Housing Investors Are Still Around

ORLANDO | When Florida's real estate market was booming in 2005, many observers credited the impact of investors - people flocking into the market to purchase Central Florida homes as a smart short-term investment.

Today, the days of buying a home, watching the price soar in a matter of months, and then selling it for a tidy profit are over. With the number of unsold homes in Central Florida on the market still rising, prices falling and foreclosures hitting the record books, the atmosphere for housing investors is radically different from as recently as 2006.

But that doesn't mean the prolonged housing slump has eliminated those housing investors altogether - far from it - or that there are not still some deals to be made out there. The key difference may be that no one today seems to be talking about multimillion-dollar deals that make investors rich overnight.

When the Central Florida Realty Investors held its general meeting on May 7 at The Plaza Theatre in downtown Orlando, a key segment of the program was devoted to "Deals of the Month," where investors who belong to the nonprofit, volunteer trade association - dedicated to the education of real estate investors - discuss recent, successful real estate transactions. Several members said they scored modest profits, even in a market frequently described as downright chilly at best.

"These are members of the club doing good things in a tough market," said Bruce Hefka, vice president of CFRI. "Maybe we can learn a few things from them."

Lee Spaziano, who runs Bike Realty, said he made a $30,000 profit by buying a home near the Orlando International Airport that had suffered major fire damage. The success of this project, Spaziano said, demonstrates that no matter how steep the hill looks at first, it's possible to turn a very troubled property into a profitable one.

"I got a call from a wholesaler saying, 'I've got a burned-out house,'" Spaziano said. "We did a little bit of research and said, 'Sure, we'll buy that house.'" The price: $112,000.

Spaziano was able to convince the owner to spend $60,000 on rehabilitation costs.

"They gutted the house for us, so we didn't have too much cleanup to do," Spaziano said. "With fire, you have a lot of damage to deal with. He financed the house and the rehab. The seller gave us the house on a note, and we were out of pocket practically nothing, except for $43,000 for holding costs and insurance, interest on the mortgage, and advertising. After the rehab was done, we had an open house."

They ended up selling the home to an investor for about $30,000 more than their initial investment and expenses.

"All in all, a good day's work," Spaziano said. "What would we do differently? Nothing. What I learned from this is that home fixers can really get things done quick."

In fact, the deal worked so well for his firm that Spaziano said, "We're going to continue to focus on burn-outs, because we had so much fun with this one."

Another local Realtor, Olga Smiley, made a small profit on a 1979 mobile home in Kissimmee.

"I was driving through a mobile home park and I found a home for sale," she said. "It had three bedrooms and two baths. It didn't need any work, just TLC (tender loving care). I figured it was worth $20,000, and I could sell it for that. I offered the bank $10,000 and they accepted that."

Financing it on credit cards, Smiley began a three-month search to find a buyer. Finally a snowbird from Michigan made an offer, putting $5,000 down and asking Smiley to finance the rest by letting her pay $400 a month. Not long after, though, the buyer decided she wanted a smaller home, so Smiley found her one, then resold the first mobile home - all for a profit on her original $10,000 investment.

CFRI has become a forum for investors like Spaziano and Smiley, who seek out opportunities regardless of market conditions. Adam Sleap, president of the association, said at the very least it provides an opportunity to take advantage of a key element of successful investing and real estate purchasing: networking.

[ Michael Freeman can be reached at Michael.Freeman@theledger.com or at 863-421-5577. ]