What is the best type of investment property to buy and where? (Cape Coral: short sales, real estate)

[Alan2011]

Hello,

I am new to this forum and just spent more than an hour reading the 1000+ post about house prices on this forum. Some great information there but I am hoping that some of the people here can give me some specific advice.

Right now I am considering purchasing some single-family residential properties for investment. I am looking at houses priced between $40K and $65K and have about $300,000 cash to spend. I'd like to rent out these properties and hold for at least ten years.

I am considering the Cape Coral and Lehigh Acres areas.

I'd love to hear some suggestions on what the people on this forum suggest me to purchase.

Thank you for your time.

Alan

[TamRE]

Here are some things to keep in mind if you are planning to purchase an investment property. First of all decide how long you plan to own the property before you buy it. The longer you own the home, the more money you will need to put into it for maintenance, repairs, and improvements. Then decide your purpose for investing. Is it for rental income? Are you looking for a quick flip? Are you looking to build up appreciation and resell?

Don't count on appreciation. With the market the way it is right now, appreciation is not a guarantee. When looking at homes, you want to purchase a home that would have an attractive resale value no matter what the market is like. Obviously you would like to make a profit if you did resell.


If you decide to rent the property, you want to rent it for at least 1.5 to 3 percent of the purchase price. It is necessary to make sure your rental income will cover your out of pocket expenses such as the mortgage payment, taxes, insurance, maintenance, repairs and vacancy rate. Right now, demand is higher than supply. Check with local real estate agents or call rental ads to see what the going rental rate is within the areas you are looking to purchase a property.

Try an investment calculator such as the one at goodmortage.com. Go to their web site: Should I buy an Investment Property or Rental Home?. This will give you a good idea of the financial situation if you decide to rent an investment property.

There are tax benefits in any real estate investment whether it be rental homes, apartments, vacant land, commercial buildings, industrial, shopping centers, or warehouses. Check with your local tax advisor before entering into a purchase agreement for any investment property to make sure you qualify and follow the strict requirements.

Southwest Florida is flooded with foreclosure (REO) and short sale homes that are ripe for the picking for investors. Investors are seeing this as an opportune time to purchase homes below market value. It is definitely a buyer's market. Many homeowners have lost their homes, but still need a place to live. They are being forced to rent.

Investors can pick up a home, condo, mobile home, or townhouse at a low price. Some of these properties need little fixing up other than cosmetic work. They can immediately turn around and rent them. Rental companies such as Rent Me Florida don't always have enough homes to rent. See their web site at www.rentmeflorida.com. They also do property management. Tenants are just waiting in the background for something to open up.

Investors can rent properties as annual, short term, long term, and vacation. Investors can choose to manage the property themselves or hire a property management company to do some or all of the work. This may include items such as marketing the property, handling calls from tenants, collecting rent, and maintaining the property.

If you are going to rent a property be sure to know Florida's Landlord/Tenant Law. You can find information on this at Florida Landlord/Tenant Law Division of Consumer Services, DOACS (http://www.800helpfla.com/landlord_text.html - broken link). Don't miss your chance to buy these investments before the snow birds come back in town.

[CCRESI]

Originally Posted by Alan2011

Hello,

I am new to this forum and just spent more than an hour reading the 1000+ post about house prices on this forum. Some great information there but I am hoping that some of the people here can give me some specific advice.

Right now I am considering purchasing some single-family residential properties for investment. I am looking at houses priced between $40K and $65K and have about $300,000 cash to spend. I'd like to rent out these properties and hold for at least ten years.

I am considering the Cape Coral and Lehigh Acres areas.

I'd love to hear some suggestions on what the people on this forum suggest me to purchase.

Thank you for your time.

Alan

Alan,

Welcome to the forums!

Under 65k and you are looking at older homes, or newer ones with Chinese drywall or issues in Cape Coral. We have pretty much seen the bottom in this price range. Last year you could have bought a newer home for 65k-70k, this year, it is multiple offers and homes selling for over list price. 70-80k you could find something now. You have to do your homework in this area and have a Realtor familiar with the assessments. Cape Coral has City water/sewer and irrigation in some parts(SE,most of SW, some of NE) and in the North Cape, most will have well/septic. As a homeowner you will be responsible for when the city decides to add the city utilities into the area. Impact fees and Assessments will be due. Assessments can be rolled into your annual tax bill.
In Lehigh Acres, you can probably get a home that is 2000 year built or newer. Just be sure to get a thorough home inspection. A lot of homes out there have Defective Drywall too, or extremely high sulfur content in the well water causing issues in the home as well. Most homes are on well/septic. Lehigh can be a far commute to the city or beaches, so keep that in mind when you are thinking about renting.
In either area, I would look for a home that is in a good convienent location. At least 3 bedrooms, 2 baths. If you can find a newer home, great, if not at least a CBS(concrete block) home. The more structurally sound it is against hurricanes, the better your insurances is going to be. If you can, I would bump up your price limit to 80k and buy fewer homes. That way you buy into a better product and have less overhead. Don't be afraid of short sales either.
Rent is around 600-900 depending on area, for a 3/2.

I would also talk to a local Realtor and get on Listingbook. I hope this helps!!

[Alan2011]

Thanks to both of you for the information you gave me. Am I right in thinking that if I buy a property to rent that I should not pick too isolated an area? I notice NE Lehigh Acres and perhaps other places have some areas where there are many vacant lots and few houses. The houses seem cheaper there but I am concerned. Can you suggest areas that I maybe should not consider. Just to clarify I am looking to purchase and hold for at least ten years. Thank you.

[Alan2011]

Originally Posted by CCRESI

Alan,
Under 65k and you are looking at older homes, or newer ones with Chinese drywall or issues in Cape Coral.

I understand about the Chinese drywall problems but don't really know how extensive a problem this is and what age of house is more likely to have the problem. Also what do you mean by "or issues in Cape Coral". Is there some other issue I should be aware of. Thanks, Alan

[Florida Paradise]

I wouldn't buy anything in Lehigh, regardless of the price. I bought a condo approx 1 1/2 years ago when the market was nearly at the bottom (in 40 thousand price range) I did almost a year of research on all of the areas near Ft. Myers (except Cape Coral as I wasn't interested in it) Please look at all the posting regarding Lehigh and do you research. I think you will find that area to be less than desired for investment purposes.

[Alan2011]

Originally Posted by Florida Paradise

I wouldn't buy anything in Lehigh, regardless of the price. I bought a condo approx 1 1/2 years ago when the market was nearly at the bottom (in 40 thousand price range) I did almost a year of research on all of the areas near Ft. Myers (except Cape Coral as I wasn't interested in it) Please look at all the posting regarding Lehigh and do you research. I think you will find that area to be less than desired for investment purposes.

Thanks I will check back through more postings. Today I just spent a couple of hours looking but I know there's a lot more postings to check. Can I ask why you did not look into Cape Coral? I guess what had me interested in Lehigh was that I saw the houses there were selling for what looked like 25% less than those in Cape Coral and that was for newer properties.

[hiknapster]

It sounds like you don't know much about Chinese drywall or Lehigh, two very important pieces of the puzzle. There are hundreds or posts about those issues on here.

Lehigh has never appreciated much, if at all, except for the one-off that was the housing bubble. If you didn't sell during the sweet spot you were doomed. Run a search on here. It was the last bastion when prices went up and the housing projects shut down. At one point I followed two pieces of property from the first sale in the 60s and right on through. You can do it too by going to the Lee County property appraiser website.

In any event, it is not a very desirable area and that is putting it kindly. Anyone that tells you different has an agenda.

You should be running a search of Chinese drywall, too. There is hundreds of pages of information. Buying a home with it means throwing away your entire investment. It's easier and faster to just open your window and throw the money out.

Another place I would look is the local craigslist. Check the newspapers and VRBO, too. See all those rentals? Everyone had the same idea, too. Yes, an incredible amount of people lost their homes, especially if they were in the construction/real estate industry which turned the area from a low-to-moderate retiree spot to a boom town. Now things are back to the way they were with a lot of empty homes that are being bought up with budget-minded retirees and investors. Lots of investors with cash.

The area may be turning into an enormous game of musical chairs, again. Or not. But you need to do more research. Get your boots on the ground, too. There is nothing like seeing the area with your own eyes.

Bear in mind that the area is very much dependent on "season" which runs roughly from November to April but mostly January to before Easter.

[hiknapster]

Originally Posted by Alan2011

Thanks I will check back through more postings. Today I just spent a couple of hours looking but I know there's a lot more postings to check. Can I ask why you did not look into Cape Coral? I guess what had me interested in Lehigh was that I saw the houses there were selling for what looked like 25% less than those in Cape Coral and that was for newer properties.

And surely that sent up some red flags?

Let's put it this way, you may be able to rent out a home there. Maybe. But will you want the tenants?

Do a search.

Another word of caution. Just because someone bought some investment property does not make them an expert. Cape Coral is one of the lowest crime areas in the state. Fort Myers is not.

There are water assessment issues in Cape Coral so you will get a killer deal in the north but there may be an assessment issue down the road. Personally, I think the northwest area of Cape Coral has the best deals, even taking the assessments into consideration. The schools tend to be better, too.

Fort Myers can be a mine field, with a good area abutting a ghetto. If you don't know what you are doing it is not a good idea and a lot of these investors didn't know the area well enough.

[rikoshaprl]

Boy is Hik right about getting your boots on the ground. You can look all you want on Listbook but don't buy anything without driving through the neighborhood and checking it out carefully. Now that I am here, in Cape Coral, I am often surprised that areas that I thought were great are only mediocre and vice versa.