Flippers Beware

>>Yvette and Anthony Bone stepped into the world of real estate investing in 1996 when they purchased a duplex in Lee County. In 2004, in the midst of the real estate boom, they sold the duplex and used the profit to purchase a lot in Lehigh Acres and two pre-construction homes in Fort Myers.

Enter the real estate slowdown.

Now the Bones have on their hands both homes-one that they purchased for $242,000 after Hurricane Wilma and had hoped to flip in 90 days-and the lot.

"We're a little stressed right now," Yvette says.

Fellow investors are feeling the same pinch, resorting to renting the properties or devising creative financing to sell the homes in a market where buyers have the upper hand. But others see this as the time to snap up properties with an eye on the future.

"It's an exciting time right now if you're a real estate investor," says Jeff Tumbarello, a founding member of the Southwest Florida Real Estate Investors Association. "It's now time to make money."

The association holds monthly networking events and seminars on investing, including an event in August that brought Donald Trump's Apprentice winner Kendra Todd to Fort Myers. The club, which was formed about three years ago, has close to 400 members.

Tumbarello says members are true investors who typically buy property below 80 cents on the dollar, not the speculators "who just had their big heyday." Even Tumbarello, who works in the mortgage industry, says that toward the end of the big boom, he was scared to buy.

"Sooner or later, the music was going to stop, and I didn't want to be a guy without a chair," he says, noting in August that the Multiple Listing Service showed 700 homes for sale in Cape Coral alone.

Now he's "like a kid in the candy store" because he, and other investors like him, are able to get better deals for properties than they've seen in the past couple of years. But with the current state of the market, Tumbarello says he would not try to buy and flip at this point; he advises purchasing properties with the potential for a long-term investment.

Most people are fed up, desperate and scared, says realtor Denny Grimes, president of Denny Grimes & Co. He recommends that those who have all their money tied up in homes let go of greed and sell the properties now, even at a reduced price. "Forget about the home run. If you can sell it and make a dime, get out," he says.

Grimes believes there is an opportunity for buyers to take advantage of the "negative emotion" in the marketplace, but an investor must understand value and shouldn't expect to be able to flip a property for a profit after 30 days.

"Right now is not a market for the mom-and-pop investor," says Grimes.

J.J. Jones, an agent with Miromar Realty and president-elect of the Realtor Association of Greater Fort Myers and the Beach, says buyers must expect to keep properties for two to five years-a more normal investment cycle than the area has seen in recent years.

"You've got thousands of people moving in every year; that market is not going to stop," she says. "We've got the sunshine, we've got the Gulf and we've got the water-that's not going away."

Jo Carter, president of the Naples Area Board of Realtors, agrees that investors need to plan to hold properties long term, as homes in Southwest Florida continue to be an appreciable asset. "I think it definitely is a good time to invest. It's a buyers market, and you want to buy in a buyers market," she says.

Yvette Bone says she expected a cooling-off period, but was surprised to see prices drop instead of just level off. "It's not like we have a bad market," she says.

The Bones have found a renter for one of the homes, but even the rental market is changing as many investors are turning to renting to help fund their investments. "It was easy to find a renter in March," but became more difficult over the summer, she says.

Both she and her husband, who are self-employed, know others who are in the same quandary. For now, they're focused on selling or finding renters before they even consider buying another property. "We want to get through this period of adjusting in Southwest Florida," says Yvette.

With real estate values down about 20 percent from the July 2005 peak, the first signs of recovery will be the return of investors, says Grimes. He's seeing a small sign of that with lot sales; in Lehigh Acres, where lots peaked at around $50,000 and then dropped to the $20,000s, prices are again starting to increase a bit.

"When you start to see the investors coming back in, that will be the earliest telltale sign that the curve is bottoming," he says.