SW Florida REO Investing – Missing the Boat?

As the Florida real estate market is just about as sellable as a deadly disease, seasoned investors are taking advantage of the massive amount of foreclosures, also known as REO’s that are so abundant. While banks are desperate to get some capital and cash flow moving again, they are deeply discounting the notes owned by homeowners to about 30% of the purchase prices, some even better! Some may think that you can pick up these REO’s and wholesale them or flip them for a quick profit…Not so fast. Unless you purchase a portfolio and achieve an even larger discount which is typically a bulk purchase bonus, your chances of wholesaling are slim at this point. As more and more people move to FL, realtors will continue to steer them to the foreclosures offered by approved brokers on the MLS. You may think that realtors will go for the higher dollar. Sometimes yes, but as of today, realtors are starving, literally. Even they are the victims of the market and are experiencing their own financial pain. So, by offering a lower price, they can assure themselves that even if the potential buyer shops around, the selected realtor knows that they are within market with the demand from the buyer, hoping to get the buyer to contract.

Investors with holding power are going to be the ones to succeed. In fact, you don’t even need a whole lot of money. Just good credit, a small down payment, and the patience to see the market turn around. One thing I am convinced by is that SW Florida will be the first to rebound, moreso than Ocala, Miami, Ft. Lauderdale, etc…Whether you realize it or not, we are in a bad enough economy to justify the word “recession.” Unemployment rates are climbing and employers know that they can pay less for people out of a job with the same experience. My opinion is that income will remain historically lower than the recent years. Home prices will need to remain affordable for years to come and the term “affordable housing” has never been so necessary. SW Florida has waterfront property, beaches, islands, entertainment and everything else that Miami has without its glamour. People relocating to Florida, including the baby boomers will continue to take advantage of what SW Florida has to offer, and its affordability which is back in full action where it needs to be. That said, our economy will become stronger due to lower prices, lower rental rates, and cheaper seasonal values, this bringing in additional surges of tourists.

As far as missing the boat, we have yet another adjustable rate boom coming up later this year and into early 2009. You think you are missing the boat due to foreclosures being bought by numerous investors? I don’t think so. The opportunity will be here for the next year or so for you to start investing in the market. We are in a sagging economy largely due to oil prices and the housing market. Again, patience is needed, and if you can give yourself that, your are destined to succeed.

To sum it up, I have recently purchased a brand new never lived in home in Cape Coral, FL for $115,000. It’s a 4 bed 2 bath home and over 2000 sq. ft. of living space. I haven’t even closed on it and a property manager has a lease in place already for me at $1,000 per month. I put 10% down which on this price is not bad, I pay all of my operating expenses and I am breaking even. If I can do that for 5 years, I will be in good shape. Imagine if I buy 10 of them and the market turns around by that time? Golden opportunities are among us. With insurance rates coming down this year, I expect next year to take in a positive cash flow on this property, and with the market seeing more and more purchases every day, I think the turnaround will be quicker than most. The chance is here, the choice is yours.