Rental Property Investor · Northeast (NJ DE, PA) · Member since 2018 · 38 posts · 19 votes
I'd love to hear from anyone who's invested with Rent to Retirement, specifically in Ocala, FL. Hoping you guys can give me more insight from the investor/buyer side of things.
Thanks for the input Chad. I'd like to add a few notes to clarify points mentioned. We are here to support whatever makes sense for your investment criteria regardless of the location. We have new construction in many parts of the country along with rehabbed SFR & MF properties.
Just to be clear, this thread is about Ocala. We are currently discussing a different market in SWFL (Cape Coral). This is an exceptional market that is growing dramatically. This is driving rents & market values up consistently throughout the year. Just over one year we've seen an increase of market value of about 18% to 20%, and rents have increased faster than that. If this trend continues over the next year (which it likely will) there will be a large amount of equity and cash flow beyond what we are seeing with today's analysis. The nice part about investing in this location is the opportunity to have a brand new built house in an appreciating market that has high rental demand. You will likely come into immediate equity while still having positive cash flow. In most instances it is very hard to obtain positive cash flow on new construction.
Here are a few points I think would be worth considering in your evaluation to determine what the best path forward is. It's important to know what numbers to input in your analysis.
-We run $2,395 on the pro forma for rent evaluation. We have seen finished projects renting in this range very quickly. I'm not sure where the $2,500 to $2,700 came from, but that would be too high for current market rent. Maybe in the future if the market continues how it is. As @Stetson Miller mentioned, going the STR route is a great way to achieve higher rents. Please evaluate your rental at the $2,395.
-With new construction there is always a 1-2 year comprehensive warranty along with many longer mechanical & structural warranties. I do not think it would be correct to evaluate 5% for maintenance & 5% for cap ex with new construction. Maybe if you are holding 15+ years, but then you also need to factor in rent increases, etc. Leasing fee coming through our network should be 1/2 of what is mentioned, not full month's rent.
-The pro forma shows a regular 30yr conventional loan as that is the only way to compare apples to apples for long term holds. There are loan options that are realistic within these parameters. This is not evaluating a construction loan upfront like you are doing & there are different construction loan options to choose between. We need to evaluate each of these on a case by base basis with varying numbers.
-The CoC play is not dead. If the market continues as we have seen over this past year the rents will likely be higher. Also, please note we evaluate the taxes at over $3k in yr one. The reality is that with new construction your taxes should be a fraction of that cost the first year & will gradually increase to be fully accessed in yr 3 likely. That means in the first couple of years your cash flow should actually be ~$1k to 2k higher than projected due to the tax amount. If CoC play is not attractive on this, then maybe the equity position would be. On this 1774 model you are considering, we just had 5 appraisals that came back in the $400k to $405k range. It's a good to have options with homes to cash out refi, sell, vacation to & use as a STR, etc.
Not trying to oversell this too much. It's not for everyone. The building delays are real and the market could slow over time, but these do make a lot of sense right now any way you slice it up.
Hi Erica. I don’t have direct experience with rent to retirement but my property management company, Resolute Property Management, is working with some people who purchased through them. I think overall the experience has been a positive one. The ocala market is definitely healthy and great for rentals. I hope that helps.
@Clay Lehman thanks! What’s the average days listed before a contract is signed/deposit is made for rentals in Ocala? Also is the Ocklawaha market comparable? Can you compare/contrast the 32179 and 34472 zip codes for me?
@Erica L. I have a couple SFR homes in Ocala and I haven't had a vacant month in over 10 years. Properties rent very fast here, it's sorting through dozens of applicants that takes the most time.
@Mev D. Other than the answers posted here, I haven’t gained much insight in the difference. I do believe the supply of rentals in 34472 may be smaller. However, I’m not sure the demand is as high either.
I was born and raised in Ocala, specifically the 34472 area. This is known by the locals as "Porter's Shores". It is a subset of Silver Springs Shores (not to be confused with Silver Springs). It is a very suburban area that is a 10 minute drive to downtown, decent restaurants and grocery stores. It is very popular among the middle class and has a mix of brand new construction mixed with older, Florida style SFRs.
32179, on the other hand, is FAR more rural and woodsy. This is going out east of Ocala towards the Ocala National Forest. Lots of pockets of trailers, SFRs, farms and dirt roads. There are pockets of neighborhoods there but nowhere neat the density of 34472. There also isn't a lot in terms of shopping/grocery stores.
@Erica L. Have you gone with Rent To Retirement finally? I had few calls clarifying my queries. Even I am considering to buy one at Ocala or surroundings.
@Erica L. We’ve purchased in Ocala a few months back and It was a great purchase. Was not through RTR however. We did end up buying a new build with RTR though that had an all in cost of $265k, rents estimated at $2400/mo and post construction appraisals are averaging $377k for this 4/3 model. My plan is to cash out refi all my capital and invest It again! Good luck! Happy to connect to share more of Ocala or Cape Coral
@Erica L. We’ve purchased in Ocala a few months back and It was a great purchase. Was not through RTR however. We did end up buying a new build with RTR though that had an all in cost of $265k, rents estimated at $2400/mo and post construction appraisals are averaging $377k for this 4/3 model. My plan is to cash out refi all my capital and invest It again! Good luck! Happy to connect to share more of Ocala or Cape Coral
Are you actively getting 2400/month right now and where in Ocala.
@Drew Ramasco Negative. My $2,400 comment was in reference to Cape Coral with a new build I am completing. My current property in Ocala (bought through the MLS) is currently renting $1,800, but it is currently under market value. I will have to wait until the end of the lease to raise it. My plan is $1,950 based on comps on rentometer today. Hope this helps!
@Patrick Bavaro curious what your CoC or CF will be in the Cape Coral property. I love the idea of investing in FL but just can't decide: Ocala, Cape Coral, or Pensacola. Thought about Orlando too.
I have listened to all the chatter on here for months now about Cape Coral and currently am supposed to be closing on a lot next week to start my build with RTR. Current builds you are looking at an all in cost of $300K to $325K and I was told rents are from $2,500 to $2,700 a month but when looking on websites there are plenty of rentals on the market in the $2,200 range. If you can get $2,400 rent using the bigger pockets calculator 5% exp, 5% vacancy, 5% cap ex and 12% management (they say 8% management but when they charge 1 month rent for new renters it's closer to 14%) CoC is basically zero! I think if you are not currently under contract or about to go under contract you missed the boat as I can't see rents going up much higher. Actually I am considering not closing on the lot and losing my earnest money as I have asked both property managers I have been steered towards to provide current rental contracts proving their $2,500 to $2,700 rent estimates. On day three now waiting for a response so not getting a warm fuzzy on their estimates but maybe they both are just very busy and haven't been able to respond! Also RTR claimed $6K in closing costs on their pro forma and that is basically false (in my opinion). If you get a second home loan I am not sure of the closing costs but doubt it's even close to the $6K. If you go the construction loan then conventional loan route which I am potentially doing the total closing costs are closer to $26K. Not to be negative but all the hype on here about the Cape Coral market was true months ago but if you aren't currently under contract the CoC play is gone for now. If you are looking for strictly equity it might be okay but the investors that got in months and months ago hit a home run for sure! I just didn't have the capital until now to do so. Hope this helped!
@Chad Kinsley I would point out that this is all applicable only to new construction in Cape Coral right now. As for existing inventory, better numbers are certainly out there, especially if you're willing to cross over to the STR side
$300k-$325k acquisition/investment for a $2400 rental rate equates to a monthly loser for cash flow when you account for all operating costs, Cap Ex and vacancy+loss to lease. If your play is cash flow, this is not the right play in my opinion. If you have some appreciation play, make sure your projections are obtainable and not pie in the sky!
I wouldn't hold your breath waiting for those PM's to provide you evidence of rentals in the $2,500 to $2,700 range. New builds in Cape Coral are getting closer to $2,200 to $2,500 with only a few outliers getting higher. That might change as the rental market continues to tighten here. I think we'll continue to see big appreciation gains this year albeit at a slower pace than last year.
Non of my investors have gone through rtr but they have all made good profits on their long term rentals with me currently the market is very hot for renters here due to low supply I just rented out this week a brand new construction for $1795 in the zip code 34473
Thanks for the input Chad. I'd like to add a few notes to clarify points mentioned. We are here to support whatever makes sense for your investment criteria regardless of the location. We have new construction in many parts of the country along with rehabbed SFR & MF properties.
Just to be clear, this thread is about Ocala. We are currently discussing a different market in SWFL (Cape Coral). This is an exceptional market that is growing dramatically. This is driving rents & market values up consistently throughout the year. Just over one year we've seen an increase of market value of about 18% to 20%, and rents have increased faster than that. If this trend continues over the next year (which it likely will) there will be a large amount of equity and cash flow beyond what we are seeing with today's analysis. The nice part about investing in this location is the opportunity to have a brand new built house in an appreciating market that has high rental demand. You will likely come into immediate equity while still having positive cash flow. In most instances it is very hard to obtain positive cash flow on new construction.
Here are a few points I think would be worth considering in your evaluation to determine what the best path forward is. It's important to know what numbers to input in your analysis.
-We run $2,395 on the pro forma for rent evaluation. We have seen finished projects renting in this range very quickly. I'm not sure where the $2,500 to $2,700 came from, but that would be too high for current market rent. Maybe in the future if the market continues how it is. As @Stetson Miller mentioned, going the STR route is a great way to achieve higher rents. Please evaluate your rental at the $2,395.
-With new construction there is always a 1-2 year comprehensive warranty along with many longer mechanical & structural warranties. I do not think it would be correct to evaluate 5% for maintenance & 5% for cap ex with new construction. Maybe if you are holding 15+ years, but then you also need to factor in rent increases, etc. Leasing fee coming through our network should be 1/2 of what is mentioned, not full month's rent.
-The pro forma shows a regular 30yr conventional loan as that is the only way to compare apples to apples for long term holds. There are loan options that are realistic within these parameters. This is not evaluating a construction loan upfront like you are doing & there are different construction loan options to choose between. We need to evaluate each of these on a case by base basis with varying numbers.
-The CoC play is not dead. If the market continues as we have seen over this past year the rents will likely be higher. Also, please note we evaluate the taxes at over $3k in yr one. The reality is that with new construction your taxes should be a fraction of that cost the first year & will gradually increase to be fully accessed in yr 3 likely. That means in the first couple of years your cash flow should actually be ~$1k to 2k higher than projected due to the tax amount. If CoC play is not attractive on this, then maybe the equity position would be. On this 1774 model you are considering, we just had 5 appraisals that came back in the $400k to $405k range. It's a good to have options with homes to cash out refi, sell, vacation to & use as a STR, etc.
Not trying to oversell this too much. It's not for everyone. The building delays are real and the market could slow over time, but these do make a lot of sense right now any way you slice it up.
@Patrick Bavaro what stage are you at with the Cape Coral RTR build? Was just curious if you could give us numbers as far as what you put down/closing costs, and what you’re paying monthly in interest during the construction phase? Thanks!
My in-laws are building their own house in Cape Coral right now, so these builds have me very interested.
@Greg Orlowski I'd be happy to! All in with closing was around $273k. Required 10% down before closing costs. Currently in my first draw and pay about $100 a month. By the last draw It will be around $700-$800/mo until It converts to fixed mortgage with PITI
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