The Fort Myers area is prominently covered by author Paul Reyes including a look at a mostly abandoned, upscale gated community. A book about the housing bust would not be complete without an examination of Lehigh Acres, where the authors parents purchased a vacant lot in 1969 on the $10/month plan while honeymooning in Miami.
An insiders view of trash-outs, the process of cleaning out a foreclosed property, is covered in great detail. Underwater mortgagees including one owing $220,000 on an $80,000 home discuss their plight in this book.
For those of us operating the in the Southwest Florida real estate market on a daily basis, foreclosures and short sales have become the norm. Missing appliances, overgrown lawns and green pools are just part of every day life. For someone just dipping their toe into the foreclosure market for the first time, these conditions can be quite an eye-opener.
Exile in Eden is a must read for anyone contemplating the purchase of a Fort Myers foreclosure. The book will help provide some perspective on the perfect storm of conditions that fueled the boom and subsequent housing bust.
The latest report on the Lee County rental market released by RealFacts of Novato, CA detailed shifts in our rental market for 2Q10. Lee County apartment occupancy rates in 2Q10 climbed 4% to 90.8%, the fourth highest in the 12 major Florida markets. Lee County rents for the same period dropped 9.1% to an average of $762/month. This decline in rental rates was the highest in Florida during 2Q10. The Fort Myers-Cape Coral market now ranks 9/12 in average rental rates in the 12 major Florida metro markets.
The biggest challenge for landlords in this market is the quality of tenants. Many who have lost jobs and homes are seeking rental arrangements. Also with our rock-bottom prices, the best qualified renters are purchasing in this environment, further skewing tenant quality. We are seeing a significant demand for lease-to-own arrangements in this market for those who have wrecked their credit via short sale or foreclosure. These types of arrangements may prove very attractive for investors with skinny or negative cash flow assets.
Here is a resource to view investment properties in the Fort Myers-Cape Coral market
The Miami Herald reports that Miami Heat president Pat Riley is being sued by a real estate broker over commissions associated with the Fort Myers land where Riley has developed the mixed-use Forum project. The broker claims Riley owes him millions as a result of a handshake deal they made 12 years ago. With no written documentation and a couple of deceased witnesses, on the surface this case appears to be a shakedown rather than a handshake deal.
The development of the Forum has truly changed the face of Fort Myers near the interchange of I-75 and Colonial Boulevard. Big box stores including Home Depot, Target Staples, Petco and Bed & Bath have filled a major shopping void in this part of the city. Restaurants including Five Guys, Subway and Bajio Mexican Grill round out the Forum at Fort Myers experience.
The residential component of the Forum at Fort Myers includes two discrete neighborhoods, the Colonnade at the Forum featuring town homes currently available starting under $100,000 and The Promenade at the Forum featuring single-family homes currently available starting at $165,000.
Beyond the sunshine and warm weather, the tax benefits of a Florida residency can be substantial. Everyone probably knows that Florida does not have state income taxes, but it is generaly less known that Florida estate taxes are more favorable than many other states.
One of the questions that many snowbirds ponder is whether or not to establish residency in Florida. Boca Raton Attorney Allan Lipman offers a free online audio domicile guide that covers the benefits of establishing residency in Florida. Lipman is licensed in both Florida and New York and his 10 part free audio guide provides numerous comparisons of the tax handling for both states. A good listen for anyone pondering an investment in Florida real estate.
My inbox today contained an e-mail that really troubled me, here it is (including typos) with the senders name redacted:
Subject
I BUY AND SELL SHORT SALES…
Comments
Hello Mr Mark, I’m an investor and I’m looking for a couple of self motivated and out- going agent(s) that wants increase their commissions by helping us find and buy high end properties in short sale. I have aligned myself with group of short sale negotiators in Fort Myers with years of experience in the short sale field, that will do the negotiation(s) with the lien holder(s) on your client/seller behalf at no cost to you or the seller(s). Once I acquire the property we will put property back on market (with you) giving you the chance to earn a double commission and becoming your seller(s) hero and by that the chances of more referrals and more daels. Please contact me ASAP to set up a meeting and discuss our working along side strategy on helping your clients as soon as possible. Sincerely:(redacted)
It is troubling to me that others have crafted business strategies to profit by taking advantage of others misfortune. I bet they never mention to the troubled homeowner that a deficiency judgment may very well be hanging over their head for the next 20 years.
The latest report on the Lee County rental market released by RealFacts of Novato, CA detailed some significant shifts in our rental market for 4Q09.
Lee County apartment occupancy rates in 4Q09 climbed 7.2% to 91.1%, the highest gain in the State of Florida. Lee County rents for the same period dropped 12.2% to an average of $776/month. This decline in rental rates was second in the State of Florida, trailing only the Ocala market.
It would appear that many of our residents who have lost their homes to foreclosure are now renting. With severely damaged credit associated with a foreclosure, many of these residents will be renting for quite some time. As these leases start to expire, I expect that we will see a significant uptick in demand for lease-to-own arrangements. These types of arrangements may prove very attractive for investors with skinny or negative cash flow assets.
One of the buyer misconceptions about our current Fort Myers area real estate market is that banks will approve ultra-aggressive, low-ball offers on short sales and foreclosures. Approving low-ball offers in Lee County has absolutely not been the operating model for lending institutions during 2009. Particularly for foreclosures, much of the discount on these properties is reflected in the aggressive selling price.
The numbers speak for themselves regarding the ratio of selling price to listing price. In 2009, 20,480 residential properties were sold in Lee County for a total of $2.7B. The average listing price was $140,706 and the average selling price was $132,068. This represents an average selling price to listing price ratio of 94%. Anyone who tells you that banks are accepting offers at 50% of asking price is just not dealing with reality.
Time Magazine covers the re-emergence of flippers to the Florida real estate market. We have certainly seen this in the Fort Myers area, particularly in the entry-level single-family home foreclosure market. Cash paying investors have bought up significant quantities of the inventory below $100,000, making it challenging for regular homes buyers with a mortgage to compete.
The Time article suggest that today’s investors are “good” flippers, as they are helping to clean up foreclosure messes and also are holding longer than bubble era flippers. The article reports that during the bubble many “cocktail party” investors bought at any price irregardless of whether or not the deal made economic sense.
Peter Goodman, the author of Past Due, which prominently featured the boom and subsequent bust of the Cape Coral real estate market weighs in with an update in today’s NY Times. This article is a must read for anyone with a vested interest in Cape Coral real estate.
Despite the echos of “we’re back” from many of my peers……which ring hollow up and down the banks of the Caloosahatchee, there is still much heavy lifting to be done in Cape Coral.
We sure are selling lots of properties right now, mostly foreclosures to bottom-fishing, cash-laden investors as well as pre-retirement boomers. This rush of recent investment is not going to solve the long-term problem here in Southwest Florida, that of economic diversity and the creation of quality new jobs. I would much rather see some of the stimulus money coming to areas like Cape Coral to stimulate the creation of new companies and industries. To me this would create sustainable recovery that cannot be realized with the highway projects that are being built all over the country.
Here is a video of a Las Vegas homeowner calling into Your Money on Fox News. The caller poses the question of whether he should strategically default on his underwater home. The panelist present arguments for both sides of this debate:
The first wave of foreclosures to impact Lee County were dominated by investor-owned single-family homes in Lehigh Acres and Cape Coral. Many of these were the speculative products constructed by the likes of First Homes and sold to under-qualified and inexperienced investors. These investors were the first to fall and many just walked away from their under-water investment. Many of these homes have now been resold to new investors at 25% – 50% of he original price tag.
As reported by the Tallahassee Democrat, the next category of foreclosures impacting our market are more upscale owner-occupied homes. These are homes are owned by middle-class Southwest Floridians suffering from the economic downturn. As reported by USA Today, many have lost their jobs and are not having much success finding a new one.
These economic challenges have created a buying opportunity for anyone considering an upscale retirement home in Southwest Florida. We are currently seeing foreclosures in upscale communities come on the market at significantly reduced prices. Upscale communities like Gulf Harbour, Miromar Lakes and West Bay Club have been impacted by recent foreclosures. Banks do not want to carry these homes and are doing whatever is necessary to quickly sell these properties.
The trail of false promises, scammed investors and deceit just never seems to end when it comes to Russ Whitney. His latest venture, Millionaire University is the subject of a class action suit filed by a group of scammed students. Basically, Millionaire University ran late night infomercials designed to lure naive real estate investor wannabees to a free seminar. At these seminars they convinced students to sign up for costly seminars and eventually over-pay for inferior new construction investments.
Its scam artists like Russ Whitney, Samir Cabrera and others that have made significant contributions to the Southwest Florida real estate foreclosure mess. With the record sales that have been occurring over the past couple of quarters, we are digging our way out of this hole. Investors are finding some interesting opportunities with Cape Coral foreclosure properties and Fort Myers foreclosure properties.
An ugly era in the annuls of Southwest Florida real estate history came to an end yesterday when Hovnanian sold the last 1,409 lots it owns in Southwest Florida. Hovnanian sold these remaining lots to a Czech investment group for about $3,000 each, a far cry from the peak value about 15X greater during the boom.
You may recall that Hovnanian was the NJ based firm that acquired local power-house builder First Homes back at the height of the market boom in 2005. Many attribute much of the blame of the current SW Florida market woes to First Homes and others who built sub-par starter homes in remote sections of Lehigh and Cape Coral and agressively marketed them to unqualified investors. The acquisition proved to be a disaster for Hovnanian, as they missed their earnings projection the first quarter after the deal closed and have had financial difficulties since the acquistion.
Superstar Southwest Florida broker Frank D’Alessandro and his connected sidekick Samir Cabrera were shilling for First Homes with a very shady lease-to-own deal. With superstar broker Frank D’Alessandro dead, his sidekick Samir Cabera heading to jail, Samir’s wife and TV Anchor Jessica Stillwell disgraced and off the air and Samir’s father-in-law former Lee County Manager Don Stillwell booted from office things have not gone well for this crew of First Homes pitchmen.
See you later First Homes, while you certainly were interesting to blog about, your legacy in Southwest Florida is not a good one.
The Globes reports on Israeli nationals targeting bargains in the US Housing market. With many priced out of the real estate market in the at home, the option to purchase in the US is very attractive:
Levy and other people with whom “Globes” has talked mention double-digit returns on investment. A comparison with the Israeli real estate market is necessary in view of the rise in housing prices in Israel in recent years, and Levy has no doubt which pays better.
“We cannot find such returns in Israel,” he says. “In Israel, the ratio between home prices and rental prices is disproportionate. An average three-room apartment in central Israel costs NIS 1 million and the average rent is about NIS 100,000 a year.
Southwest Florida leads the nation in foreclosures and homes are currently available at prices below replacement cost. Fort Myers foreclosures and Estero foreclosures are popular with foreign nationals. Many are investing now with plans to rent out the property until retirement.
The Miami Herald reports that foreign nationals are buying up distressed Florida real estate with the hopes of securing US citizenship via an investor visa. An investor visa requires a significant investment in US property. Locally, a Mexican national was granted an investor visa after investing $1M in a Bonita Springs restaurant.
We welcome foreign national investment to help fuel our market recovery. Distressed property is available throughout SW Florida, here is a resource to view Estero foreclosures and Bonita Springs foreclosures. Cash offers are the key for foreign nationals to move quickly on a distressed deal.
The Chinese drywall problems plaguing SW Florida were highlighted in a recent Wall Street Journal article. Anyone looking at purchasing a SW Florida homes built in the 2002-2006 timeframe should absolutely have a housing inspection performed by a building inspector with experience with Chinese drywall detection.
One of the key draws to Cape Coral Florida is the 400 miles of canals, most of which are lined with residential housing. Cape Coral, more than any other city in Southwest Florida, offers significant opportunities for affordable waterfront living.
At the present time, Cape Coral is one of the national leaders in term of the percentage of homeowners facing a foreclosure. Many of these distressed Cape Coral homes are located in a waterfront setting and are available at aggressive pricing.
Currently, prices start around $50K for an older Cape Coral gulf access foreclosure condo and $100K for a newer Cape Coral gulf access foreclosure condo. Older single-family gulf access foreclosure homes are available starting at $150K and newer gulf access foreclosure homes start in the mid-$200s.
Here is a free resource to assist in finding the perfect Cape Coral gulf access foreclosure home. Listings are updated on a daily basis to keep you at the pulse of this market opportunity.
Steve Sjudderud’s Daily Wealth has an interesting article about investing in quality properties at a fair price rather than less desirable property at a low price. This article hit home with me as we have been swamped over the past several months with investor inquiries for some of the lowest priced, lowest quality properties currently on the market.
Is a condo in the $20K-$30K range at a development with a defunct condo association a good deal? Is a Cape gulf access lot on a skinny canal on SW 17th Pl with the longest ride to the gulf a good deal for $30K?
Hopefully any investor out there, particularly those trying to do so from afar has found a good buyer’s agent that will highlight both the opportunity of a particular property as well as the challenges. It seems like many in this business forget the part about the challenges and just share the upside with potential buyers.
A new book, Exiles in Eden: Life Aong the Ruins of Florida’s Great Recession, offering an insiders view to the Florida housing crisis is hitting the shelves this week.
One of the buyer misconceptions about our current Fort Myers area real estate market is that banks will approve ultra-aggressive, low-ball offers on short sales and foreclosures. Approving low-ball offers in Lee County has absolutely not been the operating model for lending institutions during 2009. Particularly for foreclosures, much of the discount on these properties is reflected in the aggressive selling price.
