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.

Due to the fact that he is just a few years from retirement, I advised him to consider relocating to Florida.  He will not be penalized for leaving as he is already tenured so a move to Florida is realistic.  Although teachers make about 20% less in Florida as they do in New Jersey, the real estate prices have gotten so low that the pay difference almost doesn’t count. 

I introduced him to Cape Coral on his most recent trip to Florida, the neighboring city to Ft. Myers, where I live.  I took him to a foreclosure home that I had access to in the Southwest quadrant of Cape Coral which seems to be its most desirable.  The home will cost $100,000 and you get 3 bedrooms, 2 full bathrooms and over 1,500 square feet.  Not only that, but you own the land your house sits on and the home has an attached 2 car garage and a screened in back patio area WITH A POOL! 

Getting back to his Jersey apartment, he was paying about $1,600 for his PITI.  With a Florida home at $100,000, his total monthly payment of PITI will be about $800 per month, HALF of what he was paying.  Additionally, he is mere steps from entertainment, relaxation, boating, fishing, and the goods of life. 

Relocation has to play a part in some people’s lives.  In times like today when most people are trying to cut cost of living, there is not better place to do it than sunny Florida.  If you can bare the 85 degree humid heat in the summer times, real estate prices are historically low, rates are silly low, and paradise is at your fingertips.  So whether or not you are trying to relocate or purchase an investment property, give us a call so we can help.

For those that attended my July 2007 seminar in Secaucus, New Jersey, I made a bold prediction, which was more of simple common sense. 

At this time, Florida was in a very vulnerable state.  When most of the country was holding, Florida began to nosedive.  All of a sudden, every buyer mysteriously disappeared.  I mentioned that although Florida looked like the black sheep, it would be an area we would monitor closely as it was likely that Florida would hit bottom first and provide a huge amount of value to homeowners, second homers, and investors. 

Today is March 13, 2009.  If Florida is not at bottom yet, they are pretty darn close and with median prices under $100,000 for the first time since 1997 buyers are having a field day.  Since November 2008, over 4,000 homes sold in Lee County alone, the highest amount of sales per county in all of Florida.  Why?  Miami is getting stale to people.  I don’t have an answer for that.  Tampa is still too high, and Orlando has Disney.  Lee County is home of Ft. Myers, Cape Coral, and Lehigh Acres, among others.  Within a 15 mile radius, you can have some of the best dining, shopping, and entertaining in all of Florida.  Within only 20 miles you can be at the world reknown white sand beaches of Sanibel Island and Ft. Myers Beach. 

Recently, we have negotiated exclusively with several
sources to buy REO property from banks at a huge discount.  For those that have researched, buying bank owned property has created more real estate millionaires today than any other type of purchase.  We have negotiated a near 80% discount from the original notes.  Our best value today comes with duplexes (2 family homes) in Lee County.  We are looking at these as cash cows and income property.  If I told you that your money could earn you 10% annually, would you believe me?  Haha…I bet you were looking for a guarantee!  Well, I will say this.  Look at the following numbers on our typical duplex we are purchasing in Lehigh Acres and
Cape Coral.  Using the most conservative numbers for operating expenses, look at the bottom line and let us know your thoughts. 

In most cases, we sell the duplexes turn key at approximately $75,000 which include allowances for backed taxes due and cosmetic / appliance rehab.  First, the following are our purchase criteria

As you can clearly see, even when I include every expense
possible, the cap rate, ROI, and cash flow are very powerful.  CLICK HERE for a full executive summary on foreclosure REO South Florida Duplexes.

The question is are you going to take action and capture a piece of the pie for yourself?

Most millionaires in real estate are made in down markets.  It is no secret that southwest Florida is the poster-child for U.S foreclosures.  That’s great for us because that always brings unique opportunity to those with cash or great credit.  Real estate in Lee County is selling at 75% discounts from the original notes and our REO portfolio from our sources are sold at about 30% below current retail. 

Not every REO is a great deal per say.  There are thousands of wholesalers in the industry so it is important to do a good amount of your own due diligence additionally. 

Currently, banks are holding an enormous portfolio of bad debt which are predominately foreclosed and repossessed homes.  We look at it as we are helping one another out.  MyRealtyService looks to purchase these homes at massive discounts and stops the bleeding at the bank.  We have looked into dozens of markets, searching for the most significant discounts that could provide a great level of value.  Southwest Florida is by far the most heavily discounted region we have researched.

South Florida experienced unprecedented growth followed by a gigantic crash.  This crash has created unique and historic opportunity for investors who have the buying capabilities to pluck these homes from the market at substantial discounts. 

Today we are investing in Florida’s future.  Not another place in the world offers such real estate discounts and natural amenities.  It is projected that by 2030, one county in specific is expected to grow by over 400,000 people. 

We currently assist local, out of state, and international investors, renters, and potential homeowners in suggesting opportunities that fit your needs.  No pressure, just performance.  If you are a real estate investor looking for market suggestions or would simply like to pick our brain about the market, please do not hesitate to give us a call at 877-688-7582.

Give us 1% of your trust…We’ll earn the rest