Waterbat

Hi
We are British family who have just returned from a holiday in Naples - all the info on this message board was very useful to help plan our trip.
Whilst we were there we have taken a reservation to purcahse a lot and build a 4 bed house on Mustang Island on the Lely Resort. The property will be on a small lake and facing a tee on the Mustang golf course. We have until Wednesday morning to send our deposit over to commit to buy this property and we have just arrived (jet lagged) back in the UK and are hoping we have made a sensible investment decision. We understand that the Lely Resort is increasing in equity value at a good rate?Our plans are to either long term let or vacation let the property once it is built in about 9 - 12 months time. Could anyone (particularly Patrick who I know is very knowledgeable) give us their view. We did work with a licensed Naples realtor on this.
Thanks

Patrick

I think it is a good plan. Be aware that finding a good, long term renter is not an easy task. Nor is it necessarily easy to rent as a vacation property -- especially knowing that it will probably be vacant about 9 months of the year, although golfing communities make good rentals right behind the beachfront ones. So long as you can make the payments without depending on major rental income, I'm sure the property will continue to grow in value.

You might do like some of my British friends do. They rent out in the winter high season, but come to Naples during the summer. Hopefully you'll be able to enjoy your property, not just let it sit and appreciate. If you won't be able to come enjoy it yourself, my thoughts would be to try to seek out a one to two year rental with someone moving to the area. You'll need the aid of a realtor again for this, probably. Maybe you'll be lucky like me. I bought a new condo in 1981 as an investment, then rented it to the woman who was sitting the sales office for her and her husband. She is still my tenant -- 23 years later, but now a widow! Needless to say, she has paid me a lot more in rent than I paid for the place, and meanwhile it has appreciated in value. But that is a very rare case!

mclaurie

As usual, Patrick has given excellent advice. Please pay special attention to his point about finding appropriate renters and also whether you'll need a certain amount of rental income to meet mortgage payments. Being a long distance landlord can be fraught with lots of problems.

I know little to nothing about the area or the development, but it makes me nervous when I see "we have until Wednesday morning to send our deposit..." If this is a big deal for you, don't be rushed.

Having read the website, I'd ask have you checked references on the builder who will build your home? In Fla., some builders are much better than others and I note they're using several different ones. My parents live in a development on the east coast of Fla. and have houses in their community by different builders. The poorly built ones have continued to have problems years after they were built.

I'd also ask the question how easy is renting a 4 bedroom house and what sort of wear and tear will it get?? I know smaller places should be desirable, especially for retirees, empty nesters, but a 4 bedroom house sounds like a family sort of rental. Kids=wear and tear. Just a thought.

Best of luck.

Waterbat

Thanks to you both for such quick responses. The builder is Centex which seem to have a good reputation. I agree with you comments on wear and tear and wondered also if you had any views on how easy it would be to sell this property in a few years from now?
Many thanks again for your help.

Patrick

I failed to comment on the specific development. Lely is a huge development, well respected, and adding new areas moving ever eastward. Centex is also a respected builder. As an interior designer I've worked with a number of clients working with home builders. Many have had nightmarish problems. My experiences with Centex have been very good.

In terms of how easy it will be to sell in a few years, well, it is doubtful that you would have to sell it for less than you pay for it, but that is always a distinct possibility. The only guarantee in Florida real estate is that "there is NO guarantee." One never knows for sure which properties will increase the quickest, or if fact they will increase at all. That said, Lely shows a promise of always remaining good value, in my opinion.

Basically speaking, my belief is you go for the best of the area. In otherwords, if the lot at the end of the cul-de-sac has the best view of the golf course, it would probably be wise to consider the extra money that lot may cost. It's a pretty well known fact that the people who spend the most to buy the biggest and best unit, will probably get a higher percentage return on their investment. Everybody always wants the best.

Many people in the Naples area have been disappointed that they haven't been able to resell as quickly as hoped or didn't get the increase they hoped for, particularly when they purchase in new developments. This area is not yet built out, and I suspect we have a number of years yet of newer and bigger golf communities. There is always the danger that buyers will want the new development, especially if developers keep giving "deals" too good to pass up. The best investment is clearly buying something that can't be duplicated. Currently the biggest increases in property values are the waterfront properties since they can't be duplicated and Olde Naples, which is at a total build-out.

mclaurie

Again, my experience is more east coast than west, but based on Patrick's comments, it sounds similar. On the east coast, newer is always better for some reason, until there's no more land left in a certain area. So unless you're talking about water front property, a similar house in a brand new development seems preferable to a 3-5 yr old house. Unless there's something unique about your location that can't be duplicated, you'll be competing with brand new homes is a newer section. That doesn't mean, as Patrick says, you won't make money because by then prices may go up. Interest rates are also a big factor right now. Will you be locked into an interest rate or will it be whatever's prevailing at the time the house is finished?

Is there a home owner's association and will they have rules & regs about renting?

I could be dead wrong, but if I were buying something merely as an investment, I'd buy something smaller (2-3 bedrooms). Here's a listing for another 4 bedroom house that's already built at your development for rent on vrbo (vacation rental by owner).
http://www.vrbo.com/44164

Waterbat

Thanks once again to both of you. I think this all does sound encouraging - I guess there is always a gamble when investing in property but this seems like a fairly good bet.