First time with new construction: Cape Coral, FL

Cape Coral, Florida
Land & New Construction
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First time with new construction: Cape Coral, FL

Don M.
Member since 2021 · 135 posts · 203 votes

Hey guys,
This post is mainly just to share where I'm at with this process, provide opportunities for myself to network with others in the area, and so I can periodically update.  I have connected with several members doing new construction or with boots on the ground in Cape Coral, so thanks to all of you that have discussed and answered questions from me so far.
Here's where I'm at:
-Connected with Rent to Retirement in November/December 2021 to discuss the area and opportunity.
-Closed on build contract January 2022 on a 4/3 (Build price itself is 246k).
-Closed on Freshwater canal Lot February 2022. (39k with closing costs).
-(All in construction+lot cost is 285k before loan and closing costs).
-Sent Deposit to builder February 2022. (13.5k) 
-Surveys, Site Plan, Septic Design approval initiated: February 2022
-Completed Survey/Design Package completed and sent to city of Cape Coral: June 2022
-As of August 2022, Permits are still under review by city.  Most submissions are under "Approved" status, but permit not formally issued.
-Lender currently has an estimated valuation of 410k for the property.


The hope is to buy and hold, LTR.  Current projected rent: ~$2450/mo

Needless to say, it has been a very interesting time to build.  We are excited, at times frustrated, and have a healthy level of anxiety, but all of those elements were expected from the start.

I'll try to keep this thread updated, as it has always been helpful for me to read others' experiences.

-Don

26Reply
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Most Popular Reply

Zach LemasterBusiness Member
Rental Property Investor · Denver, CO · Member since 2015 · 2k+ posts · 3k+ votes
4y

@Don M.

Thanks for sharing the details of your project!  Please keep us all updated with progress.  All normal emotions for going through the tedious construction process.  I'm right there with you.  Hopefully things continue to progress, and you come out on top with a huge equity position/high cash flow when it's all completed.  We are seeing about 50/50 split of people holding as rentals vs selling.  The avg equity position upon completion is about $150K with avg rent of $2,500 leasing in 3 weeks or less post CO.  Hopefully this gives you some light at the end of the tunnel.  Feel free to reach out at any point with any questions, or just to get a sense of how the market is doing overall.

[email protected]800-311-6781Podcast Guest on Show How to Get 10%+ Off Your Next Real Estate Deal Right Now
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  • Don M.
    OP
    Member since 2021 · 135 posts · 203 votes
    3y

    Pleased with some progress!
    All dirt delivered, and compaction tests completed.
    Next comes underground plumbing and slab pouring.

    4Reply
  • Rong Tan
    Member since 2022 · 36 posts · 26 votes
    3y
    Quote from @Don M.:

    Pleased with some progress!
    All dirt delivered, and compaction tests completed.
    Next comes underground plumbing and slab pouring.


     Whos your builder?

    1Reply
  • Ren Lin
    Member since 2021 · 2 posts · 0 votes
    3y
    Quote from @Rong Tan:
    Quote from @Don M.:

    Pleased with some progress!
    All dirt delivered, and compaction tests completed.
    Next comes underground plumbing and slab pouring.


     Whos your builder?


     delta build

    0Reply
  • Lorraine Patterson
    Rental Property Investor · Queens, NY · Member since 2019 · 94 posts · 27 votes
    3y

    Hello Don!, I have a home in SW Cape Coral. And I'm looking for land to build, in the same location. I've just begun researching, I would say about a month or so ago. A few questions if you don't mind answering.

    1. Did you work with a realtor to help find land?

    2. Did  you pay cash for the land?

    3. How did you locate a good builder?

    4. Do you pay the builder upfront costs?

    5. What kind of loan for this type of project, construction?

    Thank you!!!

    1Reply
  • Don M.
    OP
    Member since 2021 · 135 posts · 203 votes
    3y
    Quote from @Lorraine Patterson:

    Hello Don!, I have a home in SW Cape Coral. And I'm looking for land to build, in the same location. I've just begun researching, I would say about a month or so ago. A few questions if you don't mind answering.

    1. Did you work with a realtor to help find land?

    2. Did  you pay cash for the land?

    3. How did you locate a good builder?

    4. Do you pay the builder upfront costs?

    5. What kind of loan for this type of project, construction?

    Thank you!!!

     Hey Lorraine,
    All of my connections were through a turnkey provider, Rent to Retirement.  I'm not sure if they are currently working with any builders in Cape Coral at the moment, but you can connect with Zach Lemaster if you are interested in going that route.  They made the connections easy directly with a land broker, a broker for financing the deal, and a builder.  If you have questions about the builder I'm using, feel free to PM me.
    The land broker sent me some options to pick from based on the area I was interested in.  I did purchase my lot in cash.
    For the financial side, there are different options, and I am far from an expert.  For my particular situation, I have a construction loan that will be refinanced into a conventional mortgage (probably) upon completion.  Again, lot was purchased in cash, I sent about a 13.5k deposit to the builder, paid roughly 15k in fees and closing costs for the loan and have an interest only loan.  I pay interest only on the draws made to fund the build.  Right now my payments are only about 120 dollars a month, but as the build progresses and more draws are done, that amount will increase.

    6Reply
  • Lorraine Patterson
    Rental Property Investor · Queens, NY · Member since 2019 · 94 posts · 27 votes
    3y

    Thanks for all the helpful info. Don, this helps!

    2Reply
  • Ruchit Patel
    Bay area, CA · Member since 2021 · 383 posts · 306 votes
    3y

    Thanks for giving updates here, Don.

    Do you mind, elaborating on exit strategy? 

    If you refinance, for saay $400,000 value. So, you get $320,000 as 80%. Loan is ~$250,000.

    That would mean, you can get $70,000 cash out to invset more. 

    Now my question is; is ~$2450 rent enough to cover mortgage of $320,000? or now your deal will become overall negative every month?

    Thank you.

    1Reply
  • Rong Tan
    Member since 2022 · 36 posts · 26 votes
    3y
    Quote from @Ruchit Patel:

    Thanks for giving updates here, Don.

    Do you mind, elaborating on exit strategy? 

    If you refinance, for saay $400,000 value. So, you get $320,000 as 80%. Loan is ~$250,000.

    That would mean, you can get $70,000 cash out to invset more. 

    Now my question is; is ~$2450 rent enough to cover mortgage of $320,000? or now your deal will become overall negative every month?

    Thank you.


    mortgage probably but not PITI, cap ex, management fee etc let alone any cash flow..:( due to high interest unless you put more down

    0Reply
  • Ruchit Patel
    Bay area, CA · Member since 2021 · 383 posts · 306 votes
    3y

    Thanks for the quick response. 

    Then would you say, selling a house, getting full profit as cash, and then using that with 1031 to buy other cash-flowy properties would be a better way? or on a grand scheme, it's all come out to be the same?

    0Reply
  • Bernard Joseph S.
    Investor · NJ · Member since 2022 · 155 posts · 224 votes
    3y
    Quote from @Ruchit Patel:

    Thanks for the quick response. 

    Then would you say, selling a house, getting full profit as cash, and then using that with 1031 to buy other cash-flowy properties would be a better way? or on a grand scheme, it's all come out to be the same?

    He’d have to rent it out for a year before he could 1031 the sale tax free. 
    1Reply
  • Don M.
    OP
    Member since 2021 · 135 posts · 203 votes
    3y
    Quote from @Ruchit Patel:

    Thanks for giving updates here, Don.

    Do you mind, elaborating on exit strategy? 

    If you refinance, for saay $400,000 value. So, you get $320,000 as 80%. Loan is ~$250,000.

    That would mean, you can get $70,000 cash out to invset more. 

    Now my question is; is ~$2450 rent enough to cover mortgage of $320,000? or now your deal will become overall negative every month?

    Thank you.

     @Ruchit Patel  Great question.  I think ultimately, one thing I've learned is how quickly economic conditions can change.  It was just 12 months ago where the numbers aligned phenomenally and cashflow was looking crazy good.  It is hard to know where we will be in 9, 11, or 13 months, or whenever everything is finalized. 
    I will say, one of the appealing parts of this build, was the built in room for changes in the numbers.  

    My hope is to hold this property.  I'm partial to South Florida, and I believe in it long term.  

    It's hard to know what will happen.  If I took my best guess, investor rates may settle around 7.5% for quite a while.  If that's the case, I would likely hold the property without pulling money out and break even or cash flow a little.  My mortgage will be roughly 230-235k.   In a couple years, if rates come down, I would likely refinance and pull money out at that time.  With that said, it's all speculative of what the market will allow.  Right now, I'm just focused on seeing the project through and getting it done!  Currently, Cape Coral's inventory, new listings, etc are on the decline again.

    As @Bernard Joseph S. implied, I would take a sizeable tax hit if I sold immediately, but again there are a lot of market conditions at play.

    3Reply
  • Ruchit Patel
    Bay area, CA · Member since 2021 · 383 posts · 306 votes
    3y
    Quote from @Don M.:
    Quote from @Ruchit Patel:

    Thanks for giving updates here, Don.

    Do you mind, elaborating on exit strategy? 

    If you refinance, for saay $400,000 value. So, you get $320,000 as 80%. Loan is ~$250,000.

    That would mean, you can get $70,000 cash out to invset more. 

    Now my question is; is ~$2450 rent enough to cover mortgage of $320,000? or now your deal will become overall negative every month?

    Thank you.

     @Ruchit Patel  Great question.  I think ultimately, one thing I've learned is how quickly economic conditions can change.  It was just 12 months ago where the numbers aligned phenomenally and cashflow was looking crazy good.  It is hard to know where we will be in 9, 11, or 13 months, or whenever everything is finalized. 
    I will say, one of the appealing parts of this build, was the built in room for changes in the numbers.  

    My hope is to hold this property.  I'm partial to South Florida, and I believe in it long term.  

    It's hard to know what will happen.  If I took my best guess, investor rates may settle around 7.5% for quite a while.  If that's the case, I would likely hold the property without pulling money out and break even or cash flow a little.  My mortgage will be roughly 230-235k.   In a couple years, if rates come down, I would likely refinance and pull money out at that time.  With that said, it's all speculative of what the market will allow.  Right now, I'm just focused on seeing the project through and getting it done!  Currently, Cape Coral's inventory, new listings, etc are on the decline again.

    As @Bernard Joseph S. implied, I would take a sizeable tax hit if I sold immediately, but again there are a lot of market conditions at play.


     Thanks for the details. I didn't realize, one has to hold for a year to do a 1031 exchange. 

    And yes, interest going more than double, it took away $400-600 cash flow from that deal, right!! Let's a lot of money every month. 

    0Reply
  • Diane Felix
    Real Estate Consultant · 33950 · Member since 2022 · 17 posts · 7 votes
    3y

    Great update Don! There are companies "Build2Rent" that have inventory being built now (some CO'd already) selling complete SFH, Duplex + Builder incentives to include closing cash and 2 years PM paid! Cape Coral, Port Charlotte, North Port all up and coming areas in SWFL.

    1Reply
  • Kaohuhealani Trueman Jr
    Rental Property Investor · SF Bay Area · Member since 2021 · 8 posts · 5 votes
    3y

    Hey Don, what lender are you using to fund your construction loan? And how has your experience with them been?

    I'm currently in search of lender to fund my new build. Thanks

    1Reply
  • Don M.
    OP
    Member since 2021 · 135 posts · 203 votes
    3y
    Quote from @Kaohuhealani Trueman Jr:

    Hey Don, what lender are you using to fund your construction loan? And how has your experience with them been?

    I'm currently in search of lender to fund my new build. Thanks


     I am using Peak Asset Lending and the broker I used is Naycor Solutions.  Not sure if they are still funding these deals; I know they took on several projects in Cape Coral.

    1Reply
  • Mimi Phan
    Rental Property Investor · Orange, CA · Member since 2019 · 6 posts · 0 votes
    3y

    Hi @Don M.,

    Thank you for posting this thread. I am in a similar deal in Cape Coral through Rent to Retirement with the same builder (Delta) so I wanted to share our progress. We closed on the lot in November 2021 and started the construction loan in January 2022. The loan was for a 12-month period as the build was estimated to be around 10 months. However, we are much further behind in construction than anticipated, and the lender just reached to us to let us know that they can no longer continue funding because our loan just expired. We tried contacting Delta but haven't got a response yet on where exactly things are with the construction. Upon contacting Rent to Retirement, we were told by the rep that Delta "cut off" communication with Rent to Retirement and if we choose to continue with Delta Build, we will have to resolve issues with them ourselves as Rent to Retirement can no longer speak on our behalf. We were also told by the Rent to Retirement rep that our lender does not want to continue to work with Delta Build because of the delays. There have definitely more delays for our build than expected, but I am just curious if you have experienced similar delays with Delta? And does your lender have any issues with Delta?

    @Zach Lemaster I wish Rent to Retirement would have informed us of the communication issue they had with Delta Build. We were not aware of this at all, and now we feel like we are not getting the support we thought we would get with Rent to Retirement. I am sure we are not the only people experiencing this type of delay/issue. Any advice on how to move forward? Per the Cape Coral permit site, our construction is at the Mono Slab step.

    0Reply
  • Carlos JulioPro Member
    Rental Property Investor · Cape coral · Member since 2020 · 55 posts · 30 votes
    3y
    Hey Don, thanks for this thread! I would definitely hold it until conditions settle down a little bit, with that loan and interest and being brand new home your cash will be good. Eventhough prices has gone back 5% in some areas , the rent market here is limited and migration continues from northern markets

    I am investor in the area and live here, my properties have similar profile and are holding well. Feel free to DM if you need anything around here. 
    1Reply
  • Joseph Crunkilton
    Rental Property Investor · Oregon City, OR · Member since 2020 · 324 posts · 780 votes
    3y

    @Don M.

    Can you share details on the financing? I am interested in this given the potential for big equity. But it seems there have been difficulties on the construction end. 

    1Reply
  • Don M.
    OP
    Member since 2021 · 135 posts · 203 votes
    3y

    @Mimi Phan
    I went under contract Jan 2022, permits approved Aug 2022, but slab not poured yet.  However, I closed on my particular loan after permits were approved.  Your situation sounds challenging.  Have you had any guidance on potential other lenders that may be able to take over?  I have been aware about the two parties not working together any longer since nearly the start of the project.

    @Joseph Crunkilton
    I have a construction loan, where (after deposit to builder), I pay interest only on draws made by the builder.  My interest is 9.75%, but don't pay on the entire loan.  Once the project is completed, the plan is to than refinance into a conventional mortgage.  My particular lender is Peak Asset Lending.

    0Reply
  • Marlo LopezPro Member
    Rental Property Investor · Seattle · Member since 2021 · 3 posts · 1 vote
    3y
    Quote from @Mimi Phan:

    Hi @Don M.,

    Thank you for posting this thread. I am in a similar deal in Cape Coral through Rent to Retirement with the same builder (Delta) so I wanted to share our progress. We closed on the lot in November 2021 and started the construction loan in January 2022. The loan was for a 12-month period as the build was estimated to be around 10 months. However, we are much further behind in construction than anticipated, and the lender just reached to us to let us know that they can no longer continue funding because our loan just expired. We tried contacting Delta but haven't got a response yet on where exactly things are with the construction. Upon contacting Rent to Retirement, we were told by the rep that Delta "cut off" communication with Rent to Retirement and if we choose to continue with Delta Build, we will have to resolve issues with them ourselves as Rent to Retirement can no longer speak on our behalf. We were also told by the Rent to Retirement rep that our lender does not want to continue to work with Delta Build because of the delays. There have definitely more delays for our build than expected, but I am just curious if you have experienced similar delays with Delta? And does your lender have any issues with Delta?

    @Zach Lemaster I wish Rent to Retirement would have informed us of the communication issue they had with Delta Build. We were not aware of this at all, and now we feel like we are not getting the support we thought we would get with Rent to Retirement. I am sure we are not the only people experiencing this type of delay/issue. Any advice on how to move forward? Per the Cape Coral permit site, our construction is at the Mono Slab step.

     @Mimi Phan I'm in the same boat. I closed on the land in Jan '22 and permits were approved in Nov'22. The lender i had lined up originally then informed me they could no longer finance my build. So i lined up another lender and they just notified me a few weeks ago they couldn't do it either. I'm now on my third lender waiting to see if they'll be able to do the financing. It hasn't been easy and it's discouraging to see a lot of construction delays happening and lenders backing out because of it. R2R hasn't been much help either, since they can't communicate with Delta.
    Any luck lining up a new lender? 

    1Reply
  • Tom Wang
    Investor · Miami, FL · Member since 2022 · 18 posts · 10 votes
    3y

    Great post.  I'm in a similar boat and own a freshwater plot in Cape Coral.  I'm attempting to get it zoned to enable building a duplex.  Could you share a bit about how you identified the builder you eventually decided to work with?  Was it through internet search/referral/ other channels?  If you know anything about duplex builders (most seem to be single family only?), could you let me know also? Thanks!

    1Reply
  • Bernard Joseph S.
    Investor · NJ · Member since 2022 · 155 posts · 224 votes
    3y
    Quote from @Tom Wang:

    Great post.  I'm in a similar boat and own a freshwater plot in Cape Coral.  I'm attempting to get it zoned to enable building a duplex.  Could you share a bit about how you identified the builder you eventually decided to work with?  Was it through internet search/referral/ other channels?  If you know anything about duplex builders (most seem to be single family only?), could you let me know also? Thanks!


     How big is your lot?

    1Reply
  • Tom Wang
    Investor · Miami, FL · Member since 2022 · 18 posts · 10 votes
    3y
    Quote from @Bernard Joseph S.:
    Quote from @Tom Wang:

    Great post.  I'm in a similar boat and own a freshwater plot in Cape Coral.  I'm attempting to get it zoned to enable building a duplex.  Could you share a bit about how you identified the builder you eventually decided to work with?  Was it through internet search/referral/ other channels?  If you know anything about duplex builders (most seem to be single family only?), could you let me know also? Thanks!


     How big is your lot?


     Standard Quarter acre 

    1Reply
  • Bernard Joseph S.
    Investor · NJ · Member since 2022 · 155 posts · 224 votes
    3y
    Quote from @Tom Wang:
    Quote from @Bernard Joseph S.:
    Quote from @Tom Wang:

    Great post.  I'm in a similar boat and own a freshwater plot in Cape Coral.  I'm attempting to get it zoned to enable building a duplex.  Could you share a bit about how you identified the builder you eventually decided to work with?  Was it through internet search/referral/ other channels?  If you know anything about duplex builders (most seem to be single family only?), could you let me know also? Thanks!


     How big is your lot?


     Standard Quarter acre 


    Curious about the approval for a duplex on a standard lot. They tend to build out not up in CC from what I’ve seen. Someone with a better understanding will comment I’m sure but I tend to think it will be a difficult move. 

    1Reply
  • Tom Wang
    Investor · Miami, FL · Member since 2022 · 18 posts · 10 votes
    3y
    Quote from @Bernard Joseph S.:
    Quote from @Tom Wang:
    Quote from @Bernard Joseph S.:
    Quote from @Tom Wang:

    Great post.  I'm in a similar boat and own a freshwater plot in Cape Coral.  I'm attempting to get it zoned to enable building a duplex.  Could you share a bit about how you identified the builder you eventually decided to work with?  Was it through internet search/referral/ other channels?  If you know anything about duplex builders (most seem to be single family only?), could you let me know also? Thanks!


     How big is your lot?


     Standard Quarter acre 


    Curious about the approval for a duplex on a standard lot. They tend to build out not up in CC from what I’ve seen. Someone with a better understanding will comment I’m sure but I tend to think it will be a difficult move. 

    Yeah not anticipating it to be easy.  So I read about it here first: https://www.capecoralbreeze.co...

    And then I went to check the future land use map here: https://capegis.maps.arcgis.co...

    and apparently I'm in the light-colored area that says SM: Single Family and Multi-Family (even tho the lot is currently zoned Single Family)


    So I'm trying this based on the principle that Planning is more likely to approve a special use permit if it aligns with future planned use. 

    I've emailed the Planning/Zoning division so I'll update on what I find

    2Reply
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