Posted on Tuesday, April 24, 2012
Real estate investors in Naples, Florida continue to see opportunity in spec home building. Let’s take a look at this trend this morning and explore of the trends and risks of this type of investing.
A number of factors are converging to support the idea of spec home building in Naples today. There appears to be a shortage of single family homes given the market demand with the overall supply shortage with inventories at less than nine months. Prices are on the up swing. The big developers are nearing more ground breaking projects but they are not online yet, demand seems ahead of supply, building costs appear to be reasonable if not low, there are reports of recent successful spec home projects.
Demand up, supply down, costs reasonable, and some early successes – this all looks pretty promising.
Hard numbers are difficult to come by but let’s make some assumptions. Plain old dirt or a tear down can be found for $600,000-$700,000. Build yourself a 3,000 square foot home or bigger to fit the current demand trend for something like $250 to $300 a square foot. Add some money for permits, commissions, landscaping and contingencies and sell the place for 550 to 750 a square foot. You do the math – there may be some money to be made if all the assumptions hold.
What could go wrong? Well assuming you buy the dirt right and avoid the first set of risks then your builder could miss his cost-quality-timelines targets or you could miss the market and sell the place for less than you thought. You could rent it out for a while to cover you carrying costs but you better hope the market comes back to take you out.
So there are real risks here – this is not an automatic return so be careful.
We do have some ideas and some real on the ground facts to share with you if you are interested. Talk to us about spec home building in Naples, Florida.
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No legal, investment, or tax advice is being given in this Blog. Consult with legal, financial and tax professionals before acting on any real estate transaction. Actual real estate price and sales results are subject to market forces and are not completely predictable. The writings of this Blog are intended for the sole use of our clients.
Some of the data relating to real estate for sale on the NaplesBestAddresses.com website comes in part from the Broker reciprocity program of M.L.S. of Naples, Inc. The properties displayed here may not be all the properties available through the MLS reciprocity Program. This information is deemed reliable but is not guaranteed. Buyers and sellers are responsible for verifying all information about their purchase prior to closing.
Mark Goebel, PA is a REALTOR with Coldwell Banker on 5th avenue in Naples, Florida with 35+ years of visiting and living in Naples. After 25 years at Accenture, Mark retired as a managing director and spends his time helping non profits and building a Naples real estate team with his wife Nan. Talk to Mark and Nan about life in Naples and why they chose this place to live full-time over all others and enjoy Naples real estate.
Mark Goebel, PA
REALTOR Coldwell Banker 5th Avenue South
Mobile: 239.595.3921
Email: mark.c.goebel@gmail.com
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