MARKET SPOTLIGHT: Is Florida at risk for another real estate crisis?
then it’s a risky time to buy,” he said. “If you’re buying for that ride, it’s a riskier play. From the standpoint of holding long-term, it’s still a great time to buy.” Garcia sees south Florida as one of the riskiest mar- kets in the country to flip properties. His contacts, who do a lot of loans in the area, are very weary of south Florida, he warned. “If you bought five years ago, the market would work in your favor. But not today. It’s a combination of buyers not being able to get financing and inventory staying around longer,” he noted. “Most of the investors we see in single family, other than the big hedge funds, are mom and pops buying turnkey stuff and you don’t see much of that in south Florida.” While flipping properties may not be the right strate- gy in the southern part of the state, in central Florida, Billy Ross is busy flipping and wholesaling properties in the greater Orlando metro area. “There are lots of fix and flips, lots of rehabs in the five
If you coordinate the contractors tight on a good schedule, there’s no reason to have a cookie cutter rehab go more than 40-45 days. Sixty days is pushing it. Our average rehab is $30,000-$35,000.”
BILLY ROSS
county area including Lake, Seminole, Osceola, Volusia and Orange counties,” said Ross, president of Sell That Florida House. “We’ve always marketed ourselves. We like to be in
FLORIDA 2018 MEDIAN SALES PRICES BY MSA
and out. A quick rehab and appeal to the broadest buyers possible. We like to have it under contract in 14 days after completion at pretty close to list price.” At the moment, Ross and is firm are doing 10-12 deals a month. So his construction crews are always working, going to the next project right after complet- ing their current rehab. “If you coordinate the contractors tight on a good schedule, there’s no reason to have a cookie cutter rehab go more than 40-45 days. Sixty days is pushing it. Our average rehab is $30,000-$35,000,” Ross said. Ross has not purchased a property on the MLS in over a year. He buys below market and prefers to stay below the area’s median price point which ATTOM re- ported at $225,000 in 2018. Staying in that price range he does not see any risk at all to his business model. “We’re picky about the properties we pick up. We’re looking for the hotter areas. You have to look at list price versus sales price. Did they have to go through several price reductions looking for one buyer. If so that particular house may not be good for a flip.” If Ross sees any risk at all in his market, it’s in owning rentals. He does not believe now is the time to be buying a lot of rental properties in his market. If an investor does, then he needs to make sure that property will completely cash flow. He also suggests buying on terms such as a seller carryback or other creative financing. “The market is correcting, not really crashing,” he said. Compared to other parts of the state, Obadiah Dorsey
1. Cape Coral-Fort Myers 2. Crestview-Fort Walton Beach-Destin 3. Deltona-Daytona Beach-Ormond Beach
7. Miami-Fort Lauderdale-West Palm Beach 8. Naples-Immokalee-Marco Island 9. North Port-Sarasota-Bradenton 10. Ocala
13. Pensacola-Ferry Pass-Brent 14. Port St. Lucie 15. Tallahassee 16. Tampa-St. Petersburg-Clearwater
We spend a lot of time and energy going into the weeds to find the off-market deals. That’s the best way to capture some equity. We’re still able to find deals in Jacksonville proper.”
4. Gainesville 5. Jacksonville 6. Lakeland-Winter Haven
11. Orlando-Kissimmee-Sanford 12. Palm Bay-Melbourne-Titusville
$334,561
OBADIAH DORSEY
$260,000
$260,000
$248,000
$225,000
$220,000
$214,000
$200,000
$195,000
$195,000
$190,000
$175,000
$175,000
sees his market in the north – specifically Jacksonville – to be much more of a blue collar part of the state. “It’s a different animal in that respect. Much more affordable and not quite the same product,” said Dorsey, co-founder and CEO of Freedom Home Buyers. “We’re more of a cash flow market. We’re getting a fair amount of investors coming in and buying. Our immediate price point is $150,000. Rents are $1,700-$1,800 a month. It’s a uni- form product that cash flows without breaking the bank.” Doing roughly 20 deals a year, Dorsey describes his business model as a wholesaler who cherry picks about 10 percent of his properties to fix and flip and another 10 percent to buy and hold as rentals. His goal
$172,000
$170,000
$139,500
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30 think realty housing news report
june 2019 31
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