All Forum Posts by: Seth Nadreau

Good for you. While I'd never personally buy or build a new single family home, I'd totally buy a new multi-family property as new duplexes sell near what 2004 construction duplexes sell for and you have MUCH less wear and tear and will need lower annual reserves since you know your roof and your mechanicals will last longer.  

I'd disagree that inventory is "over-priced". There's not a lot of inventory at the moment, and income producers are a supply/demand market. There are a LOT of builders putting up brand new duplex properties in Cape Coral and many are marketed outside the MLS as builders are selling them nearly as fast as they can put them up. I'd recommend taking contact info of builder signs at the site of the build and speak with them directly about upcoming inventory.

Or... bite the bullet and get one listed in the MLS. At least you could have a tenant or two in place and start earning income on day 1.

Peter's a good guy. Can't step on his toes. In fact, I'd endorse him openly!

You may be able to do it for less if you're managing it yourself. I've seen some done as low as $94/sf... but that's usually on a larger home (as the $ decreases as the sf increases). Clearly, the more work you can do, the cheaper the build gets. Most of the time, the $/sf numbers also include builder profit, which would be backed out in your case. Just remember to account for all costs going in such as impact fees, well/septic, fill dirt, permits, inspections, concrete work (driveways and walkways), landscaping & sod, irrigation if desired, mechanicals, etc. 

If you own the land and are doing much of the work, your numbers don't sound unreasonable at all. Going all in for $100K might be a bit low, but I'd think $125K is attainable. 

I'd still recommend running the numbers by someone who's built here as my experience is primarily in appraising new construction and determining a cost based analysis for resale value. My numbers typically always include builder incentive/profit, labor costs and whatnot. That said, most people wouldn't build if they couldn't walk away with at least 20% profit, and that seems MORE than reasonable in your case. 

@Rich Cee Unless you're managing the build yourself, it's likely not happening. In my estimation, you'd be looking at about $108/sf for living area and another $40/sf or so for the garage. On top of that, you have well/septic, impact fees, landscaping, driveways, patio/lanai, etc. If you own the land, I'd estimate the cost to build a 1250sf home to be about $135-140,000+ land all in if you have ZERO builder profit.

On the plus side, that same home sells for $195-205K in the NE Cape. 

If I were building, I'd try to build at least 1500sf though. Your $/sf decreases as your sf increases. Also, 1450 is a VERY common size in the North Cape. Going smaller could handicap your returns a bit as buyers may buy a resale property just to get a few hundred more square feet. 

I know a GREAT team in Cape Coral. 

I'm a certified residential real estate appraiser and licensed broker here and my wife and brother are licensed sales agents. My primary work is in valuation, which means I know what to pay and what to sell for on a flip property. While I may not always be the agent that drives a buyer to 50 houses a week, I am the one who understands what income properties are, what potential is and what the numbers mean... and I do have the added benefit of a wife and brother who happily will do the driving and showing. 

Three for the price of one isn't a terrible deal... and getting one who knows the numbers of this market the way I do doesn't hurt. (Did I mention how humble I am?).

Please let me know if I can help with anything at all. 

Short answer. Larger equity in the market means more collateral for the debt. Massive debt isn't a bad economic issue if there's something securing that debt (or something liquid capable of securing that debt). 

It's the macro-market concept of leverage at work. 

While there may be some market corrections coming, the lending market isn't where it was in 2006-2007. PMI has been restructured to capture losses faster and better and many more deals going to closing have 20% down or more... ESPECIALLY in income properties. If a recession hits, it won't hit like it did in 2008. You'll see a stall in new home building, an increased inventory, higher days on market and then declining values at a much slower pace.

As an appraiser, I analyze market conditions with every report I do. In my area, MOST property types are seeing stability or slow growth (less than 0.15% monthly). Some pockets with fewer buyers (higher end homes) have already seen some declines and are back to stable. The market is in a much better place to self-correct than it was a decade ago. Stock market earnings are in-line as well... and the Fed seems really cautious about increasing interest rates, so most factors point towards a healthy economy.

As for that debt, I took out a $40K HELOC to fund my down payment on my recent buy and hold property. The rent pays for the mortage, HELOC payment and reserves with a bit of cash to spare every month. Sure, my debt increased, but so did my potential earnings and my net worth. :-)

I'm in Cape Coral. Lived here for 20+ years. 

As an investor friendly agent and certified residential appraiser, I have MLS access to pretty much every part of Florida and help investors find properties all over. That said, most of my out of area investors don't really need to see the property as they are looking more for cash flow than finishes. I won't drive all over the state showing properties. Primarily because I can analyze the numbers all day long, but there's something to be said for working with someone local... especially if you're looking for more than just a turn and burn income producer.

Now that THAT'S out of the way, I have a 3 person team down here with my wife and brother and we're always happy to work with anyone anywhere in Lee, Collier or Charlotte Counties. If I can offer any assistance please don't hesitate.

If you have experience, I'd recommend getting the license. 

To those of you reading with NO experience... GET THAT FIRST... then get the license.

If you do one deal a decade, then the license pays for itself. Do more than that and you're saving cash on the back end.

I just bought an annual rental. Took concessions and a buyer's side commission. #WorkSmarter :-)

As an appraiser, I can give you the following advice.

Rule #1 - Find Comps. They do actually exist. You may just have to increase your search criteria. Go out 5 miles and 12 months. Any luck? Go to 24 months. Ignore age (In my market, age has very little effect on value). Any luck? Go 10 miles. Think like a buyer. If the property you want is no longer available. What else would you buy?

Rule #2 - CAP RATE or INCOME APPROACH to value. What is the typical rate of return on investment properties in the zip code? The city? What's the Cap Rate when factored against sales prices? What's the rental rates of your subject property? What's the potential rate?

Never appreciate and never use $/sf of inferior properties. The laws of diminishing returns will almost guarantee over-payment.

If you're still SOL... just figure out what the average market response to bedroom/bathroom counts is and ignore everything else. 

There's always a way.