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Investing in the Space Coast of Florida Opportunities to Profit in One of the Fastest Growing Real Economies in the United States

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Investing in the Space Coast of Florida Opportunities to Profit in One of the Fastest Growing Real Economies in the United States INVESTING IN THE SPACE COAST OF FLORIDA OPPORTUNITIES TO PROFIT IN ONE OF THE FASTEST GROWING REAL ECONOMIES IN THE UNITED STATES. By Chris McAllister Founder / President / Real Estate Brands Ltd. TABLE OF CONTENTS 3 About Brevard County 4 How We Ended Up Here 5 Trends 6 Our Plans 7 Case Studies of Properties under Management 13 Vacation Rentals 14 Brevard County/City Information 16 Why Florida is Primed to Stand Out in the New Commercial Space Race ABOUT BREVARD COUNTY Bordering the Atlantic Ocean, Brevard County is located along Florida’s east coast. As of the 2010 census, the population was 543,376, making it the 10th largest county in Florida. The official county seat has been located in Titusville since 1894. Brevard County comprises the Palm Bay– Melbourne–Titusville, FL Metropolitan Statistical Area. Influenced by the presence of the John F. Kennedy Space Center, Brevard County is also known as the Space Coast. As such, it was designated with the telephone area code 321, as in 3-2-1 liftoff. The county is named after Theodore Washington Brevard, an early settler, and state comptroller. 3 How we ended up here Kelly and I had been visiting The Disney Vacation Club resort at Vero Beach at least annually since 2003. The resort is just south of Brevard county, about 30 miles from Melbourne Beach, Florida on A1A. We loved the area but never thought much about investing or working there. Rena Smith, who has worked with us for almost 12 years relocated to West Melbourne, Florida in 2009. Rena helped us with our Springfield, Ohio REO division assisting with Broker Price Opinions from her home office both when she lived in Springfield and in Florida. We did not make the connection until 2014 that Rena and her husband Craig had relocated just north of Vero Beach. Craig transferred to the Space Coast area with PNC bank. Once I took a closer look at the Melbourne area the more impressed I was. This area got hit hard during the recession but bounced back like very few other areas in the country have. Craig did extensive research on the area before agreeing to transfer with PNC. All in all, I know of no place in Florida I would rather be building a business. We seriously got to work when Rena earned her Florida Real Estate Sales Person license in early 2015. 4 TRENDS The median home value in Brevard County is $164,900. Brevard County home values have gone up 10.6% over the past year. Zillow predicts they will rise 4.8% within the next year. www.zillow.com/brevard-county-fl/home-values The Melbourne Florida area is a great place for our current and future clients to expand their portfolio of rental properties. As of September 2016, we have 9 OUR PLANS properties under management and expect to expand this business rapidly just as we have in Ohio. We will have a licensed property manager(s) on the ground in Florida but will continue to run our accounting operations from our offices in Springfield, Ohio. 5 CASE STUDIES OF PROPERTIES UNDER MANAGEMENT At this time our owners are treating their investments as rental properties but an attractive alternative for many of our clients will be to sell these homes via land contract. Both the rental market and land contract markets are hot due to the number of people moving into the area. Many of these people are not yet in a position to obtain a mortgage and therefore welcome the option of a land contract. For each of the case studies below I am showing both a rental scenario and a land contract scenario. I am using what I consider very conservative figures. You will see that insurance costs are estimated higher due to our proximity to the coast, but property taxes are in line, or even less than, what we see in Ohio. The land contract exit strategy is a terrific option for many investors that could have a positive impact on their income tax liability. The land contract strategy also allows the investor to ‘lock in’ anticipated appreciation gains with a buyer now. For the buyer, at the end of the two or three year term, the final ‘purchase’ can be treated as a refinance which is often easier and quicker than a new purchase mortgage. We have had great success marketing land contract purchases in Ohio for various clients by using all the marketing and screening tools we have developed over the years for our rental clients. Rently boxes, www.ROOSTRentals.com, Zillow, Facebook, and Appfolio have made the process of marketing, advertising, showing, and screening applications a routine process that just works. We have all of these tools in place in Florida right now. Zillow.com has the last 12 months appreciation trend in the area at just under 11%. The home Kelly and I purchased in Melbourne last year has appreciated by almost 20% since November of 2015. I am using 6% in my case studies. I think that is an appropriately conservative approach. 6 GIBBS STREET, MELBOURNE FLORIDA 4 Bedrooms, 2 Baths Purchase Price: $70,000.00 3 YEAR LAND CONTRACT SALE Sale Price: $83,500.00(1) RENTAL Down Payment: -$5,000.00 Land Contract Amount $78,500.00 ANALYSIS Monthly Priciple and Interest: $576.01(2) Monthly Insurance: $75.00 PURCHASE PRICE: $70,000.00 Property Taxes $100.00 MONTHLY RENT: $820.00 TOTAL PAYMENT: $751.01 Annual Income: $9,840.00 Annual Income: $9,012.12 Vacancy Reserve: -$492.00 Vacancy Reserve: $0.00 Repair Reserve: -$492.00 Repair Reserve: $0.00 Insurance: -$900.00 Insurance: -$900.00 Property Taxes: -$1,200.00 Property Taxes: -$1,200.00 Mowing: $0.00 Mowing: $0.00 Utilities: $0.00 Utilities: $0.00 Pool Maintenance: $0.00 Pool Maintenance: $0.00 Mischellaneous: $0.00 Mischellaneous: $0.00 Professional Management: -$984.00 Professional Management: $0.00 ANNUAL NET PROFIT: $5,772.00 ANNUAL NET PROFIT: $6,912.12 ROI: 8.25% ROI: 9.87%(3) 3 Years Annual Net Operating Profit: $20,736.36 ESTIMATED 6% APPRECIATION: Downpayment: $5,000.00 3% Commission on Land Contract Sale: -$2,505.00 3% Remaining Commission at Cash Out: -$2,505.00 Profit at Cash Out $8,500.00(4) Total Return after 3 years: $29,226.36 Annualized Return $9,742.12 ANNUAL ROI: 14.25 ANNUAL ROI: 13.92% (1) 19% Premium on $70,000 (2) 30 Amortizattion at 8% (3) Annual Net Profit / Purchase Price (4) Land Contract Amount less $70,000 Purchase Price 7 EDWARDS DRIVE, MELBOURNE FLORIDA 3 Bedrooms, 2 Baths Purchase Price: $144,000.00 3 YEAR LAND CONTRACT SALE Sale Price: $170,000.00(1) RENTAL Down Payment: -$5,000.00 Land Contract Amount $165,000.00 ANALYSIS Monthly Priciple and Interest: $1,210.71(2) Monthly Insurance: $150.00 PURCHASE PRICE: $144,000.00 Property Taxes $100.00 $1,460.71 MONTHLY RENT: $1,375.00 TOTAL PAYMENT: $17,528.52 Annual Income: $16,500.00 Annual Income: Vacancy Reserve: -$825.00 Vacancy Reserve: $0.00 Repair Reserve: -$825.00 Repair Reserve: $0.00 Insurance: -$1,800.00 Insurance: -$1,800.00 Property Taxes: -$1,440.00 Property Taxes: -$1,440.00 Mowing: $0.00 Mowing: $0.00 Utilities: $0.00 Utilities: $0.00 Pool Maintenance: $0.00 Pool Maintenance: $0.00 Mischellaneous: $0.00 Mischellaneous: $0.00 Professional Management: -$1,650.00 Professional Management: $0.00 ANNUAL NET PROFIT: $9,960.00 ANNUAL NET PROFIT: $14,288.52 ROI: 6.92% ROI: 9.92%(3) 3 Years Annual Net Operating Profit: $42,865.56 ESTIMATED 6% APPRECIATION: Downpayment: $7,500.00 3% Commission on Land Contract Sale: -$5,100.00 3% Remaining Commission at Cash Out: -$5,100.00 Profit at Cash Out $21,000.00(4) Total Return after 3 years: $61,165.56 Annualized Return $20,388.52 ANNUAL ROI: 12.92 ANNUAL ROI: 14.16% (1) 19% Premium on $144,000 (2) 30 Amortizattion at 8% (3) Annual Net Profit / Purchase Price (4) Land Contract Amount less $144,000 Purchase Price 8 FAIRHAVEN, PALM BAY FLORIDA 3 Bedrooms, 2 Baths Purchase Price: $120,000.00 3 YEAR LAND CONTRACT SALE Sale Price: $143,000.00 (1) RENTAL Down Payment: -$5,000.00 Land Contract Amount $138,000.00 ANALYSIS Monthly Priciple and Interest: $1,012.60 (2) Monthly Insurance: $150.00 PURCHASE PRICE: $120,000.00 Property Taxes $111.00 MONTHLY RENT: $1,170.00 TOTAL PAYMENT: $1,273.60 Annual Income: $14,040.00 Annual Income: $15,283.20 Vacancy Reserve: -$702.00 Vacancy Reserve: $0.00 Repair Reserve: -$702.00 Repair Reserve: $0.00 Insurance: -$900.00 Insurance: -$900.00 Property Taxes: -$1,332.00 Property Taxes: -$1,332.00 Mowing: $0.00 Mowing: $0.00 Utilities: $0.00 Utilities: $0.00 Pool Maintenance: $0.00 Pool Maintenance: $0.00 Mischellaneous: $0.00 Mischellaneous: $0.00 Professional Management: -$1,404.00 Professional Management: $0.00 ANNUAL NET PROFIT: $9,000.00 ANNUAL NET PROFIT: $13,051.20 ROI: 7.50% ROI: 10.88% (3) 3 Years Annual Net Operating Profit: $39,153.60 ESTIMATED 6% APPRECIATION: Downpayment: $5,000.00 3% Commission on Land Contract Sale: -$4,290.00 3% Remaining Commission at Cash Out: -$4,290.00 Profit at Cash Out $18,000.00 (4) Total Return after 3 years: $53,573.60 Annualized Return $17,857.87 ANNUAL ROI: 13.5 ANNUAL ROI: 14.88% (1) 19% Premium on $120,000 (2) 30 Amortizattion at 8% (3) Annual Net Profit / Purchase Price (4) Land Contract Amount less $120,000 Purchase Price 9 CHARLES DRIVE, PALM BAY FLORIDA 3 Bedrooms, 2 Baths, Pool Home Purchase Price: $126,000.00 3 YEAR LAND CONTRACT SALE Sale Price: $150,000.00 (1) RENTAL Down Payment: -$5,000.00 Land Contract Amount $145,000.00 ANALYSIS Monthly Priciple and Interest: $1,063.96 (2) Monthly Insurance: $200.00 PURCHASE PRICE: $126,000.00 Property Taxes $121.00 MONTHLY RENT: $1,270.00 TOTAL PAYMENT: $1,384.96 Annual Income: $15,240.00 Annual Income: $16,619.52 Vacancy Reserve: -$762.00 Vacancy Reserve: $0.00 Repair Reserve: -$762.00 Repair Reserve: $0.00
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