Lauren is a real estate investor who rents out properties to horse owners. She’s currently doing development deals in Florida and maximizing her returns. In today’s episode, we find out how she is solidifying her position in this very niche market.
The World Equestrian Center opened up in Florida in January. This was somewhat like the Disneyland of the horse eventing world. With expos and car shows expected to be held there, a largely untapped opportunity for development came up.
Horse owners from New York were expected to come down during the on-season to compete in this facility. Since they’d be bringing their own horses valued between $50,000 to millions of dollars, they would need a property with a house and the needed facilities to keep and exercise their horses.
Lauren chose to build on an underdeveloped, rural area that doesn’t offer these kinds of property. There’s now a large influx of demand, and supply isn’t available yet.
Lauren had a friend who was into horse eventing. She partnered with that friend, and they bought a horse property. Later on, the friend moved, and Lauren rented out the place. Now, it rents out for 3x the market rate.
Horse property renting is seasonal, short-term renting. Think of it like Airbnb but for horse owners. Lauren doesn’t provide service for the daily care of the horses brought in. She only provides property maintenance such as repairs for fixing broken fences.
Lauren’s first horse property was a 3 bedroom, 2 bathroom house situated on 10 acres. It had a 7-stall barn and 7 paddocks for the horses to exercise in. Horse owners who compete tend to bring between 4-30 horses. So they need a lot of space.
Lauren is in the middle of developing her second property, which is also on 10 acres. It had 2 houses in it. She also bought the vacant 10-acre property next to it. This will turn the entire development into 20 acres.
With horse events having on and off seasons, renters are expected to be seasonal. Shows usually take place from December to April. During the downtimes, Lauren lets the property rest to allow the grass to grow back.
She is also lucky to have the renter for her first property rent it out for 2 years. As equestrian shows start to happen all year round, people are willing to rent the entire year to lock the property down.
Horse owners are commonly from New York, Pennsylvania, Maine, Kentucky, or generally the Northeast states. They need to keep their horses in shape during wintertime because they plan to go to the Olympics. So they fly their horses down to Florida to get them ready.
For her first property, Lauren worked with Farm Credit for a residential loan as the house still made it residential. She had to put more money down though to get the farm loan. Getting an agricultural loan in these areas is easier.
Her first property was bought for $450,000. Her lender didn’t really care what she’d do with it. The property has now been appraised at $850,000.
The current property she’s developing was purchased for $900,000. It was a 10-acre property with 2 houses. With this one, she needed third-party private money financing to come in. Her investor put in $300,000 for the down payment.
Vacant land is harder to finance. But Lauren got a better price for the 10-acre vacant lot beside her current development. She paid $150,000 for it.
Lauren plans to do a home equity line of credit (HELOC) on her current development. She plans to put in $250,000 as she installs a 7-stall barn and convert the 4,000 sq. ft. garage into a small apartment and office and tack and feed room.
She’ll also be putting up fencing around the entire property, paddocks, and a GGT arena for owners to practice on like they’re on a big show. The arena alone would probably cost $100,000 to put in.
Lauren plans to put up a 6-stall barn for the vacant land as part of phase 2 of her development.
Compared with California, it’s not as difficult to get permits. In fact, Lauren just put in an asphalt driveway without a permit because she realized the fine for not getting a permit was only $120.
She does, however, need to follow regulations on groundwater absorption. As there are already 2 houses on-site, the property is already overdeveloped. She plans to cover as much land as allowed without a permit.
To compensate, she’ll be putting in a pond because it rains a lot in the area. Permits tend to be needed for things where you’re putting down an impermeable surface.
The area also has a protected species of tortoises that Lauren’s property has an infestation of. While cute, the tortoises are very expensive to move. At a minimum, she’ll need to pay $1,000 to the recipient site for receiving the tortoise in addition to the payment to the person moving them.
To minimize the costs, Lauren is taking a course to become a licensed tortoise remover. She’ll still have to pay the $1,000 fee if she removes them offsite to a receiver site though. But tortoises tend to move out on their own when there’s lots of activity in the area.
Also, Lauren might just section off an area for them, but she still prefers to move them away as prized horses can get injured if they fall into one of the tortoises’ burrows.
Lauren works with a real estate agent who is with the country’s premier horse property agency. Her agent works with people who want to buy, but those same people also want to try out an area first before purchasing. So the agent refers them to her.
For Lauren, she didn’t go out looking to buy horse property. Her second one was next door to the first property. The owner was selling it, and her agent decided to ask if she’d be interested. Lauren countered that she might buy it if the vacant land beside it would also sell.
Her agent contacted the vacant lot’s owners, who agreed to sell their land. After that, things just fell into place.
Horse property investing is a very niche market. People are expected to come down because of the equestrian center. This guarantees her an influx of renters.
Since her area is not developed yet, most investors haven’t caught on to the opportunities. It’s still early in the game.
However, lots of maintenance is needed to maintain the property. And you’ll be dealing with very rich people who are particular and want things a certain way. Most come from old money with her last renter part of a family whose business started in 1910.
Fortunately, a higher-end clientele also meant that they are less affected by economic ups and downs.
Her first property which has a 2-year lease is renting for $7,800. Once she finishes her second development, she plans to rent it out for $15,000-20,000.
Her first property was pretty much turnkey as it already had everything and just needed some updating inside the house. Lauren spends $900 a month on lawn mowing alone though. Because it rains a lot, the grass there grows like crazy.
She also pays somebody to come out 2 days a week to fix whatever needs to be repaired. Depending on their skills, she pays between $15-25 per hour.
With her second development, everything will be new. The barn will be made from concrete. Fencing will also be brand new. This will ensure that it will be maintenance-free for a couple of years.
She expects to only shell out for the lawn mowing and the needed tree work such as cutting down limbs during a hurricane or tropical storm.
The property has its own septic tank and 2 wells. Lauren only needs to cover the electricity and internet. There is a set usage amount. Any consumption beyond that set amount will have to be paid by the renter.
Lauren is looking to pivot and invest in multifamily properties after completing her current development. She expects it would be easier and have lower maintenance.
She likes to diversify and is looking to invest in the Midwest, maybe in Ohio. Relying on the equestrian center is too risky. We don’t know what’s going to happen in the future. Either the center could shut down, or horse riding could fall out of favor, like greyhound racing.
She already knows that she wants to continue investing in real estate. After house hacking her first house in Hawaii, having someone’s rent cover her mortgage was a lightbulb moment for her. It also allowed her to travel and come and go as she built a small house on the back of her property and rented the main house.
Her home in Hawaii was bought for $450,000 in 2017, now it is worth $900,000. Real estate investing just makes financial sense. Lauren intends to start with a 4-plex first before she works her way up.
For now, Lauren plans to complete her ongoing development. She hopes to finish and rent it out by November-December. She actually already has someone who wants to rent it in December.
Once she’s done, she’ll leave Florida, go back to Hawaii, and start working on her next investment plans, which might be in the Midwest.
Lauren didn’t hire a general contractor. She hired subcontractors for each job she needed. Through research and asking people for help, she felt she had enough competency to get things done and right.
The hardest part was deciding how the property was going to be laid out. Luckily, she had a friend who knew someone who owned a horse property that has been very successful for 20 years. She consulted with him.
Lauren might still change the plan about the number of stalls, paddocks, and locations of the well and arena. But what’s important is to know all the pieces that need to be included.
Just go for it. No one really knows where to start. Lauren didn’t know she’d do horse property before she started.
Make sure you’re financially ready and be ready to say “yes”.
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