All Forum Posts by: Trevor Fleck

Great post @Lesley Resnick. Are you constructing build-to-rent properties in Jacksonville or has that market become too hot? 

Thanks for sharing @Jay Hinrichs. That's a fascinating background. I may try reaching out to the Cape Coral zoning and planning group to see what I can find out about their plans for future expansion. 

@Bhavya Shah great follow-up questions. I'll answer what I can based on my experience, but I'd highly encourage you to reach out to the Rent to Retirement team if you haven't already. 

My lots are spread throughout NW Cape Coral. They are all fresh-water lots. Here are some of the pros and cons to fresh-water vs dry lots I've learned:

Freshwater Lots:

- Cost about $3-5k more than dry lots

- Rent about the same as dry lots - possibly $25-$50 more at most right now

- Usually an additional $5k for the developer to construct a 4:1 grade in the backyard down to the canal in lieu of a seawall

- The same model on a canal lot has been selling for roughly $15-$20k more than a dry lot

So all that to say, you'll pay more up front for a freshwater lot. However, as the saying goes "you can change anything about a house except its location." If you plan to hold the home indefinitely as a rental, maybe it makes sense to just have a dry lot. If you plan to sell or cash out refinance where an appraisal will matter, you may want to consider a canal lot. 

You have to understand that Cape Coral - especially North Cape Coral - is essentially a myriad of quarter acre plots owned my hundreds of different people - some investors, some not. So you don't have one large developer who can come in and buy 1,000 acres and build a huge development for example. While some investors have been able to purchase a row of lots, that's more of the exception than the rule. As such, small investors like you and me are on a more even playing field. 

Regarding the loan process, that will typically depend on the lender you go with. For me, I purchased the lot, received pre-approval, signed the construction contract, put down a deposit with the builder, then closed on the construction loan. Thereafter, it is indeed interest payments during construction. When you near finish, you'll approach a long-term lender to refinance into a conventional loan and pay off the construction loan in the process. If things go how they have been thus far, you'll not only pay off the construction loan, but often the new build will appraise high enough that you'll be able to pull out some or all of your investment as well (i.e., a new construction BRRR of sorts).

@Jorge Siverio yes I really did luck out. I wish I would have bought 100 of them! As they say, hindsight is 20:20. However, I did decide in late November to build on three of my additional lots and my costs (without lending) were $289k so not too far off from what you're seeing now. I'll likely be helping my dad with a couple builds for him later this month. Agree that the prices have risen dramatically - especially the land - but the numbers are still quite strong so I'll continue investing so long as the numbers make sense. Good luck Jorge and definitely keep me updated how your build goes!

Hi @Bhavya Shah, I was one of the first investors in Cape Coral through Rent to Retirement. I identified my first property in February of last year and officially closed in April. It will be finished next month. So 10 months total. The builder shares pictures along the way and I've also had both my parents and a contractor friend go through the house and they were very pleased by the quality of the build. I'll actually be going down there next week to inspect myself and then likely back out when it's done in February for a final walkthrough. 

When I first signed the contract in April, I was told my property would rent for around $1,850/month. Now that it's nearly complete, the PM plans to list it for $2,400! I was also "all in" for $238k including the lot, and the same model on similar freshwater canal lots are appraising for $375-$410k so I'm definitely very pleased and will plan to cash out refinance as soon as I can. Right now I have 4 lots under construction including the one mentioned above. 

I've not heard builds taking 18 months. I have heard 12 months however. I read somewhere that Cape Coral has something like the 2nd most new builds/capita in the nation right now and their permitting department is absolutely inundated. That's the real bottleneck and unfortunately that's out of everyone's control. 

To your other question, I've learned to be patient. After you close on the construction loan, you'll be staring at a piece of dirt for months and think nothing is going on. Behind the scenes there is a flurry of activity: surveys, design docs, permitting, ordering materials and delivering to the site, etc. So just be patient. It's been a long ride, but the built-in equity upon completion, strong cash flow, and appreciation I've had has been just incredible!

@Jessica Pearl I've purchased 7 lots in the Cape Coral area since February of last year. What I can tell you is that in less than a year, a lot that used to cost between $10-$14k on a freshwater canal in NW and NE Cape Coral (clean lot - no protected species, not in a flood zone, no trees, flat, away from busy road, etc.) now sells for ~$40k. So appreciation on land - even in the last year - has been substantial. However, depending on what you plan to do with the lot a few other things to consider:

1. In February my build cost was $223k for a 1600 sq ft 4/2. Today it's closer to $255k. 

2. Rent was estimated at around $1,800. Today it's closer to $2,300. 

3. Appraisals were coming in around $275k. Today they are coming in between $350k-$410k. So to @Stetson Miller point, if you plan to build and can get in (lot and build) for under $300k that does give you some options to sell if the market stays hot or rent for around $2,300 which is a great plan B or (or plan A with groups like Rent to Retirement). 

Aside from reviewing comments from 3 years ago and wishing I had purchased 100 lots at $8k/lot, I did want to mention that Cape Coral now allows a 4/1 ratio grade on freshwater canal lots which substantially reduces the price over having to build a seawall. 

Lastly, you know the saying about land, they aren't making anymore of it and there are only so many areas in southern FL under $50k that close to the Ocean. I'm not saying land is going to triple or quadruple like it has, but I wouldn't be surprised at all if it continues to rise through at least 2022. I'm personally executing a combination of some land banking, some build to sell (with renting as a backup option if the market softens), and some build to rent. 

What were you thinking of doing with the land? Just hold as an investment? 

Sure @Pratik Salanke feel free to connect with me directly on BP

@Tony Guillaro what a wonderful idea to organize this! Thanks for doing it. I wonder if there is a way (either this event or future ones) to have a remote element. There are many, many investors like myself who are out of state but invest in Cape Coral. It would be great to find a way to incorporate them as well. 

@Adam Berlinberg I was in somewhat of the same boat with a high paying, demanding job and young children. I'm in Raleigh so - like Denver - not an area where the 1% rule or anything close is easily achieved. When I thought through the spectrum of real estate options available from syndications on one end to self-sourced rehabs on the other I found myself looking at how much time I had, capital, and what was the most tax efficient investment. Sounds like you have non tax-sheltered funds available. You could invest in syndications, but you're interest gained will likely be taxed as ordinary income. I personally use my SDIRA to invest in syndication deals and lend funds but use my bank account for real estate investing using turnkey companies. With the turnkey route I'm able to leverage someone else's network/framework with minimal time relative to other options and take advantage of leverage of capital as well as expenses/depreciation write-offs. There are dozens and dozens of turnkey companies out there. I'd take some time to examine client reviews and speak with a few of them to find what works best for you. 

I personally invest in the Cape Coral area of Florida on new construction with a turnkey company called Rent to Retirement. My rationale for new construction vs. continuing with more turnkey rehabs was less maintenance and tenant issues than older properties in lower class areas. Additionally, the sunbelt is one of the fastest growing areas of the nation. So a nice combination of instant equity, likelihood of appreciation, and cash flow. Happy to share more of my experiences in different markets if you're interested. Good luck!

@Jay Taylor I bought one turnkey through Rent to Retirement in Little Rock. Nicely rehabbed 1978 brick ranch build - all major CapEx issues addressed. Got a tenant on a two-year lease and was like clockwork for me. Cash flowed well and I just recently sold it on a 1031 exchange for roughly double the money I had in it. Happy to chat about what I learned about that market if you're interested. Definitely look at Benton and Bryant.