Cape Coral rental investments

Rents heading upwards

After several years of flat rental rates, expect to collect more rent in the coming months. Across the board shortages of rental units due to condo conversions has created significant shortages of apartments.

National rental expert Greg Willett, vice president for research and analysis at M/PF YieldStar, anticipates that rents will likely rise between 5 percent and 6 percent in 2006.

From an investor perspective, it is time to take a fresh look at multi-unit properties. With the slowdown in property sales and many investors cashing out, the hunt for investments with acceptable cap rates is now less crowded.

Some quadplex options currently on the market in Southeast Cape Coral include: 614 SE 46th Terrace listed for $329,916; 3738 SE 9th Place listed for $459,300 and 1307 Academy Boulevard listed for $469,000.

703 SW 47th Terrace is a newer two-story six unit building on a gulf access canal listed for $1,555,000.

Please drop me a note if you are interested in looking at rental income investment property in Southwest Florida.

Rents heading up in '06 [CNN/Money]

NAR blog

Realtor organization joins the blogosphere

In a long overdue move, the National Association of Realtors (NAR) has launched a blog titled NAR in the News, to discuss how the media covers the nation's largest trade association. The blog will be produced by the NAR Public Affairs Division.

The NAR has lately been routinely hammered in both the mainstream media as well as by many bloggers. NAR in the News will provide this organization with a vehicle for shaping the real estate news. I do think that the general media has been most helpful in forcing the NAR experts to back-off some of their more optimistic opinions of late. Chief Economist David Lereah has really toned down his optimism in recent presentations.

I am most interested in the coverage of the ongoing battle between technologists and the NAR over the closed nature of our industry's MLS infrastructure. At some point this issue will become the holy grail of the real estate industry as third parties use technology to pierce this wall.

SW Florida rental shortages

Condo conversions tightening supply

Hard to believe that there is not a single apartment left in Bonita Springs. It is true, every last complex has been converted to condominiums. The conversion wave has put a real dent on the availability of rental units in SW Florida, adding to the region's ever growing affordable housing squeeze.

The whole condo conversion wave has always seemed a little crazy to me. Some granite, new cabinets, carpet and paint doesn't change the fact that the building is still 25 years old. How often are the major infrastructure items like roofs and air conditioners replaced in these projects? Not as often as you might hope for.

It does appear that the conversion wave is subsiding as the condo market has cooled and rental rates are on the rise. This is very good news for our residents that are unable to purchase a home.

No options in Bonita [Naples Daily News]

Appraisal challenges

Slowdown changes appraisal process

It is getting tougher to appraise the value of a home in SW Florida. With slowing sales and some price declines, appraisers are having a tough time arriving at fair valuations.

Historically the best comparison properties for an appraisal have been similar properties in close proximity that have sold in the last 90 days. Market-wide price declines throw a monkey wrench into the formula as they make the prior solds a less reliable gauge for value.

The on-line valuation site Zillow isn't helping much either as it is using county data that appears to me to be a bit stale. In this market, older data can set improper valuation expectations for homeowners.

As market cools, appraisals hard to gauge [News-Press]

Bubble talk

Florida is "ground zero"

Interesting comments from Bill Fleckenstein on the recent article in the Wall Street Journal covering the housing bubble. Florida was characterized in the article as ground zero for the housing market,

The real power behind the housing bubble, i.e., irresponsible lending, was exacerbated in Florida." Quoting from Mark Zandi, chief economist at Moody's Economy.com: "There were more lenders, more realtors, more foreign investors" than the rest of the country -- which is how a hot market gets really wild.

Investors should take note that many assets purchased at the peak of the run-up are now worth less. This situation creates a difficult decision for many investors. Should I hold the asset with the hopes that after the bleeding stops, it will come back.....or should I liquidate at at a loss. Every situation is different but these are questions that every investor needs to be evaluating with their property.

The housing bubble has popped [MSN Money]

Lee County migration

Lee 9th in nation for transplants

Lee County was ranked 9th in the nation from 2000-2004 for the number of people who migrated here from other locations. The Domestic Migration publication released by the Census Bureau indicated that an average of 15,654 people moved here from other locations in the period between 2000-2004.

The big question to ponder is whether or not the region can sustain this level of migration with property values that have more than doubled over this same time-frame. Certainly the affordability appeal will have lessened for many considering a move here. In my view the challenge right now is the growth of quality jobs in the area. Far too many Lee County residents have hitched their wagons to the real estate and tourism industries.

Lee 9th as transplant destination [News-Press]
Domestic Net Migration in the United States: 2000 to 2004 [US Census Bureau]

A view from afar

Supply Problem

The Charleston Post & Courier has an interesting view of the Fort Myers real estate market as it compares and contrasts it with the market in Charleston.

The coverage of the boom and subsequent slowdown provides a chance to review and reflect on the crazy ride we have experienced here in SW Florida over the past couple of years. The article quotes Denny Grimes,

"If you want to know where the market's going, you look at inventory," said Denny Grimes, a Realtor in Fort Myers. "We don't have a demand problem, we have a supply problem. We had a market binge and now we're going to suffer a little bit."

Grimes said he expects the angst to subside after a year or two; the market will start growing again but at a healthier, single-digit rate.

Describing the current market challenges as a supply problem is right on the money. Sellers shouldn't expect to see dramatic improvements in the short term. The first wave of sell-offs will be from investors that "have" to exit due to cashflow difficulties. Once these properties have been absorbed we can expect to see a return to normalcy.

Tale of 2 growing regions [Charleston Post & Courier]

Heartland Parkway

New Highway to Lee County?

A conceptual plan has been unveiled for a new parkway which runs through the middle of the state of Florida. This roadway would connect to SR 80 in eastern Lee County near the Hendry County line.

The north-south portion of the roadway would provide connectivity between eastern Lee County and I-4 about 20 miles south of Orlando. The east-west portion connects Bradenton to Port St. Lucie.

If built, this roadway will have a revolutionary impact on the value of interior vacant land throughout Florida. The relief that this roadway would bring to I-75 would be welcomed by the entire region.

Parkway may bring I-75 relief [News-Press]

Hold or fold

Is it time to sell?

The Real Estate Journal discusses the pros and cons of holding and selling investment property. With appreciation slowing and buyers disappearing, these are challenging times for many real estate investors.

Human nature has wired all of us to seek at least a break-even return on any real estate investment. Understanding a sellers break-even floor is a piece of information that can be very useful for a buyer in a slow market.

The decision to sell with a slim or worse margin is never an easy one. The factors that come into play are different for every investor and investment. A good real estate practitioner will help the investor to look beyond the simple break-even analysis.

Selling an Investment Property In a Cooling Real-Estate Market [Real Estate Journal]

Real estate auctions

Auctions.....proceed with caution

In a recent column, The Real Estate Professor discusses the ins and outs of real estate auctions.

There have been several auctions recently here in Southwest Florida and the results have at best been mixed. The Northport lot auction was deemed a success by those involved and the Marco Island property auction was considered as a bust.

Colleagues of mine who frequent distressed property auctions are typically looking to acquire property at least 30 percent below the market value. Many are finding this very challenging with the large crowds that often turn out at these events. I expect the crowds to thin at some of these events as the market cools.

Ins and out of auctions [Naples Sun Times]

Bonita Beach developments

Projects leading area transformation

Two condo projects are reshaping the section of Bonita Beach Road west of US-41. This area is home to older retail and commercial property.

The projects, Bonita Beachwalk and Bonita Village will bring over 200 new housing units to the area. Units in these low-rise buildings start at $349,000. Another development, Blue Marlin Cove will features high-end condos with boat docks.

It's all about simple living [News-Press]

Pondering Lehigh Acres

Major development pushing eastward

The News-Press coverage of the rapidly increasing level of development activity in Alva caused me to pause and think about the future of Lehigh Acres. Each additional step towards the development of the Babcock Ranch also causes me to ponder the future of Lehigh.

I recently took the nature tour at the Babcock Ranch and it is amazing how much of the ranch resembles Lehigh Acres, particularly the section of North Lehigh north of West 8th Street bounded by Sunshine Boulevard and Joel Boulevard. The stands of native pine and fields of palmetto are common to both of these areas.

The development along Colonial Boulevard east of I-75 and in the Gateway area, coupled with the plans in Alva have literally created a development ring around a sizable portion of Lehigh.

It is truly challenging to visualize several hundred thousand homes being constructed on the quarter and half acre lots that have been carved into the Lehigh landscape. The investor driven speculation throughout Lehigh has raised individual lot pricing to levels that limit the economic viability of an developer parcel assemblage strategy.

While I don't have an answer to the dilemma that is Lehigh, it certainly seems tragic that beautiful pristine places like the Babcock Ranch and the orchards of Alva are going to be developed before the Lehigh.

Citrus groves in Alva vanishing [News-Press]

No Vue

Fort Myers high-rise deposits returned

Investors in the proposed riverfront 28-story high-rise the Vue, to be located at at 13oo Hendry Street in downtown Fort Myers, were offered their deposits back. The project has run into difficulties gaining approval from the National Park Service due to its towering presence over Centennial Park.

With lackluster resale results at Fort Myers first downtown tower, Beau Rivage, the Vue investors are breathing a sigh of relief at the return of their deposit. Ultimately, a scaling back of the number of riverfront tower projects will help make the existing ones stronger.

High-rise investors offered refund [News-Press]

Waterfront lots - Ft Myers

Gulf access options in Fort Myers limited

One category of Southwest Florida real estate in short supply is gulf access lots in south Fort Myers. These parcels, which allow homeowners to keep a boat behind their house, offer boating access to the Caloosahatchee River and the Gulf of Mexico.

Most of the available lots are located along canals in neighborhoods between McGregor Boulevard and the river. This south Fort Myers area is highly sought after and contains some of the finest communities in the area. Fort Myers gulf access lot prices start at over $300,000 and range upward to over $5M.


At the lower end of the price range, 14570 Laguna Drive in Peppertree Point is listed at $333,333. This lot is .175 acres and has boating access to the river via a boat lift which can accommodate boats to 23 feet.



15346 Myrtle Street in Tahitian Shores is listed at $595,000. This .451 acre parcel includes a new dock and direct boating access.


997 Bal Isle Drive in Town & River Estates is listed for $847,000. This .293 acre parcel offers deep water direct boating gulf access.

Please drop me a note if you are interested in Southwest Florida gulf access property.

Disingenuous dirt dealer

Affordable housing....at what cost?

The News-Press ran an article on the plans of Jack Solloway, owner of Secure Holdings in Fort Myers, to give back to the community. He plans to build 200 affordable homes, priced at under $200,000, for working-class professionals like teachers.

What the article failed to mention was the army of telemarketers equipped with the latest tax records that are calling existing lot owners around the country and making ridiculous below market offers. The fact of the matter is that Jack Solloway's supposed good deed is being funded on the backs of property owners selling him their land significantly below market value.

Land dealer's mission: Sell Lee homes for $199,000 [News-Press]

Navigating the market

Strategy required for changing real estate market

Business Week has an informative article on navigating through the changing real estate market.

Tidbits of wisdom from the article include not following the herd mentality. The daily barrage of price reductions that we are experiencing is an example of this type of behavior. Lately, the MLS quick report link for deductions is disabled as the system will not return a report with more than 500 records. How ironic that a tool designed to provide a quick view of the "daily price reduction deals" is often incapacitated!

Another bit of wisdom is that in many areas, the cost of ownership far exceeds the cost of renting. This is certainly the case in the Fort Myers area particularly at the higher end of the market where there are some incredible rental deals for investor-owned properties.

As the market evolves, it is becoming increasingly important to pick the right real estate professional to represent you. Smart money says it is time to turn to a thinker, rather than your cousin's, best-friends neighbor. If you are in need of some smart representation, please drop me a note.

Buyer (And Seller) Beware [Business Week]