All Forum Posts by: Alvin Taveras

Yes, It's done all the time. Many of my clients are selling out of their markets and do 1031 exchange to buy Build 2 Rent properties in Florida. The challenge is timing the sale and closing on the new property so that it meets the required time frames.

Let me know if you have any additional questions.

@Kristen Savino

If you are concerned about high operational/repair expenses, then you might want to consider going to new construction. With these, you'll be the first owner and will have the builder/manufacturer warentee. This might be the best way to quickly pull the trigger and have a more "hands-off" approach. 

Let me know if I can provide any additional assistance!

Build 2 Rent is the preferred strategy for most of the investors I work with. In many cases, these new construction properties are less than buying a resale home while generating higher rental rates and less maintenance costs. If you are not looking to do any value add, this might be a good strategy for you. 

A common mistake is purchasing a lot then, looking for the builder and finance. I know several investors who think they can save money by building a property themselves only to find out they can't get a construction loan for their investment property. To avoid this scenario, we recommend purchasing from a builder who is building the spec property themselves and is financing the construction. I don't know the Atlanta market as well but this is our preferred strategy in Florida. Hope this helps. 

Woodframe construction in Fort Myers is common for homes built before 1992. After hurricane Andrews, the building code change and concrete block construction in now the standard and is preferred by most. In northern parts of the country wood frame is normal. In South Florida, concrete is the norm for the first floor. Two-story houses/buildings usually have a wood frame from the 2nd floor and up. The main concern is moisture and wood-destroying organisms found at ground level. 

If it's a cashflow play, then the downsides of the wood frame is simply a number to put into the equation. It might be a bit more headaches but if you are looking to invest in that area, then you basically decided that you are okay with a little bit more work in exchange for greater returns.

Let me know if you have any more questions.

I know the Fort Myers market well and don't fully understand the benefit of buying a home built in the 30's unless you are really bullish on the midtown redevelopment projects. 

Both markets have plenty of options. Lehigh tends to look better on paper while Cape Coral seems like a more stable investment. The purchase price for a 2/2 in Cape Coral is a bit high. We currently have 3 in South Cape w/ assessments paid for under $300k. I also agree with @Matt Dombrowski that rents seemed a bit high. But this depends on upgrades and location. 

If you are looking for New Construction Duplexes, then Lehigh, Port Charlotte, Englewood and Palm Coast are excellent markets for this. Your acquisition cost will be similar to what you listed while getting the higher rents you might be aiming for. 

@Peter Davis is on the money with his case study. Both examples are ideal. With the Cape opportunity mention, the previous owner had rents way to low and as a buyer, if you find these opportunities, all you often have to do is raise rents. In Lehigh, you can find many gems that are just 15-20 years old with previous owners unwilling to pay for the repairs. These often have the same layout and rental rates as newer. Just may require some sprucing up. 

Let me know if I can provide any further assistance. - Alvin

@Cj Powderhorn thanks for the recommendation. Yes, we absolutely crushed it with that Cape Coral duplex deal. You forgot to mention the new roof, water heater and low insurance rates. lol. 

@John Devine, I'm about a month late, can you provide us an update? Were you able to use the 1031 exchange for a property?

Like @John Thedford mentioned, usually planning for a 1031 happens before the property is even listed. I have heard of doing a 1031 done retroactively but have never seen it done. Definitely speak with an expert (@Bonnie Griffin Kaake seems to know her stuff), I also have some local contacts. New construction, Build 2 Rent is a good option as you can identify early and close on the new purchase much later. This can remove the urgency when buying and selling a resell property.

Look forward to the update. 

@Anthony Morrow

Yes, with every builder there are inventory and timing constraints. This is why I always work with several builders at a time. Typically, these builds come in waves and it can be a challenge to wait for the next wave. There are several on and off-market opportunities available. Some are already built with tenants in and others will be ready in the next few months. With the low inventory, It's important to have the right partners not only help identify but actually help you get the property. Let me know if you have any additional questions. 

@Kelly Reynolds thanks for your great question.

I recently interviewed Reed. Here is a link to the video. https://youtu.be/AkZZCHQldEk

In working with Estero and several other builders in the area I'm always working with my Investors to identity the best options for them. There are many factors to consider but right now, comparing price, sqft, rental rates and inventory; they offer a great product. Prices have gone up with every builder but they managed maintain a lower price point. Lumber prices are going down which may help maintain this lower price point although lot prices keep going up. There are several new options coming available including a 4 bedroom and duplexes. I just emailed a list to my Investors and am already working on 4 contracts.

Most investor are walking into immediate equit with, property management already in place. Completed property are rent ready with basically everything except washer and dryer (tenants bring their own). As most investor aren't local, I always drive by my client's properties during the construction to keep updated.

I could go on forever but let me know if you have any additional questions.

Hello @Cj Powderhorn,

This is a great question. I'd love to see what options come up. The biggest challenge is inventory. Everything is being sold before it hits the market. I have North Port and Port Charlotte inventory that has a decent cash flow. These markets are less saturated with investors and have high rental demand. 

I'm sending some addresses of current inventory your way now. Let me know if I can provide any further assistance. 

@Julie Sisnroy

On a high level, all three a comparable and all great for long-term investments. They each have the same appeal. Great residential (bedroom community), great SW Flordia weather, near beaches and very affordable compared to some of Florida's larger metros. large growth expected throughout the region. With our currently low inventory levels, I would recommend comparing the options (actual address) that are available. You are going to need some local insights here.

Cape Coral is huge. And each region of CC would have a different investment strategy. Although its growth potential is more obvious, building a new construction behind a future carwash isn't a smart move. Furthermore, inventory is hard to come by. Two weeks ago I had five built-to-rents available, all sold within the week. The last investor wanted three and I only had 2 left. 

North Port and Port Charlotte are often overlooked by investors but not by the homeowners and renters that choose to live there. They also have low inventory. Many areas feel more secluded and peaceful. Rental demand is very strong here.

Let me know if I can provide further assistance.