All Forum Posts by: Drew C Grossman

Hi! congratulations on your goal to find your first home, very exciting! Orlando is a super diverse market with a lot going on. As already correctly addressed on this thread, having an experienced GC or handyman willing to walk a property is a great plan however finding a reliable person to physically do the work is not easiest ...let alone finding someone to spend the time to walkthrough a property for estimating purposes. It's also worth noting that the most reliable people who do the best work tend to stay the busiest and are even harder to get to commit. Having /developing a relationship is everything in this industry.

With that being said, it's not super complicated to do a lot of research, planning and material estimating up front before you get your contractor/handyman/rehab partner involved. Once you have a lot of the basic costs and general plan in place, it will portray you as more serious when you go to find your contractor partner. Also an experienced local realtor who owns and invests in the area is a great resource. They should have a good understanding of the landscape to help give you estimations on the project.

How extensive do you anticipate this rehab? Is this going to be a full gut, light cosmetic or somewhere in between? Obviously it will depend on the specific property however you should have a general idea of the size of the rehab you feel comfortable undertaking and budget you have to work with.

Things like replacing a new roof, HVAC, cabinets, windows, ducts, appliances, flooring, baseboards fixtures, painting ect are all fairly easy to estimate and get a ballpark. It’s the labor part of the equation that is always the trickiest part. You wouldn’t believe the dispersion of quotes that we have gotten on rehab items. Using a HVAC/duct replacement example for a 600sqft apartment….I had two different companies that came back, one at $6,000 and one for $13,000. This is comparing apples to apples with same equipment install. It blows my mind that companies can be this far apart but it translates to all aspects of the business and you have to very careful. My partners and I have found success in calling a minimum of three…preferably five different companies for each project we needed done and taking detailed notes on your findings with each. You will be amazed how much you will learn by pounding the pavement and connecting with people in the industry. If you need recommendations, I would go to your local Ace hardware and check the business card board which they will have towards the front of the store and then ask the manger who they recommend for each project you need done. This will be a great starting point along with a google search of local business that do the work you are looking for!

If your project goes over budget it will usually be because of labor vs materials. The more on purpose you are with your rehab plan, the better odds of you finding a good contractor partner to limiter this risk. Are there things you can/want to do yourself? Obscure problems will create headaches and cost $$$ plumbing issues, electrical issues, crooked walls ect..

I would recommend hiring a qualified inspector when you get a property under contract. They will be able to write you up a report which you can use as your punch-list to estimate materials and then give to your contractor to quote you up before they even stop by the property.

If you need specific recommendations for vendors ect…feel free to PM me as I am very familiar with the Orlando market.

Best of luck and hope this helps!

@Evin Lynch

 Good advise. 

A lot of the policies I have in Florida (or have worked on for a client) on residential or small multi family offer a property insurance section and a separate general liability portion built in that protects from a variety of things. Having a reliable insurance contact to run things by to be certain is SOO critical. 

Hi @Cindy Joseph,

Congrats on the goal to purchase your first home! When do you close? Is it still your plan to live in one side?

Regarding LLC...its a super grey area because technically quit claiming ownership into an LLC can trigger a Due On sales clause ....though extremely unlikely is still a risk. The best way to figure this out is just to ask your bank! Most banks, especially if you are getting traditional financing (Conventional, FHA, VA ect) will make you close in your own name if thats how you are buying it. It is up to their discretion what happens after.

Assuming you do move ownership to an LLC....S vs C corp really depends on how you will operate this "Business" and I would defer to your Tax professional on specifics however there likely wont be a major difference especially with this being your first property. Although the differences will not be huge for your situation is still good idea to understand the Tax landscape.

On the rehab question, it shouldn't make a difference if you own under your name or LLC. When the roof company comes to replace roof for example, they will make sure you are owner and then go pull permits with county and handle.

Being that its your first property, I would really recommend using Zillow to do the basic back ground/credit screening and applications submissions. This service is currently a free service and super valuable! You will make your listing, add pictures directly though the zillow rental manager portal which is super easy. I have a draft of a FL lease I have used over the years I can send you, feel free to PM me. This is something you as the landlord can sign directly with the tenant however if you want a PM company or attorney to do so, you can hire out. 

If you are not looking to be hands on/ vet potential tenants ect you can always hire a Property Management companies such as my self who will typically charge 8-10% for full service, placing tenants, signing leases, income verification, collecting rent, dealing with maintenance ect.. 

Best of luck!

 I also work with investors in Florida and are doing a similar thing in the Ocala market with build to rent. I will shoot you a pm. 

@Dondi Sanchez - Hi Dondi, I have a commercial industrial/office building located in the outskirts of Orlando that was built in the 80's and Amwins/Axis gave us pretty favorable rates when we binded and still use them. We ended up putting a new roof and asphalt after we closed along with other upgrades and they didnt have a problem insuring from the beginning even though the building was in rough shape at purchase. Feel free to PM me and I can pass along our agent. 

@Guy Harris - Hey Guy, how did you find this 60K property? Are you getting a smoking deal or is there something that is severely wrong? I saw in your equity section the ARV is $125,000. There are not too many situations you come across finding a 60k property that rents for 1,250 so my first instinct is to be skeptical. Is this a manufactured or mobile home? If so, I would not allocate any appreciation as this is a depreciation"asset" similar to a car. If this is a normal home, does this require a significant amount of rehab? Why are the taxes only $83 a month, sounds very very low. What data do you have supporting your rental and property value information?

@V.G Jason

Here is a whats going on in the first phase of crossroads commerce park. 

The industry is made up of a mix of Distribution, Manufacturing, Healthcare, Construction, Government and the Thoroughbred industry. Marion County, where Ocala sits as the main city and county seat, is the horse capital of the world.

Marion County has a population just shy of 400,000 and is the 19th largest County in Florida out of 67 total. Geographically it is strategically positioned reaching 34 million people.... 40% greater reach than the I-4 corridor which spans from Tampa, through Lake Land, Orlando and then ending in Daytona (coast to coast). With lower operating costs and a better labor market dynamic, it has attracted many large companies to the area and serves as a major distribution Hub to the Southeast United States.

Amazon, FedEx, Orlando Health Care, Lockheed Martin, Dollar Tree/Family/General, Autozone, AT&T, Chewies are some of the companies that have all moved major operations here and continue to invest in the area. The completion of the Florida Crossroads Commerce Park on Hwy 484 in Marion Oaks will provide over 3 million square feet and 6500 jobs alone. Dollar Tree also has an additional 1 million square sqft in development at the moment and will be one of the tallest structures in Marion County at 145ft.

The Villages, a master planned community with a population around 100,000 is a major anchor to the area for the healthcare, retail, service and the hospitality sectors of employment. It is a newly developed community for mostly 55+ and is located in Central Florida with over 60,000 homes (most built in the last few years) encompassing 80+ sq miles from Marion County in the North, through Sumter County to the South and West and into Lake County to the East. The Villages is located 60 miles Northwest of Orlando off the turnpike.... and 20 miles South of Ocala off I-75. Since most of the workforce that works in this community is under 55+, they have no choice but to find housing in the surrounding areas like Marion Oak, Belleview, and Silver Springs Shores in Marion County.

Marion County remains under the Florida median home value of $410,000 sitting at $270,000 however that dynamic is shifting as the Ocala market matures. There are certain areas of Marion County that are growing much faster than others, therefore appreciating more and having more upside. I included a picture below to show what some of the growth pockets look like.

The rent /price point ratio is much higher compared to many markets in Florida and you can typically find 1% deals if you are diligent. With high yield, you do not sacrifice growth, this has caused a large investor interest in the area with a high percentage of the sales being cash. On the renter/ owner side, because of its strategic position, attractive prices and a lot of new construction options, this market has grown tremendously from areas like Orlando, Tampa and Jacksonville which are all less than 2hrs away. They have all expanded outwards and the next best option is Ocala. The workforce trends from COVID has also given people the opportunity to work remotely/from home and this area has seen a lot of growth from other areas of Florida and out of state where cost of living is much higher. People can get a new construction house with a bigger yard, work from home and save a lot of money by doing so but not sacrifice their quality of living. This has added to the demand for good quality affordable housing for people to purchase or rent. With cheaper and more accessible buildable land compared to other markets (which have run out of room) new construction fills this need in the market.

The infrastructure is already established in Ocala, with Interstate 75 running from Tampa, through Ocala and then running into the Southeastern states. The turnpike runs from South Florida, through Orlando and then into Ocala connecting on I-75. The turnpike is also scheduled for a road expansion in the next few years which will continue west through I-75 opening up the Southwestern quadrant of Ocala . 

Hi @Anna Sam,

Have you looked into Ocala, FL on your goal to find some cash flowing Multifamily/ Apartments? I have worked and analyzed deals, on and off market in virtually every part of Florida and have not come across a sub market with existing cash flow/equity upside as Ocala. There are certainly areas you want to be and areas you don't however the target markets we are operating in have a need for entry level "affordable housing" and small multi family fills this demand. I've been investing here for the past few years and have built a little over a dozen new construction single family homes and acquired a Self Storage building so am very familiar with the dynamics/management/renter quality ect and have been very pleased. Currently building a handful of 2,000SqFt Duplex(s) for under 250k all in project cost with a market value of $425k when built (comps). Why is this opportunity so good? We have a builder relationship that we have previously worked with has presented opportunity to build block properties at a very reasonable price per SqFt. The materials and labor side of the equation has cooled off tremendously since last year which is why the price to build makes sense. What is the catch....the biggest hurdle is having to pay cash in a draw schedule up front compared to using tradition financing which we have previously capitalized on. Essentially the builder is using our money to build vs there own which is why we are able to build for 60% of market value. Typically most people that do these deals are middle man flippers but in this case for us, we are keeping as long term rentals because the cash flow is great however this may be a great market to house hack or Brrrr with the amount of forced equity day 1 or potential finance down the road when rates cool off. You will find a handful of New Construction and even decent resale Multi Family deals on the MLS and will pay between $150-$180 a sqft for the older resales and $185-$225 a sqft for new construction depending on size, specific location, finishes ect. With this builder, we are building all in (with land) at $125aSqFt. These 2,000 SqFt 4/4 models rent out for $1500+ a side / over $3000+ of gross monthly income per duplex. For reference, annual Taxes and Insurance are $3,400 and $1,100 respectively for each Duplex.

Hope this helps and best of luck with your goal! I am curious to see other markets out there that may have this same type of potential as I have only invested and have experience for the most part in Florida.