Frequently Asked Questions
1. Why invest in the Southwest Florida market?
2. What about financing
3. How is the rental market?
4. Will I have negative cash flow?
5. Where should I purchase?
6. Aditional questions?
- Why invest in the Southwest Florida market?
Currently there is a unique opportunity due to an oversupply of homes in the $300,000 and above price range. The existing supply of new home inventory is out of reach for the average worker. Market area demographics continue to remain strong. About 30,000 people move into Lee County each year. There are not enough homes in the under $200,000 price range to service the workforce. Because of the oversupply of higher priced homes, new construction has almost come to a halt. The area continues to grow and attract new workers. The 18 to 44 age group is growing faster than the U.S. average. The average wage for nurses, police, school teachers, lawn maintenance and other services workers can support homes around the $200,000 price range, and the inventory of homes in this price range is very low. The market needs a supply of under $200,000 workforce homes to service the growing community. - What about financing?
Financing opportunities vary by geographic area around the U.S. In SWFL, for new house construction, you typically will find what is referred to as a “Construction to Permanent Loan”. A “Construction to Permanent Loan” generally requires one loan approval for both the construction period and the permanent mortgage. Generally you pay interest only (no principal) for the construction period and upon the house’s completion, the loan transfers to a traditional amortizing payment of principal and interest. There are a variety of options available for your personal situation, but most of our investors elect to set up an interest reserve in the loan so that the lending institution can automatically withdraw its interest against the loan during the construction period so the investor does not have to make monthly interest payments during the construction period. There are many lending institutions for you to work with. You may work with a lender of your choosing, or one of the lenders we have listed. The financing terms often are the key to making the investment work. - How is the rental market?
A new, or almost new, 3 bedroom, 2 bath, 2 car garage house rents for approximately $900 to $1,000 per month. A new 4-bedroom house, slightly more popular and easier to rent, brings $1,000 to $1,150 a month. The most active rentals are in Cape Coral and Lehigh Acres. - Will I have negative cash flow?
You may or may not have negative cash flow depending on how much of a down payment you make on your house purchase, the terms and structure of your loan, and the prevailing interest rates.. There are many different loan packages for you to choose from. The following scenarios are provided only for demonstration purposes. Your lender will help you select the plan that is right for you.
The following scenarios assume a $150,000 Lot-House Package:
Down Payment 5% 10% 25% Down Amount $7,500 $15,000 $37,500 Mortgage $142,500 $135,000 $112,500 Conventional Fixed at 7.5% annual interest for a 30 year loan term.
Payment $996 $944 $783 10 Year Interest Only at 7% annual interest.
Payment $831 $788 $656 1 Year Adjustable at 5.5% annual interest amortized over 30 years.
Payment $809 $767 $635 - Where should I purchase?
Cape Coral and Lehigh Acres in Lee County have become the workforce housing prime areas of choice due to the affordability of lots.
Lehigh Acres has a population of about 50,000 and is located approximately twelve miles east of Fort Myers with some of the lowest priced single family lots in Lee County. According to the Lee County Property Appraiser's office, taxable property values jumped from $2 billion to $4 billion in one year. Lehigh Acres boasts close proximity to the Southwest Florida International Airport, which has recently completed a major 450 million expansion. It is less than 10 minutes from Florida Gulf Coast University, Florida's newest public university, which is experiencing student population growth in excess of 25% per year.
Cape Coral has a population of about 155,000 and is growing at the rate of about 11,000 new residents per year. Cape Coral's double digit growth is expected to maintain itself for the next 5 to10 years. The city was ranked the fifth fastest growing city with over 100,000 in population by the U.S Census Bureau. Cape Coral is the largest city between Tampa and Miami, and the third largest city by land mass in Florida. Cape Coral is only 31% built out. Cape Coral's taxable property values jumped 49% percent in the past year to over $14 billion, according to the Lee County Property Appraiser's office. The city is in the middle of a $200 million utility expansion project and new parks are planned throughout the city. - Additional Questions
Please e-mail Tom at twatermeier@wps-team.com and he will answer your question personally by e-mail and add it to this list for others to view.
