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Prominent Lakewood Ranch-based homebuilder Pat Neal knows the real estate market is strewn with the remains of investors that were positive the residential market had hit bottom. Even so, he is willing to bet it's fallen far enough.
Neal has hired David Rapp, a land buyer for Centex Homes for the previous four years, with the goal scooping up depressed residential land on the cheap. Neal Communities will buy some of the property Rapp finds, but Neal has also set up a separate entity, called the Neal Home Land Opportunity Fund to acquire additional properties. The fund, which will very likely also feature other investor money, will sell residential property and lots to other homebuilders.
“David is one of the area's smartest land buyers,” says Neal. “He really knows where all the inexpensive land is. We have found great interest from [potential] financial partners. This would allow us to only need to fund 5 to 7% of the total investment. ”
Most of Rapp's early focus will be in Manatee and Sarasota counties, but he expects to expand to others areas in Florida, starting along the Gulf Coast. His first task is getting in touch and networking with bank decision makers.
It is possible residential prices could move lower, Neal acknowledges, but his success with his homebuilding company this year leads him to believe it won't be a meteoritic decline like the one that befell Metro Development Group, a Tampa-based big vulture buyer in 2007.
From January to June, Neal Communities closed on 180 home contracts, the most it has ever recorded in that period in the company's history.
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