buy existing home vs buying lot and build home...Cape Coral (for sale, real estate)

[AZtoFL2021]

Post #1 !!!! WooHoo!
I'm contemplating a move to Cape Coral in a few years. The budget will be about $400k and we want a house on a canal with gulf access and pool. Somewhere around 1800 sf, 3bd 2 bath, 2 car garage. Nothing too extravagant. Anyway, when I look for existing homes, there are 425 meeting my criteria of under $400k. Then I got the idea of buying a vacant lot and then building on that. However, lots are very expensive even though there were 1607 waterfront lots for sale, a lot of them inland with no direct gulf access though. The lots with gulf access in the southern areas of the cape are at least $200k and many of them hundreds of thousands more.
Why are lots so expensive when you can but a home already built for at or even less the price of just a lot? Is there something I'm missing?
The family is going to spend a week in the cape this July to compare the heat with Phoenix. We'll see which is worse.

[rikoshaprl]

There can be a big difference in gulf access lots. You need to get familiar with the water map below. It will show you distance to open water, bridges and the lock. Some older homes are not built up high enough so flood insurance will be very expensive. A new home can be built to current flood and hurricane specifications.

Map of Cape Coral Florida

[AZtoFL2021]

Originally Posted by rikoshaprl

There can be a big difference in gulf access lots. You need to get familiar with the water map below. It will show you distance to open water, bridges and the lock. Some older homes are not built up high enough so flood insurance will be very expensive. A new home can be built to current flood and hurricane specifications.

Map of Cape Coral Florida

Very familiar with the map but I'm not sure how a map of the city explains why lots are so expensive and homes are relatively inexpensive.

[nhkev]

Originally Posted by AZtoFL2021

Very familiar with the map but I'm not sure how a map of the city explains why lots are so expensive and homes are relatively inexpensive.

houses were expensive then got overbuilt. typical supply and demand issue of why they were so cheap. Gulf access lots were not overbuilt. there is not an over supply of good gulf access lots. When I say good I mean there is only a portion that fall in areas that are close to open water. you can still get low priced gulf access in the extreme NW but will spend hours in the canals.

Lots were not as leveraged as houses were. as much as they are now I expect them to double over the next decade.

[AZtoFL2021]

For those that live in Cape Coral, do you think it would be financially wise to buy now and try to rent? Is it a challenge to find renters? Seems like there are so many homes for rent (either long term or weekly vacation rental) that it might be hard to find good renters. And at a price of $400k, the rent would be pretty steep just to cover the mortgage payment.
Your thoughts?

[rikoshaprl]

Originally Posted by AZtoFL2021

Very familiar with the map but I'm not sure how a map of the city explains why lots are so expensive and homes are relatively inexpensive.

That is not a city map but a waterway map. I just wanted you to see if you were comparing apples to apples as far as open water access. There are many people that want to build their own house. There are very few good vacant gulf access lots. The newer custom homes on good gulf access are not cheap at all. Only older homes are cheap compared to vacant lots. I doubt CC real estate will decrease any time soon unless the entire economy crashes, which could happen the way we are "printing" money and over spending.

[StreetSmarts]

Originally Posted by AZtoFL2021

For those that live in Cape Coral, do you think it would be financially wise to buy now and try to rent? Is it a challenge to find renters? Seems like there are so many homes for rent (either long term or weekly vacation rental) that it might be hard to find good renters. And at a price of $400k, the rent would be pretty steep just to cover the mortgage payment.
Your thoughts?

Youre looking to buy a home just to rent it out?

[AZtoFL2021]

Originally Posted by ComSense

Youre looking to buy a home just to rent it out?

Well like I asked, I'm trying to find out if that's a financially wise decision. I probably won't be moving to Fl for a few years. If I could buy and rent it out, I would probably do it. My fear is that home prices will rise over the next few years and the home I can afford now will become unaffordable.

[sunshinewi]

If you want to rent long term, like an annual rental for working people, that is probably beyond their means. You may rent it out for snowbirds but that is only for a couple months and then you cant use it. Have no idea what the vacation rental is like for off season, but I would guess that is location based. When we rent off season for va, we get sweet deals on condos on the beach.

[Restrain]

Rental vs cost for a canal home can be 1/200 of the value or less, as there can be a much higher differential in terms of what someone will pay for rent vs cost to acquire on higher priced homes. Just keep that in mind.

Second, home prices went up significantly this year. The reported increase was skewed by the reduction in foreclosures in the market, so the low end homes are going away. But prices have increased.

Watch the differential in acquisition costs in older homes vs newer homes. Large differentials due to age as a result of building code changes, and impact due to flood zone/storm damage repairs if necessary. Look into this when looking at a home.

Finally, new construction is significantly higher than acquisition costs for an existing home. Just are. You will likely be upside down as soon as the ink is dry on the deed.

So, in summary, annual rentals are doable, but, depending on down payment, cost, etc, may not fully recover the monthly cost. But it will help defray your ownership expenses. Further, rates are really low right now and the longer you wait, the higher the probable costs due to the combination of increasing housing prices, a declining inventory, and increasing interest rates. Finally, unless you absolutely want new, existing newer homes are the better value.

Hope this helps