All Forum Posts by: Clay Lehman

@Edwin L. - unfortunately, no.  In fact, the first one I finished came in closer to $150k due to the increase in construction costs.  We had a builder that was building 1,000 sq ft wood frame for around $130k but they just sold to Lennar and my understanding is that they won't be building that model any more.  It is hard to find anything under $170k in our area any more.  I was just talking with a friend that buys at FC auction and he said that somebody bid $140k for a house with assessed value of $97k.  It is getting really hard to make sense of the mindset of the investors coming into the market.

Edited to add that the good news on my house is that I ran my numbers assuming it would rent for $1,300, but it rented for $1,400 in a day.  So while it cost more to build, my return is still super healthy due to the increase in rent.

I would listen to the podcast. Those are definitely strong markets.  Happy to connect to provide boots on the ground input from an Ocala investor, realtor and property manager.  Also, I admire your commitment.  Welcome to Florida!!

@Daniel Ocampo welcome!! I’m an investor and realtor in ocala. Please let me know if me or my team can be of any assistance.

FOMO!!!!  The struggle is real!!!  I think you are right, though, it won't happen any time soon.  We have a lot of runway here in Ocala, which is good overall, but for an investor in buying mode, it is a bummer.  I think being strategic, not getting overleveraged, you will be able to participate in any decline in prices.  Sounds good on the deals, the ones we have selling now are all accidental landlords that are looking to get full retail, but if any of our multi-family comes up, I will let you know.  Message me your email and I will add you to our investor list.  Nice connecting with you!

Yes, there is definitely a lot of building going on, so your concern about saturation makes sense.  One thing I was thinking about yesterday that would offset that concern is that many accidental landlords are selling.  I know in our portfolio, we have a few a month that rather than renew, they are electing to take their chips off the table.  So that will have an offsetting impact on rental demand.  The question then is of all the factors of rental demand vs supply, what will the balance look like.  Speaking very anecdotally, meaning I haven't done a study, it still feels like demand is much, much higher than supply and even though more and more investors are interested in owning rental houses here and new duplexes and triplexes it doesn't feel like it did in 2006 and 2007 when you would see homes go up and sit vacant.

In my previous response, I was thinking you were committed to building, either now or after things pullback.  I think you are correct that at some point there will be available inventory of multi-family homes that are cheaper than building.  It comes down to trying to time the market.  It is hard to know when the pull back happens.  The approach I am currently under taking is to build now with the favorable financing terms, but I am doing one single-family home at a time.  I could do more but I want to preserve some dry powder if there is a pull back or even just an increase in distressed inventory post moratorium. 

Good afternoon Mitchell.  It definitely feels like a bit of a frenzy here in the Ocala market.  You are ahead of the game having the lots under contract.  Also, those financing terms are strong.  I think the conundrum of waiting for a pullback is you may not have the interest rate leverage you have today.  Also, what is your advantage in waiting for the pullback to build?  I guess the assumption is that in a pull back the cost to build will be lower.  I think I would run the numbers on various scenarios.  What does it look like if your cost to build is 10%, 20% lower but your interest rate is 6%, 7%, or 8%.  None of us knows what the timing will be on a decrease in cost to build or what interest rates will be in that same time period.  I think the demand for your rentals will remain high for the foreseeable future and you have some margin if rent prices pull back long term.  I think ultimately, I would say that it is better to build now with those favorable financing terms vs waiting for the cost of construction to come down with unknown financing terms.  Thanks for posting the thought-provoking question.

@Sendil Thangavelu - did the builder say the home is as-is with no warranty or did they ask you to use an as-is contract? The use of an as-is contract is common, but you would also expect to receive a warranty with a new construction home. I would make sure there is language in the contract referencing the warranty the builder is providing. If they are not offering a warranty, I would like to understand why. That would be unusual for new construction.

Ocala is a great area for buy and holds.  The buy part is a bit challenging due to the highly competitive nature of the real estate market, but the rental demand is equally as strong.  I look forward to connecting with you and discussing further.

@Rafael W. Good afternoon. I own a quad in ocala and I am building single family new construction homes as quick as I can. I also live and work in real estate here in Ocala. It’s a very strong market for a number of reasons, primary among them low price of entry and strong employment market. Do you have any specific questions I might answer?

@Chelsea Jeffers, greetings from Ocala! I am a fellow investor as well as a real estate agent. Ocala is a very strong area for rental investment. Great job growth supported by increases in distribution centers here. I will DM you some more info in the morning. The big challenge is like everywhere else is inventory is really thin.