All Forum Posts by: Trevor Fleck

@Will F. OOS investor here building 7 SFHs in NW Cape Coral - 6 of the 7 on freshwater canal lots. No one has a crystal ball for sure and it's easy to sound smart when the market goes up and up. That said, a few pieces of information to chew on from my own experiences and information I've gathered:

Back in early 2021, I could get a freshwater canal lot on the MLS for $10-$15k. Those same lots are now selling for $45-$50k. So a 4x increase in just under a year. In early 2021, I could construct a 1600-1700 sq ft 4/2 or 4/3 for $225k through Rent to Retirement. Now I can't do it for under $250k. So build prices went up about 10%, but land went up nearly 400%.

So some would look at that and say "I'm too late to the party." However, keep in mind that rent in early 2021 was around $1,800 for that 160-1700 sqft 4/2 and is now closer to $2,400-$2,500. Additionally, appraisals on that 1600-1700 sqft 4/2 that I could build all in for $238k (lot + build + closing costs) appraised for around $280k, but are now appraising for $360-$410k. 

So today you can still build a 1775 sqft 4/2 (current model I'm building) for just under $300k on a freshwater canal lot (lot + build price) that will rent TODAY for $2,500. I don't think rents can continue on their current upward trajectory. However, Cape Coral has some large tailwinds helping it out such as the massive influx of people (look up recent articles by UHaul on migration patterns and they cite Cape Coral/Fort Myers in specific), low supply of available rental and housing, and overall desirability due to weather, proximity to the Ocean, price point, low taxes, business-friendly state, etc. 

Personally, I think the underlying value of land is what will continue to increase at a rapid pace in 2022. You see that in coastal areas across the nation. It's the land that is the real value. At some point, the combined cost of the land + build (mainly driven by land increases) will reach a point where there isn't enough cash flow to justify anything other than an appreciation move. However, I still think canal lots this close to the Ocean in SW Florida under $50k remain a good value. 

Look, hindsight is 20:20. We all wish we would have bought 100 lots early last year. Who knew? Well @Peter Davis has been singing this for years, but unfortunately, most of us didn't know him then. However, I think you need to look at what's in front of you right now rather than lamenting that you didn't get in earlier and ask yourself if a new construction 4/2 1775 sqft home with a custom builder for $300k on a freshwater canal lot within a couple miles of the Ocean in Southern Florida that rents for $2,400 conservatively makes sense. It does for me. It might not in 6 months or a year, but right now I'm making hay while the sun is shining! 

@Danushka Abeyasekera and @Gopichand N. I currently have 7 builds in various stages of development in Cape Coral right now. The first will be completed next month. It's 1,600sqft 4/2 on a freshwater canal lot that will be listed for $2,500. When I purchased it (all in) for $238k almost a year ago, anticipated rent was $1,850. 

To your questions about delays in new builds, these things are true. My first build started in April and was originally anticipated to be finished in October. Cape Coral has the 2nd most new builds in the nation/capita right now and their inspection and permitting services are overwhelmed. It's a fantastic opportunity, but patience is key. In addition to the permitting department delays, there are the same material delays and resource delays due to COVID that you see anywhere else in the country right now. On the back end, I currently have a finished house on the interior that has been waiting 45 days for the State Dept of Health to conduct the septic inspection so we can finish. Is it frustrating? Sure! Am I going to make a lot of money making it worth it? You bet! 

I'm using Rent to Retirement and they have a couple different builders they work with - depending on the model you choose. 

@Trent Torzewski I have several builds ongoing in Cape Coral right now. Definitely pick @Adam David Graning brain as he actually has a STR in Cape Coral vs. just speculating. That said, right now I'm able to build for just under $300k. I was quote the cost for a standard pool, hot tub, and cage at around $60-$65k. Might be worth considering a new build and then renting out short term and adding a pool later if needed. Focusing on a lot that backs up to a freshwater canal might be a nice additional feature. Happy to brainstorm ideas if it would be helpful. Good luck!

@Tyler Piciullo have you looked into Southwest Florida around Fort Myers and Cape Coral? I'm working with a turnkey company - Rent to Retirement - and have had a lot of success with new construction (build to rent). Currently, you can get a new 4/2 or 4/3 roughly 1650-1775 sq ft home for under $300k that is appraising for anywhere from $360-$410k and renting for $2400-$2500/month. Might be something to look into. A lot easier than trying to compete on the MLS! Happy to chat more if you'd like. Good luck!

@David Epstein Look into new builds in the Cape Coral area while you're at it. STR occupancy rates average nearly 80% and you can build a brand new 4/2 or 4/3 between 1650-1775 sq ft house for ~$300k. I know a few colleagues who are doing quite well with short-term rentals in that area. Feel free to reach out if I can help point you in the right direction.

@Isham Zabala you'd have to get different insurance. 

@Michael A. investor here living in Raleigh. I actually chose to invest in other markets in others states. You'll have to really focus either on perimeter or rural markets to get under $100k for a house anymore. You could also focus on manufactured homes which get a bad name, but can be very lucrative investments. Out of curiosity, if you're out of state why focus exclusively on NC? It's certainly great for appreciation, a beautiful place to live, and has a strong economy in many parts, but all things being equal, I think there might be other markets better suited for an investment under $100k to get started. However, take a look at Fayetteville, NC where Fort Bragg is located. It's historically more of a cash flow market, but you might be able to find homes in your price range there. Also, Eastern NC in areas like Greenville or Goldsboro might be worth a look. 

@Blake Ramsey Think of it like being a student when you're researching for a paper. You look in the bibliography of an applicable book, and rent out all those books. After a while, you've found that the bibliographies you are referencing all reference books/articles that you've already examined. At that point you know you've pretty exhaustively covered the topic. 

In a market, I talk to as many vendors as I can - property managers, contractors, appraisers, realtors, etc. After a while you start hearing the same names and promising neighborhoods over and over again. Same with deal analysis. If you conduct enough of them, after a while you'll KNOW when you see a good deal and be ready to pounce. Trust your numbers, trust your team, and have fun! If you either don't have the bandwidth or still feel like you're just not sure, consider a turnkey company as a way to tap into an existing, proven network while also having a mentor to provide some guardrails for your first deal. That's what I did with Rent to Retirement. Either way, the biggest thing is to pull the trigger! You'll get a great education along the way and be even better with each deal. 

@Thomas Weiss Assuming you want to house-hack a multifamily property? I ask because Cape Coral in particular really lends itself more to SFH build to rent/sell situations at the moment. That said, the numbers are incredible. You can still find a lot and build for under $300k and appraisals are coming in between $360-$410k for a 1650-1774 sq ft 4/2 or 4/3. I personally have 7 of them going right now with the first finishing next month. So you might consider a snowball approach with primary homes where you acquire good financing, stay for at least a year, then move to the next and rent the previous one out. You could also rent out rooms within your SFH or Airbnb rooms like I did before my wife and I had kids. Reach out if you'd like to brainstorm or hear more.

Whatever direction you end up going, I think Southwest FL is the place to be right now. I use a free property management software called Stessa and they sent out a market update this morning and here were some of the highlights to underscore my points:

U-Haul and United Van Lines released migration studies earlier this month highlighting the markets that have the most inward and outward migration. Starting with U-Haul, which calculates growth states using the net gain of one-way U-Haul trucks entering a state versus leaving. The top states for growth according to this metric, (including their ranking in 2020) are as follows:

1. Texas (2)
2. Florida (3)
3. Tennessee (1)
4. South Carolina (15)
5. Arizona (5)

Similarly, United Van Lines compiled their , indicating “Vermont as the state with the highest percentage of inbound migration (74%) with United Van Lines. South Dakota (69%), South Carolina (63%), West Virginia (63%) and Florida (62%) were also revealed as the top inbound states for 2021.”

The study also found that “many Gen Xers are retiring (often at a younger age than past generations), joining the Baby Boomer generation. While many are retiring to states like Florida, United Van Lines’ data reveals they’re not necessarily heading to heavily populated cities like Orlando and Miami — they’re venturing to less dense places like Punta Gorda (81% inbound), Sarasota (79% inbound) and Fort Myers-Cape Coral (77% inbound). Similarly, in Oregon, cities including Medford-Ashland (83%) and Eugene-Springfield (79%) saw high inbound migration in 2021.”