Fast forward to 2008-2009 when many of these duplexes went into foreclosure.  Built during the boom for nearly $300,000, we can buy directly from the banks today at pennies on the dollar.  There are a lot of companies claiming to be “direct” with the bank and some wholesalers who offer duplexes.  Could be true, but I can tell you with utmost confidence that we are your source for the most affordable duplex foreclosures available.  We get the REO’s direct from the bank, and wholesale them to homeowners and investors at exclusive prices.  Due diligence has shown that duplexes in this area that are completely rent-ready and in no need of repair retail for just under $100,000.  Our are turn key and ready to go.

Each duplex will gross around $1,300 per month in rent ($650 per side).  We do not recommend at this time paying more than $100,000 for the duplex, so if you can buy for under $100,000, your rate of return is higher than 10%, and also gives you some leverage in the event you have a vacant month.  The goal is to achieve a 10% Cap rate or rate of return on the duplex.  Anything higher than $100,000 does not give you enough equity, in our opinion.

Most of our duplexes are built 2005 and newer and are located in very precise areas.  We do not believe that every REO out there is a good deal.  We are specific and want to maximize the future equity potential by its location.  Most duplexes are 3 bedrooms, 2 bathrooms, and some have 1 car garages per side. 

Here’s how the numbers work:

We are the most exclusive foreclosure wholesale real estate  firm in SW Florida.

In order to fascilitate transactions coming into our office, we mention to everyone looking for REO purchase opportunity that if you can have some patience with us, we will undoubtedly get you a deal that is right for you.  This is not due to an overwhelming amount of buyers, nor is it a lack of staff in my office. To get a good REO, we negotiate hard with the banks.  This takes time, sometimes weeks so it would be appreciated that once you imply interest that you are as patient with us as we are with the banks.

Currently, we are able to buy homes at over 80% discounts from the original note in Florida distressed real estate and REO’s.  Keep in mind that 80% doesn’t really mean all that much because 20% of that is not a true 80% discount off of TODAY’s current values.  Today we are able to achieve an average of 15% below market value on commercial property, single family income, and duplex to multi-family apartment complexes.  Whatever you are looking for in southwest Florida REO and foreclosures, we will have for you

Below are some homes we recently purchased.  We have many more properties like the ones below so please specify which you are interested in and we can begin the process with you.  Two ways we sell are wholesale and direct.  If it is a wholesale transaction, we will buy the homes from the bank in bulk to achieve the best discount.  It would essentially be a “flip” to you.  Our markup is very low, so most of the equity is yours.  We rely on sheer volume and look to make the investment right for you.

Southwest Florida Duplex REO: After minor repairs, $80,000. Paid $70k + $10k in cosmetics and flooring. Others available for $80k +/-. Rents for $650 Per side and provides a 13% Cap Rate

Single Family with Bay views: Fantastic water views and huge roof deck. Paid $180k in REO status and needs $60k rehab and updating. Current market value $335,000. Upscale neighborhood.

REO Single Family Home in Cape Coral, Florida Paid $80k. Current market value: $105,000. No repair or updating needed. Rented for $900

Gulf of Mexico Access. Paid $275,000. Current value $325,000 and discounted 65% from original note. By boat, 45 minutes to open Gulf and Sanibel Island. Slow zone takes up 40 of the 45 minutes. Slow zones are enforced for Manatee and Dolphin protection. Beautiful boat ride. Home has pool and boat lift/dock.

South west Florida is the hidden gem in today’s real estate market.  Lee County was hard hit by the foreclosure crisis and as we finally reach the bottom of the housing market, bargains are found by aggressive agents.  With bank discounts as much as 75%, massive gains in value are not a matter of if… but when, and our opinion is a buy and hold for 5 years unless of course it is your primary residence. 

Our boat tour is focused on Gulf Access waterfront homes, however clients of non-waterfront are more than welcome. 

We offer a complimentary cruise on our 40′ Silverton which holds approximately 12 people and is fully equipped with an air conditioned living room, plenty of upper, rear, and bow seating and plenty of comfort.  Beverages and snacks served on board.  Or, for smaller groups, we may cruise out on the 30′ Glastron Cruiser.  Our boat tours may be scheduled for any day during the 7 day week and our preference is to be off the dock by mid morning.

 Our tour is available to cruise Gulf Access single family homes in Cape Coral / Ft. Myers area.  Second homes and Vacation homes may also be toured in Sanibel Island or other exclusive hideaways.  Downtown Ft. Myers luxury waterfront high rises also offer tremendous amenities and fire sales from REO banks.

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I have looked into several portfolios with our lenders and have considered SW Florida to have the better deals right now when it comes to overall cash flow performance and market conditions.  I just bought personally and sold a few duplexes (2 family homes) in Lee County (Ft. Myers area).  I focused on 2004 or newer builds, brought them back to brand new condition and rented them out.  Overall, I was into each duplex at about $75,000.  If you saw the duplexes you would think they were a steal.  All concrete construction, 3 bed 2 bath with 1 car garage on each side totalling over 2800 square feet.  I rented each side for $700 a month and making $890 per month positive cash flow AFTER paying my tax/insurance escrows.

Assuming my cash flow is about $10,000 a year on a duplex, I will have $40,000 in cash flow annually if I achieve my goal to purchase 4 this year.  The IRS will plan to take over 40% of that.  Here’s how you offset:  Consider you will have to pay $20,000 in federal/state income taxes.  Taking into consideration a small/medium sized Florida portfolio of property that you own, consider buying something in Louisianna along the coast, in what is called the “Go Zone” region. 

Remember Hurricane Katrina?  Well congressional / IRS incentives are still in place for real estate investors who invest in rental property can take a MASSIVE income tax incentive in exchange for helping to restore the housing stock.  The Go Zone allows you to accelerate the depreciation on your rental property in designated areas.  After ony the first year of ownership, you are allowed to take a BONUS depreciation of 50% in addition to normal rates of depreciation.  This “depreciation” is a tax deduction and the bonus 50% gives you a MASSIVE income tax deduction.

Assuming you purchase a home in Louisianna for $130,000:  The IRS will only allow you to depreciate the value of the “structure”.  Lets say the land is 10% of your price so your structure value now stands at $117,000.  After your first year of ownership, you will be allowed to take a tax deduction or “bonus depreciation” in the amount of $58,500 which is half of $117,000.  Here is the best part.  In the meantime, this Louisianna property is already rented out giving you cash flow as well. 

So let’s take your $58,500 bonus depreciation.  Assuming you are in the 35% tax bracket, the $58,500 essentially saves you $21,060 IN YOUR POCKET.  (I achieved $21,060 by multiplying $58,500 by 36% tax bracket). 

Let’s go back to your Florida properties.  Remember how I mentioned that assuming you have 4 properties and $40,000 of rental income annually?  Remember how I said that the IRS will likely command about 40% of that?  If so, the IRS will require you to pay about $16,000.  HOWEVER, being that you are invested as well in Louisianna or The Go Zone, your CPA will be able to amend your taxes for the IRS and completely eliminate you from tax liability from your positive cash flow.

We were analyzing the local Lee County, FL market, and from what we saw, of the 800+ homes sold last month, maybe 15 of them looked like an investor purchased them to rehabilitate.  Why?  Because nobody wants to come up with the cash to pay for the rehab work.

Last week, we purchased a 2500 square foot home in (my opinion) the best area of Fort Myers.  The asking price from Deutsche Bank was $200,000.  We offered $160,000 and settled at $180,000….good enough for me and little did they know I would have been very willing to pay $200,000!

The home is an easement away from being “on the water”.  The water is not just an ordinary canal.  This is the open bay…panoramic views of water and real estate.  Beautiful.  A home in this neighborhood currently commands $145 per square foot if it is updated.  Our As-Is price per square foot was $72.  I had my bids done on the home and for my specifications that I wanted, it would cost $80,000 for remodel / repair.

The roof needed about a 25% replacement, I wanted to install 18 inch tile throughout the house, move some walls, enhance the front of the house, paint/wallpaper, gut kitchens and bathrooms, install a swimming pool, and my favorite was to add a rooftop deck which would provide breathtaking water views of the open bay…so close that you could throw a rock to the water.

At a total of $260,000, I financed 80% of the REO and paid cash for the rehab.  My out of pocket commitment was $132,000, a big nut, but worth it.  At $260,000 my cost square foot breakdown is now $104 per square foot, still over $40 per square foot under market value. 

Once the loan closes, I immediately intend on putting the home on the market during the remodel process to allow any potential buyers to customize any unfinished work.  I will list the home for $30 per square foot higher than what I am invested.  My asking price of $134 per square foot equates to $335,000 list price. 

What I am essentially doing here is inviting a bidding war on the property.  I would be at that point the lowest price per square foot in one of the nicest and high end areas in the county.  If I settle for my list price of $335,000, my profit will be $75,000, a perfect opportunity to 1031 exchange into another similar deal.  My out of pocket investment of $132,000 has now brought me a cash on cash return of over 50%.  After paying my mortgage and debt service for lets call it 6 months, I am right at about 50% ROI.

These deals are out there.  If you have the cash capabilities, I highly recommend pursuing this concept of REO investing.

We have found that wholesale investors are the way to get the best deal unless you have a very good connection with a bank or an asset management affiliate.  We use all three.  For our local markets, we utilize our bank relationships to purchase bulk properties at a substantial discount.  We will add our wholesale fee to an individual home and sell it way under current market value. 

I recently referred a friend of mine to an investor in Arizona that I knew.  He was frustrated over the retail agent MLS concept so this investor held a small residential portfolio from the bank and sold it to my friend for 10% over what he (investor) purchased it from the bank.  The final price to my friend was still about 15% under current values, a great deal.

Typically, a good wholesaler has extensive relationships with resources.  This is our job and we make money by our own portfolio and selling them wholesale style.  It is a win-win situation. 

Many investors will attempt to circumvent the system and call banks direct.  I can honestly say that I have seen their success less than 5% of the time to achieve a true steal. 

Working with your peers and advisors can lead you to a path of success.  It is nothing short of the simple concept of teamwork.