacant one can cost me $400 per square foot (like MailScanner has detected a possible fraud attempt from "www.ma-realty.com" claiming to be www.cyperlincenter.com). My point is that the older purchase, for the commercial investor, may be a wise alternative FOR A CERTAIN CLASS OF BUYERS. This is because there will be, over the next five years, a meeting of the two prices per square foot, the difference between the two will be less significant. Chosen properly and wisely, both will make money and because we are continuing to build, I do not believe prices will come down, but believe the older properties prices will rise to meet the cost of replacement buildings. The market will cause this to happen.
The older building may require a cash infusion for two years (My polite way of saying "negative cash flow") due to the below market rents and some of the deferred maintenance items that need to be addressed by the new owner. But as a long term investment, the older building can pay off handsomely. Just as a preconstruction investment can, but I can better define my risk with an existing building.
The fundamentals of our market, by the way, that I believe in:
1. There will be a continued influx of buyers. Florida is and always will be a retirement destination and we still have 1000 new residents a week.
2. Time is not standing still just because the market has slowed. Baby boomers continue to age and will continue to bring their money and their families to the area.
3. Lee County has surpassed the 500,000 population mark and this is bringing new national companies to the area.
4. Interest rates on mortgages are still very attractive
5. The unemployment rates are low the economy is strong.
6. We have the weather, the lifestyle and the beaches
7. We have momentum.
8. Location RULES and is ALWAYS worth paying for.
Regarding the crowded roads, I am reminded of a Yogo-ism, "Nobody goes there anymore, there are too many people". Yes there are some folks leaving for less crowded areas, but the net growth is phenomenal and will continue to be.
Now let me relate all this to residential purchases. I have alluded to this in previous e-letters. Many second home buyers are attracted to the new and preconstruction homes and condos. Much in the same way entrepreneurs are attracted to brand new franchise opportunities rather than existing businesses. They are attracted to the promise, the sizzle, the smell of fresh paint, and the crispness and predictions of the marketer. Unfortunately more often than not they are paying more for the promise than they would have to pay for today's reality. In this market of high inventory of homes and increasing high cost of construction, you may be better off buying existing inventory, where you can see the construction, the amenities, and how well the neighborhood has done. You can see the construction that was done at a lower cost to the builder and developer.
I say now IS the time to use price per square foot as a thumbnail comparison. If you can buy a fully decorated home on a canal at $325 per square foot (Look at my home in the historic district. This home was redone only two years ago, with a new boat lift, master suite and kitchen and above all, with a location that has been the most desirable in Fort Myers for many years is a bargain). Or look at existing condos that have just closed like The Shores at Paramount or Grand Isle. Or older condos with superb locations like The Citadel. There is a mentality that preconstruction purchasing, since you can leverage the purchase with ten or twenty percent for 18 months is a better deal than buying new now. I say this MAY be true, but more often than not in today’s market this is not true. Increased cost of construction materials, the cost of money and labor, and the higher cost of land are making the new construction more costly than the existing inventory. Further more, the higher cost of the new construction will have an upward pull on the cost of existing homes. Heck, it already has. Just like in the commercial market.
The market climate can be very profitable for the savvy buyer. I say buy now. It's a buyers market and you need to take advantage of it. Get with a knowledgeable Realtor and plan your purchase based on age old qualifications. Remember, there are only three:
1. location
2. location
3. location.
Remember, you make money when you buy, not when you sell .
And have some lemonade.
And one more comment - if you think we are in a down market, which way do you think we can go from down? What are you waiting for? Lower prices? Don't count on 'em.
Gregg
Gregg@ma-realty.com
www.investinwaterfront.com
www.cyperlincenter.com
PS. A few words about Cyperlin Center. Number one - LOCATION. Number two -UNIQUENESS. I know there is a severe shortage of class A space in Fort Myers. I know there is a dearth of luxury homes in Fort Myers. Cyperlin Center is where these folks need to work. They live in luxury, why not work in it? Check it out.
G.
PPS - We ARE the knowledgeable Realtors you should call. 239-277-9309
© Copyright 2006 Gregg A. Fous All Right Reserved
The website contains copyrighted information and graphics. No portion of this intellectual property may be duplicated, reproduced, or distributed without express written permission of Gregg A. Fous. Any unauthorized use, reproduction, or distribution is expressly forbidden and may result in civil liability.
This past Friday I attended the bi-weekly Commercial Investments Professionals meeting (CIP). This is a rather informal breakfast networking meeting where 45 to 60 of some of the best commercial brokers and investors in town get together to share property and market information, to make deals, and to meet their fellow professionals. The meeting starts at seven o'clock in the morning with breakfast and an hour of socializing, then promptly at eight someone leads an invocation, the pledge of allegiance, and then we often will have a 15 minute speaker about a topic that may help us all, (Perhaps the county appraiser or commissioner etc.) and then one of the agents leads us though a presentation of flyers that have been brought in by the various brokers on properties that the brokers are selling. We end the meeting with ten minutes or so of "wants" or brand new "haves" for which there are no flyers. By nine in the morning we turn our cell phones back on and are on the way to our cars and off to work some more.
I joined the group during its first year and soon after that joined the board. I became the secretary. My main job was to send email notifications of the meetings every two weeks. It was then that I started putting my picture and links on every signature on every email I sent out. This was not common back then. In fact no one else that I knew was doing it at the time. I am sure it was not my idea, but I am just as sure that many in the group began doing after I did. My goal was to be recognized by all in my peer group. It worked.
Most of the attendees at CIP, by the way, are quietly the most successful real estate agents and investors in Lee County. The informal information exchange that happens over coffee is one of the many things that gives these guys and gals the edge. I know it is one of the main reasons I have earned high seven figures since I joined - just on deals that I learned about at this meeting, and all this for four hours a month, before normal working hours.
Yesterday I got up during the "wants" session. I told my fellow professionals what I am now buying. I told them I want them to bring me their listings for occupied buildings that they are having trouble selling because they are trying to sell them as income property and the leases may not be long term enough for the investors to get financing. You see, a normal income property, say a warehouse, may sell at a cap rate of 8% . But if the existing lease has only two years to run, most banks will not loan the investor enough money for him to buy it. Hence the price gets lowered or the seller has to wait for an end user buyer. And end users normally will not buy two years in advance of their needs.
You residential folks may be thinking, "Why do I care about this?" But stick with me while I try to being this point home. My goal is to buy properties that do not cash flow well unless I put a great deal of cash down, but I only want to buy properties that are undervalued, not based on the income approach but on the replacement cost approach. Why?, because I believe very strongly in the fundamentals of the market.
I know, for example, that I can buy a new preconstruction commercial one story building for $240 per square foot. It will be vacant until I find a tenant. I know that it will cash flow (make sense on an income approach to value). I also know this will happen only after perhaps the first year after I pay leasing commissions, get through the vacancy period, and pay off my loan costs. I also know that the bank will finance my purchase because of either my financial strength, the fact that the building is new, and/or the fact that I have the construction period to locate a tenant. It is not easy to find these deals, but Market America Realty and Investments has them and in fact have sold over 18 of them in the past eight weeks to our clients. I love them as investments. There are just not enough available.
Alternatively, I can find existing older buildings, in good locations, in fair to good shape, with short term leases, but can pay considerable less than $240 a square foot THAT A NEW BUILING COSTS TO BUILD. Or perhaps I can purchase an old multi story office building at $280 a square foot when a new vacant one can cost me $400 per square foot (like MailScanner has detected a possible fraud attempt from "www.ma-realty.com" claiming to be www.cyperlincenter.com). My point is that the older purchase, for the commercial investor, may be a wise alternative FOR A CERTAIN CLASS OF BUYERS. This is because there will be, over the next five years, a meeting of the two prices per square foot, the difference between the two will be less significant. Chosen properly and wisely, both will make money and because we are continuing to build, I do not believe prices will come down, but believe the older properties prices will rise to meet the cost of replacement buildings. The market will cause this to happen.
The older building may require a cash infusion for two years (My polite way of saying "negative cash flow") due to the below market rents and some of the deferred maintenance items that need to be addressed by the new owner. But as a long term investment, the older building can pay off handsomely. Just as a preconstruction investment can, but I can better define my risk with an existing building.
The fundamentals of our market, by the way, that I believe in:
1. There will be a continued influx of buyers. Florida is and always will be a retirement destination and we still have 1000 new residents a week.
2. Time is not standing still just because the market has slowed. Baby boomers continue to age and will continue to bring their money and their families to the area.
3. Lee County has surpassed the 500,000 population mark and this is bringing new national companies to the area.
4. Interest rates on mortgages are still very attractive
5. The unemployment rates are low the economy is strong.
6. We have the weather, the lifestyle and the beaches
7. We have momentum.
8. Location RULES and is ALWAYS worth paying for.
Regarding the crowded roads, I am reminded of a Yogo-ism, "Nobody goes there anymore, there are too many people". Yes there are some folks leaving for less crowded areas, but the net growth is phenomenal and will continue to be.
Now let me relate all this to residential purchases. I have alluded to this in previous e-letters. Many second home buyers are attracted to the new and preconstruction homes and condos. Much in the same way entrepreneurs are attracted to brand new franchise opportunities rather than existing businesses. They are attracted to the promise, the sizzle, the smell of fresh paint, and the crispness and predictions of the marketer. Unfortunately more often than not they are paying more for the promise than they would have to pay for today's reality. In this market of high inventory of homes and increasing high cost of construction, you may be better off buying existing inventory, where you can see the construction, the amenities, and how well the neighborhood has done. You can see the construction that was done at a lower cost to the builder and developer.
I say now IS the time to use price per square foot as a thumbnail comparison. If you can buy a fully decorated home on a canal at $325 per square foot (Look at my home in the historic district. This home was redone only two years ago, with a new boat lift, master suite and kitchen and above all, with a location that has been the most desirable in Fort Myers for many years is a bargain). Or look at existing condos that have just closed like The Shores at Paramount or Grand Isle. Or older condos with superb locations like The Citadel. There is a mentality that preconstruction purchasing, since you can leverage the purchase with ten or twenty percent for 18 months is a better deal than buying new now. I say this MAY be true, but more often than not in today’s market this is not true. Increased cost of construction materials, the cost of money and labor, and the higher cost of land are making the new construction more costly than the existing inventory. Further more, the higher cost of the new construction will have an upward pull on the cost of existing homes. Heck, it already has. Just like in the commercial market.
The market climate can be very profitable for the savvy buyer. I say buy now. It's a buyers market and you need to take advantage of it. Get with a knowledgeable Realtor and plan your purchase based on age old qualifications. Remember, there are only three:
1. location
2. location
3. location.
Remember, you make money when you buy, not when you sell .
And have some lemonade.
And one more comment - if you think we are in a down market, which way do you think we can go from down? What are you waiting for? Lower prices? Don't count on 'em.
Gregg
Gregg@ma-realty.com
www.investinwaterfront.com
www.cyperlincenter.com
PS. A few words about Cyperlin Center. Number one - LOCATION. Number two -UNIQUENESS. I know there is a severe shortage of class A space in Fort Myers. I know there is a dearth of luxury homes in Fort Myers. Cyperlin Center is where these folks need to work. They live in luxury, why not work in it? Check it out.
G.
PPS - We ARE the knowledgeable Realtors you should call. 239-277-9309
© Copyright 2006 Gregg A. Fous All Right Reserved
The website contains copyrighted information and graphics. No portion of this intellectual property may be duplicated, reproduced, or distributed without express written permission of Gregg A. Fous. Any unauthorized use, reproduction, or distribution is expressly forbidden and may result in civil liability.
Freakin' Out in the Jungle
Freakin’ Out in the Jungle
Kathy Brewer, one of Market America's top agent's recently won a full page ad in The Fort Myers News Press. At our weekly staff meeting we were talking about the design of the ad. None of us really like the typical Realtor ads. Lots of small, hard to see pictures, tons of sparse information, and designed really to show the agent's customers they that the agent is indeed making a good effort to sell the listing he promised to sell.
It is our belief that these types of ads have limited, if any value.
We discussed what message, what KEY message, we want to get across. I have not seen the final copy that Devious Design Studio has come up with, but we asked for an atypical design. One that gets this message across:
In this market there are many choices and you need an expert to help you sort out the bargains from the wishful sellers.
Tatiana had her favorite copy: "Freakin' Out about selling your home? Call Us."
I like: "It's a jungle out there - let us be your guide."
As all of you know, we are an internet based agency that specializes in serving our customers. We are not in the real estate agent business; we are in the real estate customer business. We are not traditional print advertisers.
If we did repeat print advertising, it would not be to show our listings. It would be to build brand recognition and to get traffic to our website: www.investinwaterfront.com where more detailed information is available about each listing or community.
Now some comments about our market...
The real estate market in Lee County:
1. Is a buyers market.
2. Is volatile (a wide range of prices over similar products)
3. Is confusing.
4. Has some very good deals and some not so good deals.
5. Is experiencing a downward blip in an upward trend.
Let's talk about number 5. When we look back at this market over a three year period, we will discover that this period was simply a small inverted peak in a generally long upward slope of appreciation. Believe it or not homes are still appreciating. The trick today as a buyer is to find opportunities in the jungle of offerings. For this you need experts that study the market and know the offerings in the different communities that interest you.
Today, I am a buyer. I am looking for commercial deals. Land. Income property. Bargains. I am ignoring asking prices and making offers. This is the time to build your portfolio and become a buyer.
In the condo market I suggest buying existing inventory. In the single family market, buy two to three year old homes. Ignore what somebody else paid for their home. It simply does not matter. I have heard buyers say, for example, of a $400,000 offering, "But they only paid $200,000 one year ago!" I say, "So what? If they paid $500,000 it does not make the house worth that much more, does it?"
The market sets the price, not the cost. The problem with today's market is that it has not settled. This is why you need to be very careful when buying. Use a good agent - maybe more than one. An agent should have two very important traits for you as the buyer:
Character and Knowledge.
For Character look for honesty, openness, empathy and the willingness to meet your objectives, not theirs.
For Knowledge, you need specific product knowledge and well as knowledge about the communities you are looking for. It is improbable that an agent will know all the communities you want to buy in. If he does not, you may need more than one agent. (They may indeed be with the same firm)
Please visit www.investinwaterfront.com and let us guide you through the jungle.
By the way, I am writing this on my wireless lap top, overlooking the river while Jacob and Adi row a 14 foot Kayak (purchased yesterday) back and forth in our 30 foot long pool. (Not getting very far, are they?) The temperature is about 70, the fish are jumping, the birds are singing, and life is good.
Welcome to my world, come on down!
Gregg@ma-realty.com
Kathy Brewer, one of Market America's top agent's recently won a full page ad in The Fort Myers News Press. At our weekly staff meeting we were talking about the design of the ad. None of us really like the typical Realtor ads. Lots of small, hard to see pictures, tons of sparse information, and designed really to show the agent's customers they that the agent is indeed making a good effort to sell the listing he promised to sell.
It is our belief that these types of ads have limited, if any value.
We discussed what message, what KEY message, we want to get across. I have not seen the final copy that Devious Design Studio has come up with, but we asked for an atypical design. One that gets this message across:
In this market there are many choices and you need an expert to help you sort out the bargains from the wishful sellers.
Tatiana had her favorite copy: "Freakin' Out about selling your home? Call Us."
I like: "It's a jungle out there - let us be your guide."
As all of you know, we are an internet based agency that specializes in serving our customers. We are not in the real estate agent business; we are in the real estate customer business. We are not traditional print advertisers.
If we did repeat print advertising, it would not be to show our listings. It would be to build brand recognition and to get traffic to our website: www.investinwaterfront.com where more detailed information is available about each listing or community.
Now some comments about our market...
The real estate market in Lee County:
1. Is a buyers market.
2. Is volatile (a wide range of prices over similar products)
3. Is confusing.
4. Has some very good deals and some not so good deals.
5. Is experiencing a downward blip in an upward trend.
Let's talk about number 5. When we look back at this market over a three year period, we will discover that this period was simply a small inverted peak in a generally long upward slope of appreciation. Believe it or not homes are still appreciating. The trick today as a buyer is to find opportunities in the jungle of offerings. For this you need experts that study the market and know the offerings in the different communities that interest you.
Today, I am a buyer. I am looking for commercial deals. Land. Income property. Bargains. I am ignoring asking prices and making offers. This is the time to build your portfolio and become a buyer.
In the condo market I suggest buying existing inventory. In the single family market, buy two to three year old homes. Ignore what somebody else paid for their home. It simply does not matter. I have heard buyers say, for example, of a $400,000 offering, "But they only paid $200,000 one year ago!" I say, "So what? If they paid $500,000 it does not make the house worth that much more, does it?"
The market sets the price, not the cost. The problem with today's market is that it has not settled. This is why you need to be very careful when buying. Use a good agent - maybe more than one. An agent should have two very important traits for you as the buyer:
Character and Knowledge.
For Character look for honesty, openness, empathy and the willingness to meet your objectives, not theirs.
For Knowledge, you need specific product knowledge and well as knowledge about the communities you are looking for. It is improbable that an agent will know all the communities you want to buy in. If he does not, you may need more than one agent. (They may indeed be with the same firm)
Please visit www.investinwaterfront.com and let us guide you through the jungle.
By the way, I am writing this on my wireless lap top, overlooking the river while Jacob and Adi row a 14 foot Kayak (purchased yesterday) back and forth in our 30 foot long pool. (Not getting very far, are they?) The temperature is about 70, the fish are jumping, the birds are singing, and life is good.
Welcome to my world, come on down!
Gregg@ma-realty.com
Mowing Lawns, Cash, and Syndicates
Before I had all my right ankle problems I used to like to mow my lawn. Goal driven guys like me like things like mowing lawns. It has something to do being able to track progress. Every time you get to the end of a row, you turn around and you can see the wonderful progress you just made. You can also see pretty clearly how much more you have to do and how well you have done. Most things we do every day we have to wait a while to see results. Not so with lawn mowing, the results are immediate. There is also pride involved, a certain amount of skill, and sometimes mowing a lawn can cater to the creative side of you; you mow at an angle, or in a circle. (I don’t like things like fertilizing a lawn, by the way. I can’t tell where I just fertilized. I get to the end of a row, turn around and I have to concentrate on the task at hand. I also have to wait a week or so for my skipped spots to show up).
What I really liked about lawn mowing my own lawn is that it really didn’t take concentration and the weekly task gave me time to think and to plan about other things; like real estate investing or what to write in a weekly email. The noise of the mower drowned out the rest of the world and I could absorb myself in a particular problem.
Yesterday I took a three hour kayak trip. I just discovered my new “lawn mowing”.
I can take my removable ankle cast off, sit down at water level and start paddling. Paddling does not take any concentration so I have time to think and plan. But instead or the immediate rewards of a job done well, I get to bask in the beauty of South West Florida. I discovered a small wildlife paradise directly across the river from my house. Manatees, dolphins, sting rays, all sort sorts of birds, and the beauty, the peace and the calm that come with the natural beauty was inspiring.
I kayaked across the river from Gail and I to a park just down river from where Paradise Preserve will be located. I don’t know if whoever named Paradise preserve ever took a kayak into the mangroves like I did yesterday, but I am betting he did.
I get asked some version of this question often, "Where should I put my money now", this is often followed by, "This is a good time to have cash".
Yes, indeed this is a good time to have cash. But not if you just sit on it… By the way, last time I heard the comment that this is a good time to have cash I heard someone else say (who probably never had any cash) say heck, it's always a good time to have cash. That indeed is not true. If real estate is going up 45% a year and the stock market is racing upwards in value every month and you have cash invested at 5% you’d feel like the only one without a date at the prom – left out!
It's a good time to have cash to buy property now for several reasons. Having cash allows you to BE a buyer in this buyers market and this is a wonderful thing because here are so many opportunites. Cash gives you a stronger bargaining position in this buyers market. In the residential market there are bargains. No, prices are not dropping precipitously – at least not in new construction, but there are some opportunities to get extra incentives.
One of the incetives that may be available is LEASEBACKS. I suggest that you look at leasebacks again. We can negotiate for you to buy the condo of your dreams and then get the developer to pay your mortgage payments for a year by leasing the condo back from you. By the way, these lease backs are income property and qualify for Starker 1031 exchanges. All the basic rules still apply to leasebacks like they do to a normal purchase, you must buy the right condo in the right location and at the right prices, but the lease back will give you a year for the market to settle down and give you time to sell your existing home. A lease back purchase will also give you the opportunity to take investment profit from other income property and shelter it from taxes E mail me if you are looking for leaseback opportunities or just want to chat about them (By the way – in many cases the developer or seller has no intention of actually USING the leaseback. You can get immediate use yourself).
It is also a good time to have cash because there some superb long term investments locally in underperforming income properties that highly leveraged buyers cannot capitalize on. In fact I have been thinking about getting a few folks together and buying some of these properties. In today's market, a performing income property is one that has long term leases, and the net income will pay a capitalization rate above, say, 8%. This gives the bank the comfort to lend you the funds you need to buy the property; you will have cash to pay off the debt service, and the security that the cash will be coming for at least the next five years.
There are properties out there, however, that are being sold at well below replacement costs, but the rents are below market, and the leases are short term. Banks are funny about wanting to know how you are going to pay back the money you borrow. They will not loan on these properties. In order to buy them you would have to demonstrate the ability to pay back the debt and in fact probably put 40 to 50% down.
But if you are able to buy that property, and at well below replacement cost and hold for the balance of the leases that are below market and then release the building at market rates – this will be a superior investment. There are some investors doing that through syndicates of some sort. A group of wealthy and smart investors get a knowledgeable sponsor and combine cash to get into investment property through a TIC (Tenancy in Common) fund, an LLC, or some other entity.
Keep in mind I do not have a specific income property in mind, and I am not soliciting investors at this time. I would like however to gauge the interest of my subscribers and current clients. If you are interested in learning more about this I would have to get a questionnaire to you and we would have to discuss this in person. I may put a group together or may know of another group we can get into in the future. EMAIL ME with your contact information and I will contact you privately.
I “ran the traps” this week and visited some of the new developments in town. I am preparing for Windsor Lake Estates the 126 half acre lot project on Burnt Store Road we are handling with Endeavor and reviewing the competition. We have not finalized the three preferred builders yet but are reserving lake front lots now for end users.
I went to Verandah and River Hall. Both projects are very quiet now and seem to be kind of out of the way. I was, however, impressed with some of the pricing that is available at River Hall on their town home projects. They have not lowered their pricing, by the way, but you can now buy with just ten percent down in stead of twenty. To review some of the new communities in town CLICK HERE.
Incidentally, I do not see a general lowering of prices in new construction. I do see some incentives like upgrades, lower down payments, and removal of investor restrictions. I do sense that this is the time to ignore ask prices and make offers.
My favorite projects are doing well so must be priced right and be in the right locations. We have sold a few Grand Isle Condos in the last month and three more at The Citadel. More than ten homes have closed at The Paramount recently and there may be some leasebacks in this premium waterfront property. I have not sold my home on Gasparilla but was made a rental offer. ( Virtual Tour here ) My personal preference was not to rent but to keep it in showing shape. Some of you with vacant condos may be thinking of renting. This is a personal preference. If you are going to rent I would plan on doing it for three years, not just short term. We can help you with rentals as well. Email Kathy@ma-realty.com
What I really liked about lawn mowing my own lawn is that it really didn’t take concentration and the weekly task gave me time to think and to plan about other things; like real estate investing or what to write in a weekly email. The noise of the mower drowned out the rest of the world and I could absorb myself in a particular problem.
Yesterday I took a three hour kayak trip. I just discovered my new “lawn mowing”.
I can take my removable ankle cast off, sit down at water level and start paddling. Paddling does not take any concentration so I have time to think and plan. But instead or the immediate rewards of a job done well, I get to bask in the beauty of South West Florida. I discovered a small wildlife paradise directly across the river from my house. Manatees, dolphins, sting rays, all sort sorts of birds, and the beauty, the peace and the calm that come with the natural beauty was inspiring.
I kayaked across the river from Gail and I to a park just down river from where Paradise Preserve will be located. I don’t know if whoever named Paradise preserve ever took a kayak into the mangroves like I did yesterday, but I am betting he did.
I get asked some version of this question often, "Where should I put my money now", this is often followed by, "This is a good time to have cash".
Yes, indeed this is a good time to have cash. But not if you just sit on it… By the way, last time I heard the comment that this is a good time to have cash I heard someone else say (who probably never had any cash) say heck, it's always a good time to have cash. That indeed is not true. If real estate is going up 45% a year and the stock market is racing upwards in value every month and you have cash invested at 5% you’d feel like the only one without a date at the prom – left out!
It's a good time to have cash to buy property now for several reasons. Having cash allows you to BE a buyer in this buyers market and this is a wonderful thing because here are so many opportunites. Cash gives you a stronger bargaining position in this buyers market. In the residential market there are bargains. No, prices are not dropping precipitously – at least not in new construction, but there are some opportunities to get extra incentives.
One of the incetives that may be available is LEASEBACKS. I suggest that you look at leasebacks again. We can negotiate for you to buy the condo of your dreams and then get the developer to pay your mortgage payments for a year by leasing the condo back from you. By the way, these lease backs are income property and qualify for Starker 1031 exchanges. All the basic rules still apply to leasebacks like they do to a normal purchase, you must buy the right condo in the right location and at the right prices, but the lease back will give you a year for the market to settle down and give you time to sell your existing home. A lease back purchase will also give you the opportunity to take investment profit from other income property and shelter it from taxes E mail me if you are looking for leaseback opportunities or just want to chat about them (By the way – in many cases the developer or seller has no intention of actually USING the leaseback. You can get immediate use yourself).
It is also a good time to have cash because there some superb long term investments locally in underperforming income properties that highly leveraged buyers cannot capitalize on. In fact I have been thinking about getting a few folks together and buying some of these properties. In today's market, a performing income property is one that has long term leases, and the net income will pay a capitalization rate above, say, 8%. This gives the bank the comfort to lend you the funds you need to buy the property; you will have cash to pay off the debt service, and the security that the cash will be coming for at least the next five years.
There are properties out there, however, that are being sold at well below replacement costs, but the rents are below market, and the leases are short term. Banks are funny about wanting to know how you are going to pay back the money you borrow. They will not loan on these properties. In order to buy them you would have to demonstrate the ability to pay back the debt and in fact probably put 40 to 50% down.
But if you are able to buy that property, and at well below replacement cost and hold for the balance of the leases that are below market and then release the building at market rates – this will be a superior investment. There are some investors doing that through syndicates of some sort. A group of wealthy and smart investors get a knowledgeable sponsor and combine cash to get into investment property through a TIC (Tenancy in Common) fund, an LLC, or some other entity.
Keep in mind I do not have a specific income property in mind, and I am not soliciting investors at this time. I would like however to gauge the interest of my subscribers and current clients. If you are interested in learning more about this I would have to get a questionnaire to you and we would have to discuss this in person. I may put a group together or may know of another group we can get into in the future. EMAIL ME with your contact information and I will contact you privately.
I “ran the traps” this week and visited some of the new developments in town. I am preparing for Windsor Lake Estates the 126 half acre lot project on Burnt Store Road we are handling with Endeavor and reviewing the competition. We have not finalized the three preferred builders yet but are reserving lake front lots now for end users.
I went to Verandah and River Hall. Both projects are very quiet now and seem to be kind of out of the way. I was, however, impressed with some of the pricing that is available at River Hall on their town home projects. They have not lowered their pricing, by the way, but you can now buy with just ten percent down in stead of twenty. To review some of the new communities in town CLICK HERE.
Incidentally, I do not see a general lowering of prices in new construction. I do see some incentives like upgrades, lower down payments, and removal of investor restrictions. I do sense that this is the time to ignore ask prices and make offers.
My favorite projects are doing well so must be priced right and be in the right locations. We have sold a few Grand Isle Condos in the last month and three more at The Citadel. More than ten homes have closed at The Paramount recently and there may be some leasebacks in this premium waterfront property. I have not sold my home on Gasparilla but was made a rental offer. ( Virtual Tour here ) My personal preference was not to rent but to keep it in showing shape. Some of you with vacant condos may be thinking of renting. This is a personal preference. If you are going to rent I would plan on doing it for three years, not just short term. We can help you with rentals as well. Email Kathy@ma-realty.com
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