Domestic and International investors are lasered in on SW Florida for good reason.   They are one of the only counties in the country that reported 10% Year over Year gains in 2010 in our median home values.

To give you a comparison on how prices have changed, during the peak of 2005, the Ft. Myers Greater Area had a median home value of $340,000.  By February 2009, the median dropped to $82,000.  Currently, as of November 2010, the median is around $96,000, an improvement from only a year and a half ago.  The cost to build a home in our area during the peak was about $116 per square foot.  The current replacement cost of homes today is approximately $66 per square foot (not including land).  We are able to provide these homes as investment opportunity to our investors for  a little over $30 per square foot.  We are able to beat the market value by about 20-30%.

See below for a sample pro forma on a typical purchase.  If you would like to preview our offering memorandum which includes pictures, charts, and additional info, CLICK HERE

Here’s how the approximate numbers work:  Continue to scroll down for a walk-through video of a recent duplex sale.

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

International investors

More and more local Florida real estate agents have dealt with an increasing number of foreign national investors and that will likely continue into 2011.  I mentioned previously that changes in value to the US dollar have had a strong impact on the international real estate business.  If you follow trends, which most savvy investors do, many believe that purchasing a home in the US is more affordable than in their own country and holds more value and future potential.

The top international markets that are putting their money in the US real estate market is Canada, Mexico, the UK, and China/Hong Kong.  Canadian investors make up for 23% of the international buyers and have remained the leading investor country for the last 3 years in the US market.

On average, foreign buyers tend to purchase closer to the upper end of the market with 16% buying homes priced at more than $500,000. According to Realtors, this was because international buyers are typically looking for a second home.

Although International buyers have had reported purchase agreements in 39 states, a majority of the total buyers are concentrated in Florida, California, Arizona and Texas. These four states account for 53% of purchases and have remained the top destinations for the past three years with Florida leading the pack.  This is in part due to lower prices and higher effective rents.  Most are drawn to those factors in addition to convenience to the tropical settings and amenities.

The majority, 66%, bought single family detached homes. However, more international buyers purchased a condo than did their US counterparts, at 23% and 7%, respectively. And only 44% of international buyers used a mortgage to pay for their home, compared to 92 percent of domestic buyers.

Some 55% of foreign buyers paid in cash and this is often because of the difficulty in establishing international credit in the US.

We are seeing big plays in single family homes and residential multi-family homes.  Due to the record number of foreclosures over the past few years, most homeowners must transition to becoming a renter.  Rental property vacancy rates are at all time lows and Capitalization Rates are achieving numbers in the teens.  If you are an international investor and would like additional information on purchasing real estate in Florida, we have expertise in the bank owned properties and can send you financials to any opportunity that fit your criteria.

Florida is set to be one of the bargain hotspots of 2010 for real estate, according to a new report.  As the global recession eases and the recovery begins, experts are forecasting that investor confidence will flow back into the US real estate market. New home sales should post an increase of around 20% from the very low levels seen in 2009, according to the report.  It points out that few real estate markets have suffered more than Florida where oversupply has been a major factor in driving down prices.  Foreclosures and a glut of unsold condominiums have especially contributed to slowing down the Florida housing market.

Sean Snaith, economics professor and forecaster for the University of Central Florida in Orlando, agrees. ‘For international buyers, 2010 will be a great time to buy in Florida.  The imbalance of supply and demand puts the buyer in the driving seat.  Large inventory, pricing power and the continuing weakness of the dollar when compared to other currencies mean awesome deals in the housing sector,’ he said.

You will find hundreds of apartment complexes for sale on LoopNet and eBay.  My feeling is that once an apartment complex that is distressed or repossessed is listed to the public, the deal is already gone.  There is a reason it is public.  I’m not saying that you can’t find good deals there, but you will find much better deals when they are not listed.

We have a receiver that we work with who provides us with some good opportunities for our investors.  Most of the complexes we work with this receiver on is in the Tampa and Orlando markets.  What makes things more complex is that most of these complexes are what we call “Value Add” opportunities.  For example, the one we are working on currently is 330 units.  The occupancy rate is 20% and the property is in need of major capital improvements.  That said, the area is dense with surrounding communities that are a minimum of 90% occupied, thus if we can get our “value add” complex for a good price, the potential is there.  Once we invest some Cap X to this current project, the equity will be substantial.

We ran some numbers on this complex.  At an 80% occupancy rate at today’s rental numbers, this complex will have a 10% Net Capitalization Rate at $11 million.  We currently have a contract in place with one of our investors to purchase from the bank at $3.2 million.  After looking at the rehab needed to get this complex comparable to the surrounding ones, we determined that we need an additional $1.8 million to $2 million in Cap X.  Assuming that number is $2 million, we are invested at $5.2 million.

We feel we can rehab the property within 4-6 months and per our property management firm we hired, we can achieve 90% occupancy within 18-24 months.  At that point, our investor can keep as income property, or we can sell it at an attractive 10% Cap Rate.  Assuming we sell at a 10% Cap in 2 years, the gross profits are almost $6 million, not taking into consideration the cash flow from occupancy.

Negotiating an apartment complex with a bank is not easy.  It is easy to get into trouble if you don’t know what you are doing.  We have a very experienced team of market specialists and contractors where it is our job to get the best deal from the receivers/banks that we have working relationships with.

If you would like additional information on apartment complex opportunities in Florida, feel free to call us for a consultation at 877-688-7582.  Ask for Scott.

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.

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.