Sunday, March 28, 2010

Busman's Holiday Questions Unearth News, Insight

On the road, I can't help but nosing into local real estate wherever I go.

Right now I am in SW Florida on some family business, but while here I have been in touch with a number of people, getting caught up on the latest sats regarding regional and local real estate trends.

Garren Grup, a good friend I made last year and colleague in the business, had some good news regarding values in the Lee and Collier County areas. Specifically that the two counties are the fastest growing counties in all of Florida regarding business (and real estate) recovery. But my guess is it is coming back fast because these two counties likely fell harder and sharper than any other counties in the Sunshine State.

There are still many, many MANY vacant, brand new strip retail centers in many areas I have driven. Also it isn't hard to find commercial buildings where work suddenly stopped last year (or before. On the housing front, there is hope that values here have reached bottom and may be on the way up, albeit slowly. Interestingly, word is that most of the foreclosures in these two counties occurred in Lehigh (in Lee County) and in Golden Gate Estates (in Collier County). So there are significant values there for investors who want to jump into the single family housing rental market.

Along Vanderbilt Beach where I am staying there are many condo units for sale. I was amazed, frankly, at how many were listed in one particular building where my family used to own. The number is staggering and the word is "make an offer." West of U.S. 41 values have been hurt, but families are not as likely to have been forced into foreclosure. East of U.S. 41, it is another matter, according to Garren and others.

And therein lies the potential. When you are in a market that has been hit hard, the question becomes when to jump back in. And how long will the recovery last...or even how strong will it be?

A half dozen years ago the play was one of leverage. Buy smart with cheap money. No money down if you can get it. True, there were those who jumped into no money down deals, or interest only transactions, but they often paid full price because they didn't know what they were doing. Those folks got burned as their notes were converted or as values fell. But those folks who bought right (at a smart price) AND leveraged are in a stronger position today.

Today, the leverage opportunity is harder to come by. Today it is all about buying distressed properties, stabilizing them, and holding them to appreciate. Its what we call "a strong upside." Many opportunities here. I'm heading out to some multifamily open houses this afternoon. It should be interesting.

More to come....

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