I believe in all our areas, Carrie, Southwest Florida. You know the
greater Fort Myers area that was really hot. It was the fastest growing area
in the country last year ranked. But I think you know, part of
me really likes Jacksonville. You're listening to Carrie Letts's Financial Survival Network, where
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Financial Survival Network. I'm your host, Carrie lets Well. You hear about
real estate busts taking place around the country, but there is there are several
places where that just is not the case, one of which is the Great
State of Florida. My adopted home and the adopted a home of the person
you're about to hear from, Jim Shields. I've known you for years now.
You've literally been at this NonStop. I think I've known you five or
six years. You've been building homes in the Jacksonville market and selling them to
investors through thick and thin. How is business? Business is good. We're
actually now in twelve different markets in Florida. So we've expanded the new construction
model. You know, I used to do both foreclosures, buy foreclosures,
fix them up, rent them, or work with investors on them. And
we just found the new construction to be a better way, and it was
also more scalable and more desirable for everyone for the for our own building needs,
for investors, for the tenants. So we've been able to scale into
about twelve different markets now. All right, So you have a really good
perspective, a unique perspective on the Florida market. Like I said in the
intro, there's weak real estate markets around the country, but Florida is not
one of them. What is your take, what's your perspective on what the
market's doing and where you think it's heading. You know, right now in
Florida, supplying demand is a big factor of all real estate, and we're
still behind on building for the people that have been coming here through the pandemic.
So we're still seeing nothing like the growth that you saw of twenty thirty
percent and values and rental growth in like twenty twenty one, but still ticking
up a few percent already this year. And we're very conservative at our growth
patterns, so we're still seeing a very small uptick in both rents and growth
our year over on rental contracts if you do a new rental contract, we're
having about nine point six percent increase on our rents, and this year so
far, the market's average about three percent growth midway through the year. So
Florida's fascinating state. Do you know how many people that were in Florida in
nineteen fifty A lot less than now two point seven million. You know what
the population was in the nineteen sixty four point nine million. Yes, now
it's twenty two and a half a million. It's probably higher than that.
I don't think Census really has the key metrics programmed in. So in a
market where you have rising population, even in the face of rising interest rates,
prices still go up. Yeah, absolutely right. So a house that
you sold to an investor a year ago, how much what was the average
price you were selling for a year ago? You know, a year ago
wouldn't be a ton different from now, probably about eight percent less a year
ago, you know, now to three years ago thirty percent less, right,
nice climb for our investors. They've been very happy. Yeah, so
eight percent effectively. I mean, I realize it's paper gain from one year
to the next. It's not a real gain until you go to sell.
But that's got to give you some some incentive, some security when you're going
into a market where you hear the media just saying, you know, can't
get mortgages, mortgage rates are so high, all of this. Yeah,
well, we've tried to create our own market for our investors. So one
of the major things that does influence no matter what anyone says, is interest
rates, because it affects your payment, whether you're an investor trying to get
cash flow or a homeowner wanting to lig there. So what we've done for
our new constructions, we've created an in house financing program, locking people in
at four point seven five percent, which obviously helps with immediate cash flow when
when others are out there offering about seven percent for investor loans, we're trying
to get them off on the right tra You have to have a certain size
company I'm balance sheet to be able to do this with banks, but we've
been lucky to cross that threshold, and now we're able to offer these low
rates to our buyers. So what's your typical house that you you sell to
investors? Well, you know, typicals a tough word carry because you know,
our our recipe is all residential right now, single family duplexes and quads,
um and and that's our main focus. Those range from about two forty
two about heat hundred and yeah, So what what kind of rent can you
get on these homes? Uh, we're looking at anywhere from you know,
fifteen hundred to twenty two hundred or for smaller units twelve hundred to sixteen hundred.
So I would classify that almost as an affordable housing on the small.
Oh yeah, we're definitely in the workforce affordable housing price below the medium you
know. And and I'll none of the big builders out there will build duplexes
or quads. They have no interest. No, no, so less than
I think it's less than eight percent. Since two thousand and nine of new
construction has been for units under twelve hundred square feet. Twelve hundred square feet
are underd So when we step in with one of our duplex models or quads,
it's an affordable housing and not a large apartment that people are really attracted
to, and that's been to our advantage because a lot of people just don't
want to build them. We don't mind building them, and the returns are
great for our investors. I can see that. And I know just in
my area, Palm Beach County, very little you know, multi multi unit
housing is like you know, basically town homes that are going for like,
you know, a million dollars. Yeah, that's what they're going for here.
You know, you see, the high end builders are involved in that
space, but in terms of middle class housing, there just isn't any really
being constructed here in Florida unless they're in areas that are transitioning. You know.
Yeah, yeah, my m like for that that southeast side of Florida,
it's just too expensive. Beautiful, it's a great place to live,
as you know, uh, you know, the Miami Palm Beach for Lauderdale,
it's just been too expensive. The numbers don't work. So that's why
we're more up in Jacksonville, O'calla areas of southwest Florida. You know,
several markets down there. Those just have a little different fundamentals for the investors
side, and still great lifestyles. Maybe not as nice as Palm Beach or
or Emmy if that's what people want, but still a great lifestyle. Florida
is Floriday of your twelve markets, is there a standout where things are really
happening quickly and you know, just a total panic to move to that area?
You know. I believe in all our areas Kerry, Southwest Florida,
you know, the greater Fort Myers area that was really hot. It was
the fastest growing area in the country last year ranked. But I think,
you know, part of me really likes Jacksonville. That's that was our hub
market, That's where we started, you know, and I'm just seeing some
real exciting approvals come through finally in Jacksonville where we need housing, you know,
and in good areas we're finally getting more quads approved, which you know,
investors love our quads, their uniform unicorns, I call them, because
they're harder to find, especially new construction. They're hard to get approved,
but they produced a great cash flow. So so probably Jacksonville's the one I'm
I'm most excited about right now. Any of your buyers actually taking one of
those quad units for themselves and just letting the tenants finance their home pay for
their home. We've had a few people all our occupy h and living a
unit and then rent the other three, which is not a bad strategy for
people to start off on. Yeah, especially you're young in your twenties,
early thirties. It's it's your ticket to building wealth, rif exactly exactly.
Yeah, So you've been doing this for like a lot of years here,
Like, I don't think me four years been the new construction game about ten
years now. I hung up my rehab shoes, you know, about nine
years ago. So as far as cost inflation, as far as finding qualified
contractors and laborers, that's gotten a lot tougher. It wasn't it a lot
tougher. But we are you know, a team of one hundred and seventy
so we have a good sized team. We've also really entrenched in the markets
where we're not as big as the nationals, but we've been building through the
pandemic and so we've established some pretty good trade routes with both you know,
our subs and materials, which helps everyone involves, right, and luckily the
price of lumber has dipped dramatically from its peak it's come down quite a bit.
Still not where we were in twenty nineteen, you know, a normal
market, but definitely a lot better than where it was at end of twenty
twenty. So, if you're an investor and you're looking to take your first
step into this market, what is your key piece of advice to that person?
You know, I would look for the long term people. My best
advice to people carrying I'm owned hundreds of properties. If I had to go
back and do something different, I would own less of better quality and better
areas period. And the story because the cheapes with deferred maintenance can seem like
a great strategy and the look, I've owned them, but there is more
involvement. There is maintenance and more maintenance for repairs, more turnover, and
I would I have now in my more wise years, I'm hoping I've learned.
I own a lot less property than I used to, but they're much
better quality and they produce a way better cash flow and way more equity than
when I had more to deal with. So I tell people, you know,
it's not the amount of properties you own, it's the quality of each
property you do own, And that's my best in so quality not quantity.
Yeah. Also, when you're talking quality, you get better quality tenants.
Right, So better quality tenants means less maintenance means less headaches, right exactly,
sir? All right, well, hey tell us where do we find
you, how do we contact you? How do we follow you on the
internet. Yeah, if you want to learn more about kind of our fundamentals
and principles, my wife and I designed something called the JJ Playbook. You
can go to JJ playbook dot com. That's going to talk about our buildret
model and kind of our journey over the last twenty four years. How did
we create our passive income to support our lifestyle? And then some and then
Southern Impression Homes is our building company, and we're in most major markets in
Florida, like we talked about, And that's a great starting point. If
you're wanting to get more involved, all you have to do is go through
JJ playbook dot com and set up a discovery call with one of our sales
specialists. All right, hey, reallysting times. It shows that real estate
is in fact local, and you've got hundreds of local markets and they're not
all created equal. If you've got for Jim or myself, shoot me an
email kl at carry Lutz dot com. You'll find the links in the show
notes this interview on Financial Survival Network dot com. Just click through, and
while you're there, sign up for your free newsletter Jim. Always a pleasure.
Thanks for stopping by. Let's seeing you carry Thank you, Thanks for
listening to carry Lutz's Financial Survival Network, your solution to today's trying times.
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