Devotees of HGTV know Scott McGillivray as the hunky host of Income Property — that addictive show in which he helps homeowners convert their disgusting basements or unused space into sleek rental units producing enviable streams of cash.
A Toronto native who began buying and renovating houses while in college, McGillivray has a new show, Buyers Bootcamp, that teams him up with rookie investors. He and his crew have just started work on episodes to air next year: Half will be in upstate New York; the rest in Florida including Tampa Bay, Sarasota, Port Charlotte and Fort Myers.
McGillivray, his wife and two daughters live part-time in Estero, near Fort Myers, where he bought a house in 2013. "My offices are in Fort Myers so I typically work out of that area,'' he said. "I'm a Tampa Bay Rays fan so I make it up there for some baseball and also go to hockey games.''
The 39-year-old McGillivray recently spoke by phone with the Tampa Bay Times.
Q. First, how did your house in Florida fare during Hurricane Irma?
A. I have a screen shot from the weather that day and the eye of the storm is sitting directly over it — it could not be more dead center. We lost most of the lanai and most of the trees but the building is intact. Almost the entire neighborhood made the decision to leave — we left — but a few people stuck around. It was pretty rough because there was no power for around five days.
Q. As a homeowner and real estate investor in Florida now, do you think the market is getting too overheated?
A. We are definitely seeing some increases in home values over the last few years but I think at the moment we're doing OK. Southwest Florida (he includes Tampa Bay in that) is fairly affordable. We are filming my TV show for HGTV and DIY Network and we're find some incredible opportunities to buy and flip and hold all the way from Clearwater through Tampa to Sarasota to Fort Myers.
Q. How about St. Petersburg?
A. I think there's a good opportunity in St. Pete. I know some good student rental opportunities and there's a lot of what I call up-and-coming opportunities, like where you're on the edge of a good neighborhood and a bad neighborhood. I like to hold those kind of properties several years to be part of the resurgence rather than buy later.
Q. What's the first thing someone investing in income property should know?
A. Trial and error does not work in real estate. It's way too expensive to learn from your own mistakes, you need to learn from others' mistakes. I tell folks there are three things you absolutely must do when buying. One, understand how the financing works because it can make or break you. Two, work with a home professional, someone who knows how to renovate or a home inspector or contractor who can give you the details of a home; and No. 3, work with a local agent or someone who can not only access the data but understands what the local schools are like, whether or not there's a water backup problem, things you don't see online. If you think the cost of a professional is expensive, wait 'til you get the bill for making a mistake.
Q. How important is location to an income property? As you mentioned, it seems it would be good to be near a university with thousands of students who need places to live.
A. Student rental is definitely a very profitable form; it is also a very time intensive type of investment. There's a lot of working involved with student rentals.
Q. How has investing in income properties changed since you began?
A. It's very different. Technology has really created new markets. For instance, Airbnb has created a high demand for executive short-term and vacation properties. Even 10 years ago, it was hard to find tenants without newspaper ads. When I got started, I used to go around to all the campuses and post rental signs on and off campus and now I just go online and list. Same thing with using agents for renting or selling some of our flips. Now I can get my properties sold online. We can't afford to pay 6 percent (commission) in some cases — that's a lot of our profit gone. And when I purchase through these portals you get back some of the (money).
Q. Uh? How does that work?
A. It's a fairly new concept. You can use a portal like Owners.com to arrange to see a property and help you through the buying process and instead of the commission going to your Realtor, you get a 1.5 percent rebate because you used their technology. When you're buying a $100,000 property, you're getting $1,500 back at closing.
Q. How abut the decor of income properties?
A. It all depends on the property. If it is a rental property, we'll typically keep it fairly neutral. If it's a vacation property, we have a lot more fun and do things a little more edgy and exciting. When we're flipping, we obviously want to make smart decisions and do things that produce great returns. We are very market specific — it's a different design we'd do in Florida than in upstate New York.
Q. How long do you keep an income property?
A. I have had some properties for 19 years and some that I don't hold on to for more than a year. If it's an equity play like a flip, I'll typically want to turn it over in as short a period as possible.
Q. Have any of your investments turned out to be dogs?
A. When you see the show, you almost always see the happy ending but definitely there have been a few investments that have not gone as planned, where there was a challenge with tenants or the renovations costs far exceed the original scope?
Q. Some examples?
A. We had to take a loss of $25,000 last year (on a place) in Toronto. It was a shift in the market, things were on the up-and-up while we were doing the work, then there were some interest rate changes, a few government decisions and the next thing you know the demand for those properties went away. We gave somebody a nicely renovated home at a discount.
Q. Any in Florida?
A. There was one we lost (on) in Florida. It was a very minor rehab in Fort Myers . We bought it and thought we'd rent it for a year. During that year and a half, we were holding and all of a sudden a new development opened up right across the street selling like 2,000 new properties that drew everybody's attention, so demand for our property went down. We sold off the property and were probably out $10,000. But we sold a property in Estero at the end of August so we were glad we did close then because the hurricane caused a lot of damage.
Contact Susan Taylor Martin at [email protected] or (727) 893-8642. Follow #susanskate