Too Soon to Retire - But Don't Want to Pay Future Higher Prices?
This month's report is heavily dedicated to the investment aspect of the SWFL real estate market. Every week we are asked by future buyers how our rental market is doing. It is no exaggeration to say that our local seasonal and annual rental market is the strongest in the nation. Home rental prices in the Cape rose by 24.5% in 2015 (highest in the country), and both annual and seasonal rentals in the city are in very short supply. It's a good time to give our semi-annual warning to people who plan to rent a home during next winter: RESERVE IT NOW. If you wait until near the end of the year your rental selection will be depressingly dismal. Property managers tell us that much of winter 2017 is already booked, with some reservations for winter 2018.
Many future retirees and future snowbirds are buying a home now and renting it out seasonally via VRBO and/or a management company (which we can suggest). Approximately 4 1/2 months of seasonal rent pays for all expenses, the owners get to use the home when it's not rented, and most importantly they lock in today's prices and enjoy any future appreciation. Many of our clients who bought a few years ago are realizing appreciation gains of $100,000 or more on their waterfront homes.
For example, because of continuously rising prices, a gulf access home that could have been purchased a few years ago for $350,000 is now priced at $450,000 - $500,000. Many clients who are now retiring and haven't bought a SWFL home are finding that they have been priced out of the market. This scenario will play out again in the coming years, and a buyer is then faced with either significantly increasing their price point, or accepting a much less desirable home and/or neighborhood. We make an increase in commission for every year that buyers delay, but it's disheartening to us to see the expression on client's faces who look at homes now and realize how much less home they can buy than a few years ago. Call Tom if you wish to discuss seasonal rental strategies for waterfront homes.
Real Estate Ownership Via Self-Directed IRA's
A few decades ago we learned about the many advantages of buying/selling real estate via a self-directed retirement account. Since that time many of our family, friends and clients have benefited from this savvy financial strategy (especially for those of us not familiar or comfortable with stocks, or dissatisfied with low CD or savings account rates). We are better able to gauge when to buy or sell our real estate investments, and there is the added advantage of either delayed income taxes (or zero income taxes if purchased via a Roth IRA). You can even own real estate with a combination of personal funds and retirement funds.
There are a few national Self-Directed Retirement Companies, but we are fortunate to have one of the very best right here in Ft Myers, called Midland IRA. To learn more about the benefits, restrictions, and costs of a self-directed IRA go to their web site @ www.midlandira.com
if after reading the info on Midland's web site you still have questions, call one of their knowledgeable representatives, or call me if it relates to a specific type of investment in our area. I'm very familiar with Self-directed IRA real estate investing.
Cape Coral/SWFL Real Estate Market Stays Very Strong
The local real estate market seems to be getting stronger even as we head out of what has historically been our "high selling season". May was one of the strongest months of the year, with prices continuing to rise, Cape home inventory falling to a scary level of below 3 1/2 months, and the average home selling at very near full asking price.
MLS figures indicate that our strong home sales will continue into June, and very possibly into the traditionally very slow summer months. Based on the past two years it appears that our area will now have an 8 - 9 months of strong real estate sales, with the other 3 - 4 months being semi-strong. In the past, we enjoyed 4 - 5 months of strong home sales, with 3 or 4 months of average activity, and about 4 months of extremely slow sales. Those days are gone, at least for the foreseeable future.
Flipping Is Out - Long-Term Investing Is In
When the real estate recovery started back in early 2011, we, along with many other investors made a tidy profit by buying, remodeling and flipping homes. In the first three years of recovery the average appreciation rate in SWFL was about 25% annually, thus ample margin to make money by flipping homes. In the last few years the appreciation rate has settled to a more reasonable 7-11% annually. Another hindrance to flipping in SWFL is the shortage of construction labor. So, more people are buying homes to rent out long term (as described in the articles above), or buying lots for long term investing. Waterfront lots in Cape Coral are appreciating at least as much as homes, with no managerial effort or unexpected expenses.
The one scenario in which flipping can still be profitable is if the buyer is handy and can do much of remodeling. An even better strategy is to buy a fixer-upper, remodel it and then rent it out for long-term income and appreciation. Tom:
as an investor and Realtor for four decades, I've read and learned a lot about investing, retirement planning, income tax strategies, etc. Let me know your situation and objectives and I'll be glad to make investment suggestions as if it was my own money being invested.
Cape Coral: #5 Best Boating City in U.S.
51,000 Registered Boats in Lee County
Smart Asset recently conducted a study and announced that Cape Coral was the fifth best boating city in the country. The analysis focused on weather, along with the cost and convenience of boating. Cape Coral's 400 miles of canals (most of any city in the world) likely played a major role in the high ranking. It's also very convenient that so many boaters are able to park their boats on the water in their own back yards.
With all the national recognitions for Cape Coral that we've reported we wouldn't blame you for wondering if we might be making some of them up. Honestly, we aren't!! Actually, we can't believe how many accolades one city has received either, but we'll keep reporting them as they come in.
Ft Myers Riverfront Home Listed at $25 Million
Sanibel Home Breaks Sales Price Record - $6.837 Million
A riverfront home at 1240 Coconut Drive was recently listed for $25 million. The home was purchased in 2008 for $2 million, torn down and a 9,532 square foot $14 million luxury home built on the 2 acre parcel. Among the many features of the home are 2 private access roads, an elevator, home cinema room, gym, a separate1,925 guest house and 200 species of flora. This home will rival the Naples McMansions...in appearance and price - at $2,682 per square foot. Sue: if any of our clients are interested please contact us before this home flies off the market
The highest recorded residential sale in Sanibel Island's history closed recently for $6.837 million. The home at 3421 West Gulf Drive was 5,534 square feet on 1.34 lush acres in an estate neighborhood. The last comparable sale was in 2007 for just under an acre of beachfront, and sold for $6.1 million. Sue: We love Sanibel, and are grateful that we live so close to such an idyllic and lush island paradise
Analysis of Home's Rear Exposure in SW Florida
You've probably noticed in listing information for SW Florida homes that the rear exposure of the home is specified vs. the exposure of the front of the home, as is typical in other parts of the country. The direction the rear of the home and lanai/pool faces makes a difference, and there are pros and cons to each direction. In general, the most sought-after is south exposure because you have sunshine all day long on the lanai/pool area, but never direct sun in the house. West is in second position, especially if you are a part-time winter resident or rent your home out to snowbirds. West exposure will provide direct sun during the cooler months, along with fabulous sunsets. East facing lanais will provide morning sunrises and shade in the afternoon as the sun goes down. North exposure is considered the least desirable by many, however many longtime Floridians would disagree, as they appreciate the cooler temps on their lanai during the hot summer months.
Facts & Stats
U.S. Senate Appropriates $100 Million for Okeechobee: This money will be used to help divert muddy rainwater from Lake Okeechobee to the Everglades (where the water originally flowed), instead of down the Caloosahatchee River. This will help to make our SW Florida waterways cleaner and clearer.
Hurricane Season Started June 1st: The annual six month hurricane season started June 1, and will officially end on November 30th. August and September are traditionally the most active/severe months for hurricanes. SW Florida has gone almost 11 years without a major hurricane.
U.S. Foreclosure Starts Lowest in 16 Years: The Mortgage Banker's Association announced that in the first quarter of 2016, new foreclosures fell to 0.35%, the lowest level since mid 2000.
Cape Center Pharmacy wins Pharmacy of the Year Award from American Associated Pharmacies
Major Cape Industrial Park Poised to Break Ground
Fort Myers/Naples Unemployment Rate Drops to 4.1%, State Rate Drops to 4.8%
Cape Coral Racks Up More Top 10 Ratings - Gallup Survey: RE The Best Investment - Retirees Come to Cape Coral In Droves
Cape Coral 2nd Highest Growth Rate in U.S. - Red Sox & Twins Spring Training Brings Buyers to SWFL - Forbes Ranks Cape Coral 8th Best in Nation for Retirement
Lake Okeechobee Update - Naples Happiest City In U.S. - Cape Coral Burrowing Owls
6 Reasons FLA Is Best State For Retirement - Forbes Names Cape Coral In Top 10 Best Investment City For 2016 - Population Stats Cape Coral.
2015 Real Estate Highlights - FL Tops List Of Most Desirable States - National Accolades For Cape Coral
24/7 Wall Street Ranks Cape Coral in Top 50 Cities to Live - SW Florida Home Price Growth Highest in Nation - Cape Ranks High Among Florida Cities for Families & Jobs
Strong Sellers Market - Annual Rents Rise 23% - Economists Predict Strong Market Through 2017
Cape Coral's R.E. Rebound 2nd Strongest In Nation - SW Florida Now a 12 Month R.E. Season - Chiquita Boat Lock Impact
Shortage of SWFL Seasonal Rentals Gets More Severe - Fla. "Save Our Homes" Tax Break Kicks In Again - Cape Coral 4th Best Large City for Retirees
City Council Votes to Eliminate Chiquita Boat Lock - U.S. Home Prices Hit Historic Highs - High Cost of Waiting to Buy
Best/Worst U.S. Cities for Retirement - Cape Coral Inventory Falls to 2.6 Months - Homebuyer's Most Important Concerns When Looking For a Home
New Homes A Good Option - Two SWFL Beaches in Dr. Beach Top Ten - Lee County Housing Market Continues To Climb