Is Now the Time to Buy Land in SW Florida?
Date: Tuesday, January 27, 2009

Is now the time to buy land in SW Florida?

If you have cash or access to cash, the answer is YES! 
2009 is here and we are seeing those interested in buying land in Southwest Florida being offered some spectacular investment opportunities that may not be seen again for decades to come.

• Residential builders and developers began selling off excess land inventory in late 2007 and 2008 as new housing sales dropped dramatically.  Their goals were to get assets off their books, raise cash and where applicable, get tax credit losses providing them refunds from previous years’ profits.  We can expect to see more of the same in 2009 due to the over supply of existing resale properties going through the short sale and foreclosure process, against which new home sales typically cannot compete. 
• Commercial builders and developers were slower to react in selling excess land in 2007-08, but now that they are experiencing record vacancies, inability to secure or extend financing and decreasing land values.  Some are being forced to sell to gain liquidity or reduce debt.  In the commercial sector of the market, expect 2009-10 to bring abundant opportunities for investors seeking land.
• Lending institutions, both public and private, spent most of 2008 determining what course of action to take with their performing and non-performing loan portfolios that were either in default or soon would be.  They commenced with evaluating the loans and establishing special asset and REO departments to manage the flood of properties filling their coffers.  In 2009, we expect lenders to start liquidating assets by selling notes and foreclosed properties to balance their cash-to-debt ratios, which are being monitored very closely by the FDIC.  Due to the delays in going through the foreclosure process, most lenders are attempting to sell their notes to third parties prior to taking title.  As the backlog of current and upcoming foreclosures sees its way through the system, lenders will most likely be more aggressive with the sale of their assets as they are faced with the time, expense and inherent challenges of managing the assets.  Pressure from lenders not willing or able to extend financing commitments to borrowers will transcend into more opportunities for buyers. 

Those who are fortunate to have cash and the ability to invest in 2009 have the opportunity to make above average returns buying distressed real estate in markets that will clearly reemerge when financing markets open up and the economy takes a turn for the better.

As a result of the huge intangible asset losses from investment houses, the stock market, banking and insurance institutions and the media hype of Madoff-type scandals, many institutional and private investors are seeking solid, tangible investments they can see, feel and touch. For 2009, they need to know it’s real.   This makes land, at today’s discounted prices, an attractive investment alternative in 2009-2010, as we are seeing investors converting large portions of their portfolios to real property investments, including land and improved properties. 

“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”
           Franklin D. Roosevelt, 32nd U.S. president (1882-1945)

 What's selling at what price?

• 10/15/08 - Brookwood Groves, LLC to DR Horton, Inc. 
  12 developed home sites in The Groves / Lehigh Acres sold for $353,005 or $29,417 per lot 
  
  
• 10/20/08 - Colonial 40 LLC to Riverside Investors, LLC 
  40 acres on Colonial Blvd. in Ft. Myers sold for $3,300,000 or $1.89 PSF, zoned Commercial general / MF, densities up to 25 units per acre
  
  
• 10/24/08 - 5200 Ranch LLC to Ryals Citrus and Cattle, LLC
  4819 acres in Charlotte County sold for $17,890,800 or $3,712 per acre
  
  
• 12/12/08 - Taylor Woodrow Communities at Heron's Glen LLC to Windham Magnolia Landing, LLC
  Magnolia Landing on US 41 in North Ft. Myers sold for $24,023,800.  Sale included 209± developed / 1,044 undeveloped units with 18 hole golf course and clubhouse

In our next issue, we'll be talking about how to most effectively market your land investment in a downturned market. 

See you then.