Southwest Florida Real Estate Market Report-August 2013

It looks like the recession of the housing industry is in full recovery especially throughout Southwest Florida.  Unemployment remains high in many areas of the country and GDP growth is slow.  But the housing market is looking good.

Higher demand paired with lower inventory has led prices to increase across the board.  This limited inventory is mainly due to two factors: years of repressed new home starts and lower foreclosure rates.  Land sales throughout the region including Cape Coral land sales are seeing growth in sales numbers and sales prices.  It’s as simple as the law of supply and demand.  When demand outpaces supply, prices rise. The proof is in the pudding of our current housing market.

Though mortgage interest rates have begun to creep higher, they continue to stay near historic lows.  Following the restructuring of the lending industry at the end of the last decade, banks are doing a much more thorough job at screening borrowers.  People know they’ll need to jump through hoops, and they are prepared.  What we are seeing right now is a pool of buyers that are qualified and ready to move into homeownership.  This pool continues to grow.  Buyer traffic is up 29 percent from last year, but inventory is down 10 percent.

When searching for real estate invesments, it’s easy to get excited when you see this rise in prices.  It’s time to dust off those properties purchased at the bottom of the market and start getting ready to sell.  If you weren’t lucky enough to grab any of those great deals, don’t despair there are still many great lots and land available for sale.   To learn about land for sale in Florida contact a member of the 9 Core Realty land sales team at (239) 333-2221.

Private, Secluded Lot in the Desirable NW Cape Coral Area

TaxMapImageOur 9 Core Realty featured property of the week is a beautiful private lot located off Burnt Store Road in the desirable NW Cape Coral Area.  If you are looking for a Cape Coral lot that offers amazing views of nature and offers a peaceful, tranquil atmosphere, you will love 4410 NW 36th ST.

With highly sought after direct Gulf access, this Cape Coral land is a boater and fisherman’s dream.  With water access just steps away, this property could easily accommodate a dock with 100 feet of waterfront property.

All the conveniences of the NW Cape shopping areas are just minutes away and Punta Gorda and Fort Myers are just a short drive away.  Enjoy all the amenities of being a Cape Coral resident, while still being secluded.

Prices in this area are going up quick, buy now, before this dream location is gone!

It’s a Hot, Hot Summer in the Lehigh Acres, FL Real Estate Market

The Summer of 2013 has been hot to say the least and we aren’t talking temperatures, we’re talking real estate.  The market in Lehigh Acres, a city of 86,784 in Lee County, is on fire this summer with land and home buyers finding great deals throughout the 95.98 square mile town especially on lots and acreage for sale.

Hit hard by the decline of the real estate market in 2008, Lehigh Acres has seen a large resurgence in its real estate market over recent years.  Land and home values are up and selling near market value, making it a great sellers’ market.  On the flip side, there are many great existing homes to be found at low prices through short sale and foreclosure, although they are becoming fewer and farther between.

For the first time since 2007, property values in Lee County are projected to have increased, at nearly 2 percent, with almost all 91 taxing districts seeing its numbers in the black.  Lehigh Acres real estate also has the highest projected increase in overall valuation in Lee County at 5.66 percent.

One of the perks of the Lehigh Acres market is the amount of vacant, available land for home building and investment purchases. There are many great land deals to be found throughout the city. gratiagroup.com is a top seller of Lehigh Acres land and lots and has an extensive property catalog of lots include dry and freshwater.  Visit us at www.9CoreRealty.com or call us at (239) 333-2221 to discuss your Lehigh Acres land needs!

With Less Investors in the Game, It’s a Great Time to Purchase Investment Land!

Are real-estate investors starting to run out of gas?  Single-family home investors, whose mostly cash purchases played a central role in healing the U.S. housing market, have started to slow down their buying, according to several surveys, land purchases by investors continue to trend upward.

Investors accounted for 20.2% of home purchases in May—still high by historical standards, but down from a peak of 23.1% reached in February, according to the Campbell/Inside Mortgage Finance survey of real estate conditions.  A separate survey conducted for MemphisInvest.com and Premier Property Management Group found that investors planned to slow their home purchases in the next year.

Several peripheral indicators as well as some individual market data suggest waning investor interest as well.  In May there were fewer offers for distressed homes like foreclosures and short sales, which are favored by investors.  Those properties stayed on the market for longer than in the month before and closed further below the asking price, according to the Campbell/Inside Mortgage Finance.

Reports from the National Association of Realtors and Trulia, a real estate listings site, both show a slight decline in foreign buyers — a big source of investors in U.S. single family homes and condominiums.

And, of course, even if investors are slowing their purchases it doesn’t mean they are leaving the housing market.  For starters, it’s not unusual for investor share to decline in the spring, when there are more owner-occupants looking for homes.  Also, many investors bought into the single-family real estate for the purpose of renting them out—income that continues to flow long after they stop buying property.

Fewer investors wouldn’t necessarily mean the housing recovery is in jeopardy, either. While surveys show investors are slowing down owner-occupy purchases remain healthy.  The number of offers for non-distressed single-family homes—which are favored by owner-occupiers—has increased over the past several months, according to Campbell/Inside Mortgage Finance.  Non-distressed homes are selling faster and the sales-to list-ratio, a proxy for buyer competition, is rising.

Still, anyone who got into the real estate market at the bottom couldn’t be blamed for leaning back or taking money off the table.  Prices have shot up housing inventory is low, making it a tough time to get cheap houses and a great time to sell at a premium.  On the flip side, if investors are dropping out of the market it could allow existing or new investors better land deals and a larger piece of the investment pie.

Tips for Buying Land through a Self-Directed IRA

Here are five things to keep in mind when considering investing in land or real estate through a self-directed IRA.

#1:  It Takes Time: It’s advised devising a timeline based on the account-opening process, transferring or rollover of assets and finding the actual investment.  It normally takes two to three weeks to open an account at a typical brokerage firm, and you’ll need to find a custodian who will hold real estate inside an IRA.  The down payment must come from IRA funds, so rollovers may be required.

When a real estate investment is contracted, the IRA account holder reviews and signs the purchase agreement and then the custodian must approve it and release of funds to the title company.  All of this takes time, so it’s imperative to learn as much as you can before jumping into a decision.

#2:  You Cannot Take Advantage of IRA Investments until you Retire:  You can’t use the fund to pay off your mortgage or live in or use the property you buy as an investment in the self-directed IRA.

You buy it because it is anticipated to appreciate in value, plain and simple. You also lose the depreciation tax deduction that you would otherwise receive on an investment property.

#3:  Your Spouse, Immediate Families or Companies you Have a 50% Interest in Cannot be Involved: While it is possible for the property to be held as tenants in common, an IRA is an individual account—and you must avoid any conflicts of interest.

Self-dealing or enabling a transaction that is beneficial to you on the other end is strictly prohibited.  You also cannot use the IRA as collateral for a loan; it should be treated like other retirement accounts.

#4:  It’s a Lot of Work:  While there are many highlights and potential benefits, many investors don’t fully appreciate or understand the reporting and administrative requirements involved in using a self-directed IRA to buy real estate.  For example, the investor should not be doing the work on the property, especially because he can’t get reimbursed.

All expenses, maintenance, taxes and insurance are paid from the IRA.  If there are association dues or golf memberships, those all must be withdrawn from the IRA.  Finding tenants and contractors may take time, and every penny in and out must be approved by the custodian.   In many instances land investment over an existing home is a better choice when purchasing with a self-directed IRA as no maintenance or dealing with tenants is required.

#5:  All Income from the Property is Tax Deferred:  That includes rental income and capital gains. If you plan to be in a lower tax bracket at retirement, this is quite beneficial.  You can also make tax deductible contributions to the IRA.

To learn more about investing in land or real estate through a self-directed IRA visit http://www.gratiagroup.com or call a member of our land sales team at (239) 333-2221.

Looking to Invest in Real Estate? Think land!

Many investors, especially first time investors, choose to invest in real estate over stocks, bonds, mutual funds or other types of investments.  Real estate is so popular for investment purposes due to tax breaks, its being a tangible asset, it experiences less depreciation, and the real estate market is less volatile than the stock market, among many reasons.

Within real estate there can be many investment choices.  You can purchase a home to rehab and sell, a home to produce rental income, commercial property or land.  Land is the wisest of investment choices within the real estate world for a variety of reasons.  In many instances vacant land for sale is less expensive to purchase than land with an existing home.  The land can be used for many future uses including building, development, resale, or personal recreation.  Also, the depreciation on land value is much smaller than the deprecation an investor would experience purchasing a home.

Within the Cape Coral and Southwest Florida market we are seeing a much higher ROI on land over land with existing homes.  Parcels within Cape Coral with Gulf of Mexico access purchased in 2010 for $20,000 are now being valued by the Lee County Property Appraiser and sold for nearly $50,000.  Quite a return in three short years!

Determining your ROI on Investment Land Purchases

When you look for ways to put your money to work, real estate may catch your eye as a source of potentially big profits.  Whether you buy a home to live in or purchase undeveloped land, calculate your return on investment.  ROI can include rents paid by tenants on houses, duplexes, apartment buildings and office buildings.  ROI also encompasses appreciation in the value of property, including a home, commercial buildings and unimproved land.

ROI with Leverage

If you put $20,000 down on a property worth $140,000, your investment is $20,000.  Don’t make the mistake of counting the full amount as the value as your investment.  Real estate investment allows you to leverage your money.  That is, you control a much larger value by putting down a smaller percentage on the purchase.  When you pay a down payment on a home, land or commercial real estate, you receive all of the ROI from that property.  A comparable investment in stocks, for example, might produce a return of 15 percent.  For a $20,000 investment, 15 percent is $3,000.  If your property worth $140,000 appreciates 15 percent, the increase in value is $21,000.   Calculate your ROI by dividing your gain by your investment and multiply by 100.  In this case, 21,000 divided by 20,000 times 100 shows that your leveraged investment produced a 105 percent ROI.

ROI Using Capital Gains

Capital gains come from an increase in the property value.  Even if you don’t sell a property, you can estimate its current value vs. the original value.  Use comparable properties in the local area for your estimate.  If you prefer, you can hire a professional appraiser.  Capital gains apply to any type of real estate, including a home, unimproved land or buildings you rent to tenants.  To calculate ROI using capital gains, determine how much the property has appreciated in value.  For example, if you invested $20,000 in a property and it went up $10,000 in value, divide 10,000 by 20,000 and multiply by 100 and you find you made a 50 percent ROI.

Total ROI

If you invest in a property that is leveraged (you make a down payment but get all the capital gains from the full value), produces income and incurs expenses, you need to combine all of your factors into one formula: ROI equals capital gains plus income, minus expenses, divided by your investment.  For example, if you had $10,000 in capital gains plus $5,000 in income, that totals $15,000. Subtract expenses of $2,500 and your net figure is 12,500.  Divide that by an original investment figure of $20,000 and multiply by 100, and you find that you made 62.5 percent ROI in this example!