INVEST R A Think Real ty Publ icat ion SPONSORED CONTENT
JEFF PEPPERNEY Real Property Management
LEE ROGERS RealProtect
MARCO SANTARELLI Norada RE Investments
Robert Knight withWhite Stone Developments is reimagining rentals in Cape Coral, Florida
LINDA HYDE AAPL
JIM HITT American IRA
THE BUILD TO RENT CONCEPT - RENTALS REIMAGINED Why Build to Rent in Cape Coral, Florida?
by Robert Knight, White Stone Developments
B uild to Rent takes the best of SFRs and upgrades the experi- ence by creating new construction homes with elevated finishes and professional property management that will attract the “rent by choice market.” The rent by choice market is selec- tive and looking for quality finishes with granite countertops, hardwood cabinetry, stainless steel applianc- es and smart home technology. The pandemic has further focused B2R design to include a home office, more space and a backyard without all of the responsibilities and hassle that come with homeownership.
THE B2RMARKET ISVERY ATTRACTIVETOMILLENNIALS ANDBABYBOOMERS
We have 95 million millennials who can’t buy (43% have less than $3k for deposit) and 75 million baby boomers who are moving into retirement age but instead of selling the larger home they needed while raising their family, they are opting to sell and rent and use the equity from the sale to help with the cost of retirement. NATIONALGROWTHOFTHE B2RMARKET According to the National Association of Home Build- ers, in 2017, 37,000 homes were built as rentals. In 2018, that number jumped to 43,000. About 16 million rental properties today are single-family homes, and another 13 million rental households are expected to be formed by 2030, according to the Urban Institute. Rents for single family are growing fast at 4.5% annually now compared with 3% rent growth for multifamily apart- ments, according to John Burns Real Estate Consulting.
ADDITIONALREASONS TO INVEST INB2R • B2R is proving to provide solid returns on A class assets.
• Interest rates are at a historic low and locking in a 30-year fixed rate mortgage is fantastic for maximizing cash flow but it is also a great hedge against the coming inflation. • New construction rents are higher, have less turnover, attract higher quality renters. • Less hassle and cost with maintenance issues, 1-year bumper to bumper and manufacturer appliances warranty, 10 year HVAC warranty and 10 year structural warranty. • 6-month build cycle with homes rented normally in less than 30 days.
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up year-over-year by 12.3% for single-family. July 2020 also showed a median sale price increase of 9.4% for single-family year-over-year. • Cape Coral checks all the boxes! • Top 10 places to invest, to retire, and to own a boat. • Top 25 safest cities in America with a population of 150,000 or more. • Cape Coral ranks No. 3 on a list of “The Most Affordable Cities to Live in Florida” by Livability. com. • We are surrounded by beautiful barrier islands with white sand beaches, 33 parks, 5 Golf courses, 8 Boat ramps and an excellent school system that provides school choice. • Affordable land with dry lots and freshwater canal lots priced between 10k to 12k. • Scalability and deal flow with 50% of the city undeveloped. • Single family and duplex models available with high quality finishes designed with the B2R market in mind. • Construction to perm lender with one time close and competitive market rates in place with as little as 10% down. • Quality property management in place with discounts when managing multiple units. • Cape Coral has a balance of great cashflow and capital appreciation potential. For more information on White Stone B2R home models and pricing see the White Stone Developments website at www.whitestonedevelopmentsllc.com or email me at email@example.com or call us at (239) 850-8821. •
WHYFLORIDA? • The pandemic has created winners and losers. California and New York have been hit really hard and Florida has been a clear big winner. • The pandemic has made employers and employees realize they can be productive working remotely and Florida will be a top choice. • Florida is the new No. 1 growth state in America, according to U-Haul® data analyzing U.S. migration trends for 2019. • The sunshine state prior to the pandemic was adding about 1,000 new residents per day. We don’t have updated statistics for 2020 but we know there has been a significant increase. • 335 days of Sunshine, white sand beaches and water. • Florida has a 0% state income tax and business-friendly environment. • Florida’s GDP hit 1 trillion dollars which means If Florida were an independent country it would be ranked the 17th largest in the world. • Job growth of up to 19% in software development jobs are projected in the state through 2025. • Florida has ranked # 1 for foreign home buying for the 12th straight year. WHYCAPE CORAL? • The city has an amazing vision. It is Master planned, Pre-plotted with 400 miles of navigable canals, 50% of which are Gulf access and the fresh water canals feed into a network of lakes. • SW Florida currently has about 3.2 month of inventory and is not enough to meet the demand of people moving to our area. Single family home inventory in Lee County is down 36.4% in July year-over-year and sales were
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To find private money you can trust, start here. Our members are the most-trusted private lenders in the business. They’ve pledged to follow the industry’s only Code of Ethics , enforced by the oldest and largest association for private lenders. Find your next financial partner today at aaplonline.com/directory.
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Where Can You Find Funding You Can Trust?
by Linda Hyde, AAPL
W e at the American Association of Private Lenders field hundreds of emails and phone calls monthly asking for referrals to lenders that real estate investors can trust. We’ve heard the bait-and-switch stories, the haphazard and stressful closings, the exhausting search of shopping a deal around. Real estate investors are looking for experience, partnership, and above all: trust. Every day at AAPL, we work to bring that trust to our industry. We set the standard for professional conduct and are the only organization that enforces a Code of Ethics. We pledge to our members to provide structure and legitimacy to the private lending industry, and in turn, they promise us – and you – that they will uphold the trust you place in them.
• Adhere to all laws with respect to the services in which they engage. • Not discriminate against borrowers based on sex, age, race, sexual orientation, or religion. • Be honest and forthright in all their dealings. • Only change their loan terms with just cause and perform in accordance with the agreed-upon terms. • Not originate loans intending to see the borrower fail in order to obtain title to the property. • Adhere to all advertising laws as defined in the Truth-in-Advertising Act • Respect the intellectual property rights of others and comply with regulation related to copyrights, trademarks, patents, and trade secrets.
LINDA HYDE AAPL
Each year, we host the nation’s largest gathering of private lenders in Las Vegas, NV. This year will be our 11th Annual Conference on November 15-17 at Caesar’s Palace. Register at aaplconference.com to join more than 400 private lenders dedicated to learning the industry’s latest and best practices and find the trustworthy capital you’re looking for. Our members proudly display the AAPL Member emblem below. Look for it in your lender’s email signature and on their websites, and then visit aaplonline.com/directory to verify their membership status. You should be able to trust the people funding your business. Let us help. •
OURMEMBER CODE OF ETHICS To be an AAPL member, members must promise to:
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Why American IRA’s Fee Structure Makes More Sense—and Dollars
by Jim Hitt, American IRA
I nvestors are rightly concerned about strategy, long-term returns, and the past performance of underlying assets. But you know what falls too often by the wayside? Fees . This is especially true with Self-Directed IRA administration firms, in which investors can lose a sense of just how big a chunk fees can take out of their returns. At American IRA, we think fees that grow with your success are counterproductive. Why would you want to be charged a “success fee,” in so many words? That is why we have put together this quick comparison to show the difference between how we structure our fees: HOW AMERICAN IRA’S FEES DIFFER It is all based on a simple premise: your Self-Directed IRA company should not make more money just because you do. After all, the goal here is independence . Why should you be beholden to someone else’s fees when you start to see success?
Let us take a look at a comparison: • If you have 1 note and 2 properties in your IRA, our typical competitors will charge you $900/year or more. At American IRA you would only pay $285/year. • With an account value of $200,000, you will still pay American IRA only $285/ year. But our typical com- petitors may raise the rates on you, so now you are pay- ing $660/year or more. What does that mean? It means that American IRA’s Advantage Account Value Fees are going to remain static, even as your account grows. That, in turn, means that the percentage of the fees you pay go down the more you succeed. You are incentivized to invest and succeed, because the more you do, the less the fees are relative to the account. Another area to pay attention to whether fees increase with the number of assets in the account. For example, a typical competitor of ours may charge $300/year for a simple account with one asset in it.
But what if you have one note and two properties? Those fees may accelerate. Not so with American IRA’s Advantage Account Value Fees. Unlimited assets and unlimited account values come with a low, set annual fee. The result: you continue to pay the same fees as your account grows. The fees for the account are low and get lower relative to the account size if your account continues to move up over time. This is a key advantage over many of our competitors, who want to enjoy a piece of your success by charging you more as you improve. But we do not think that your accounts growing should be something that you deserve to be charged for. After all, that is the whole goal of retirement investing, isn’t it? •
For more information, give us a call at American IRA by dialing 866-7500-IRA or download our free “Essential Guide to Self-Directed IRAs” at AmericanIRA.com/essential-guide.
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Real Protection for Your Properties
by Lee Rogers, realprotect
A s the real estate insurance program of Norton Insurance, realprotect is not only comprised of insurance professionals, but is also a real estate firm that has over 200 licensed agents and property managers. realprotect is the expert in insuring real estate investors and understanding the real estate business and what you look for and need in a comprehensive insurance program. You have built a business out of owning and investing in real estate, and realprotect wants to help you protect it. realprotect starts this process by gaining an understanding of your properties, business structure, and operations. Then, realprotect will de- sign an insurance program that helps you meet your coverage and pricing objectives. realprotect promises to work diligently to find the best cover - age at the best price for you – based on your actual needs. realprotect takes risk manage- ment and loss control seriously for every single client. realprotect has
risk management resources to offer you the tools you need to under- stand the risks that you face and has partnered with industry-leading companies to provide you risk con- trol products at discounted rates. At the helm of realprotect is Lee Rogers, President. As an insurance professional that has worked and consulted with different Sin - gle-Family Aggregators, Rogers brings unique value and perspec- tive for investors, fund managers and operations professionals. He and the Aggregation Risk Man - agement Team at realprotect have helped design and implement insurance and risk management strategy that is above and beyond what is being set as an industry standard for insurance structure in Aggregation Portfolios, while keeping costs contained and risk properly manage and transferred. Based in Atlanta, Rogers has unique insight and knowledge of many insurance markets, with direct access to many of the world’s lead-
ing insurance carriers. Rogers has helped develop analytical tools and insurance philosophies that are in line with the true risk exposures that Single-Family Aggregators are fac - ing. He understands that the Aggre- gation Market is unique, and that the insurance industry must be able to adapt to this emerging asset class. Rogers uses his vast experience and innovativeness to focus on building business relationships with prospective clients, marketing products and advising investors on coverage options for their real estate assets – while making sure that his entire team at realprotect provides the same quality experi- ence for each client. Lee Rogers and his team at realprotect work with industry leaders such as lenders, market- places, and property managers and wholesalers to provide them with the protection and service that their hard work deserves. To learn more about realprotect, please visit www.realprotect.com. •
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10 Reasons to Buy Investment Properties in Cape Coral, Florida
by Marco Santarelli, Norada Real Estate Investments
H ere are ten practical reasons investors might want to invest in the Cape Coral real estate market, rather than the generic platitudes of “great atmosphere” and “you’ll love their restaurants.”
to. However, you don’t see the same fluctuations in the housing market that you would if the only major college in town becomes less popular.
THE TOURIST MARKET The Cape Coral area is so popular with tourists that they are struggling to regulate short-term rentals. How- ever, Cape Coral law forbids rentals less than seven days, though the area is popular with seasonal renters like snowbirds and longer-term rentals to them is certainly legal. The Cape Coral real estate market is particularly attractive to those who love the ocean and don’t want to live in a dense downtown.
CAPE CORAL HAS A PROPORTIONALLY LARGE
STUDENT MARKET Florida SouthWestern State College is located near downtown Cape Coral. Edison State College is located in town. The city is within easy commuting distance of Florida Gulf Coast University and Ave Maria University. This provides a relatively large student market to cater
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THE LIKELY GROWTH OF THE RENTAL MARKET
THE SUPPLY-DEMAND CURVE We’ve already mentioned that the city of Cape Coral was a planned community. The strict zoning limits the de - velopment of new housing stock. That in turn limits sup- ply though demand is high. That creates faster-than-av- erage rent increases that yield significant returns for investors. On the flipside, Cape Coral planners didn’t build a glut of luxury condos that have caused a several year backlog of such inventory in other housing markets. Because the surrounding area is built up, there isn’t room to build a lot of single-family homes that bring down existing home prices, either.
Pay scales in Cape Coral haven’t kept up with the double digit rent increases. That is in part because the large student market isn’t very sensitive to rent increas- es, and it is in part because they provide cheap labor that keeps wages from going up. The movement of Fort Myers residents to the relatively affordable area, too, drives up rents. That means that the number of renters in the Cape Coral real estate market will go up while supply won’t increase the return on investment for those who invest in this housing market today. That is why rents in the Cape Coral zip code are expected to hit $1500 a month though the median income is around $50,000 a year.
THE STRONG RENTAL MARKET Between tourists, students, snowbirds, seasonal workers, and locals who cannot afford to buy a home or condo, the Cape Coral real estate market has a strong market for rentals. However, it isn’t a market that is so hot for rental units that new construction could cause that bubble to burst. Cape Coral has roughly a third of its population renting, a rate higher than suburbs but lower than Fort Myers proper. Rental rates won’t go down in Cape Coral as they might in Fort Myers due to redevelopment there. Nor will they be able to buy a house in the suburbs; nearly half of all rent- ers spend more than a third of their income on housing.
CAPE CORAL IS AFFORDABLE BY LOCAL
STANDARDS Cape Coral is affordable to renters and investors alike by Fort Myers standards. The average rent for a Fort Myers apartment is $1200 a month. A studio apartment comes in at $750 a month while a one bedroom yields around $1000 or more a month. Many choose to rent in north Cape Coral and commute to Fort Myers, trading time for money. For investors look - ing at buying real estate in Florida, the $250,000 median price tag is certainly better than the much higher bill you’d get if you tried to invest in Miami.
FLORIDA HAS LOWTAXES IN GENERAL Florida doesn’t have a state income tax. If you shield rental real estate by holding them in a corporation, then the corporation will pay modest income taxes. Florida’s property tax rate is 1.1% of assessed value, a little less than the national average of 1.2%. City and county prop- erty taxes are on top of that. The Cape Coral property tax rate is nearly $7 per $1000 per property value. And the city is discussing lowering its property tax rate.
THE HIDDEN BUYING OPPORTUNITIES The large number of snowbirds who visit Cape Coral seasonably provides a better opportunity for investors in the Cape Coral real estate market. Do your research, and you could buy a home from a snowbird that is going to stop traveling, whether staying home in Quebec or moving into a Miami nursing home. This demographic is notable for the number of luxury condos they hold onto.
WHEN THE MARKET IS LOW, IT IS REALLY LOW Florida in general has a strong real estate market because of its economic growth. Florida, like Texas, is attracting people from New York, California, and the Rust Belt with the beautiful combination of low taxes, high em- ployment rates and decent cost of living. Florida, unlike Texas, sees far more radical swings in property values, and it isn’t just due to the hurricanes. When Florida’s real estate market is down, it crashes. That provides an excellent buying opportunity for those who want to invest in the Cape Coral real estate market. The inevitable upswing will yield a significant return on investment in the Cape Coral housing market. If you do want to fix and flip, the aftermath of a hurricane is a great time to buy. And unlike the Atlantic coast, Cape Coral isn’t hit with hurricanes as often. That means the Cape Coral housing market will come with lower insurance costs than Miami, too.
NO. 10 FLORIDA IS LANDLORD FRIENDLY Florida is a landlord friendly state. For example, there is no rent control. Security deposits have no limit on how high they can be. If the rent is overdue, state laws say they only need three days’ notice to be evicted. If they’ve intentionally damaged the property, you can give them an unconditional seven-day quit notice. The same is true for repeated lesser lease violations, though the eviction in that case requires going through the court system. This makes the Cape Coral housing market a good option for those who want to invest in waterfront property.
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Visit www.realpropertymgt.com to learn how Real Property Management can put our experience to work for you, giving you real commitment, real ROI and real peace of mind.
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Each office is independently owned and operated. © 2020 Property Management Business Solutions, LLC.
Real Property Management is the trusted leader in reliable, cost-effective management of residential properties. With local expertise, highly-trained and responsive teams, independently owned and operated Real Property Management franchisees collectively manage tens of thousands of properties for individuals, investors, and institutions throughout North America.
Comprehensive Marketing and Advertising For each day a property is vacant, that’s
Online Reporting Owners maintain control of their property and keep tabs from afar using their own online account, with easy access to updates on property activity, including vacancies, leasing, maintenance, property evaluations and financial reports. Cost-Effective, Reliable Maintenance Relationships with preferred vendors result in discounted equipment and services. Maintenance staff is available 24/7 to handle emergencies and to make sure maintenance is timely, cost-effective and done in a professional manner. Timely Rent Collection Nothing affects cash flow more than late or missing rent payments. In addition to offering incentives for paying rent on time, our collection processes are professional but tough, and we are extremely diligent in collecting rent through a systematic, timely process. Strict and Compliant Evictions Even with careful placement there is occasionally a tenant who needs to be evicted. Our offices are knowledgeable in state and local landlord and tenant laws. If rents are not paid on time, we strive to minimize costs by following the legal steps quickly and efficiently to get the property leased again.
money lost. Professional management costs are easily offset by shorter vacancy. Our advanced planning and heavy advertising gets vacancies filled fast.
Thorough Tenant Screening and Selection
Placing the wrong tenant can quickly cost you more than professional management fees. We make every effort to find tenants who will pay rent on time and take care of the property with the use of criminal, credit, and employment checks. Full-Service Leasing In addition to advertising properties and screening tenants, our full-service leasing process also includes rent-ready guidance, market rent analysis, professional showings, move-in property assessments, and professional tenant education at lease signing. Routine Property Evaluations Regular assessments of both the inside and outside of your rental property ensure tenant compliance with the lease and identifies maintenance needs to preserve your property.
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What is After Repair Rental Rate for Single-Family Rentals?
by Jeff Pepperney, Real Property Management
W hen investing in single-family rental properties, there are two key value numbers you need to know: the property’s current value, and its after repair value (ARV). When you buy and fix up a rental property, it makes sense that not only will the property’s value change, but also the rental rate. To ensure that you are maximizing your property’s potential, you want to set accurate rental rates based not only on your local mar- ket, but also on the property’s newly repaired condition. To do so, you first need to know your property’s after repair value (ARV). So what is after repair value (ARV)? In layman’s terms, ARV is the new potential sales price of your rental property as determined by the market. The term “repair” in this case does not only refer to actual repairs you’ve made to the property. It also includes improvements, such as new flooring, painting, remodeling bathrooms, and replacing counter- tops. Often, adding such improve- ments to an existing property will increase the property’s value, espe-
cially if the improvements you have made are popular or in demand. If you have made or are planning to make repairs and improvements to your rental house, you should complete a new competitive mar- ket analysis to determine what the after-repair value would be. Usually, this market analysis involves locating comparable properties (comps) in your area that are similar to your newly updated rental house. For the purposes of determining ARV, look for recently sold homes near your property that have been updated. With at least three of these comps, you now have a good starting point for your analysis. You can calculate the price per square foot for each one (actual sales price of the home divided by square footage) to get a better sense of how yours compares. Once you have these numbers in hand, calculating your ARV is straightforward. First, find the av - erage price per square foot of your three comparable properties. Then, multiply your average by the square footage of your rental property. The
resulting is the after-repair value. But you also need to determine what the after-repair rent rate is. Fortunately, the process is similar to determining property values. Using your ARV, you can use local com- parable rentals to help determine what your new rental rate should be after making repairs and improve- ments. Or, you could contact your nearest Real Property Management franchise office. We offer free rental market analyses and assist property owners in setting accurate rental rates for their rental homes. With everything else you need to do, why spend valuable time researching rental rates and the other daily as- pects of property management? We can help you free up your valuable time for the most productive tasks your investment business requires. •
*Real Property Management is not a financial advisor. This Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.
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