Naples - 9 October, 2005 -

Buying ugly houses is getting harder and harder. Maybe that's because everyone is doing it. The national real estate investing craze has made it harder for wholesalers like HomeVestors, the real estate franchise best known for its "We Buy Ugly Houses" billboard campaign, to ply their trade. Investors across Southwest Florida are complaining about the tight housing inventory. "With the market the way it is, the buys are few and far between," says Wayne Mitchell, owner of the Fort Myers franchise of HomeVestors. In past years, Mitchell's HomeVestors franchise has sold a lot of homes to investors who then rent or resell them. But the margins just aren't there anymore in the housing wholesale trade, Mitchell and other investors say. "We end up rehabbing them ourselves," Mitchell says. Investors rehabbing their properties are creating a new and much needed source of affordable housing. It's a benefit that is often overlooked by those critical of real estate flippers, says Jeff Tumbarello, a founding member of the Southwest Florida Real Estate Investment Association. In past years, Mitchell, for example, would have likely sold the house at 390 Ottumwa Ave. in Fort Myers to an investor. Instead, he remodeled the place himself, putting in new flooring and a new kitchen. He then sold it to a first time homebuyer. The $125,000 price was affordable for Gecenia Jose, a single mother of three, who bought the three-bedroom house in April. "When you look at it it's been totally remodeled," Jose says. "It looks brand new." The 1,600-square-foot house, which HomeVestors purchased for $50,000 in January, property records show, was built in 1962. "It's a pretty good house," says Jose, an account executive for a cleaning franchise company. Best of all, it's hers. A real estate investor helped it happen. "I don't think investors get enough credit for that," Tumbarello says. Because of the tight market, though, Tumbarello says he mostly buys raw land now because of the market. Tumbarello likes to joke that he was a real estate investor before it was cool. "There's definitely a feeding frenzy," Tumbarello says. "There's just so many guys doing it it's hard to find properties." The competition is obviously good for sellers: "In the old days, I could buy properties all day long for 50 cents on the dollar," Tumbarello says. "Today, I'm lucky to find one for 70 cents on the dollar." Mitchell, too, has had to be more aggressive when locating houses to buy. He's sent direct mail inquiries to certain zip codes asking homeowners if they're interested in selling. Although HomeVestors offers below market rates, some owners are happy to get the cash. The sellers might be going through probate because of a family death or a house may be in bad disrepair. Just getting the house ready to sell may be too much work. Mitchell, who is a home inspector with a construction background, looks for a house's potential. "Some people are going, 'I'm so glad to get out of this mess,'" Mitchell says.

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