Fix and Flip Success: Transforming Florida’s New Construction Properties

Michael Stansbury (00:01.166)
Hello everybody and welcome to the Real Estate Pros podcast. I’m Mike Stansbury. My guest today is Luis Noronha and he’s a Florida guy and we’re gonna get into his story in just a bit but I wanna let you know that Real Estate, or excuse me, Investor Fuel is there to, oh gosh, all right, here you go. I forgot my script. I’m supposed to have my script with me, Luis, so I’m gonna redo this at a three, two, one. So my script wasn’t with me. Luckily we have the power of editing. Here we go.

in three, two, one. Welcome everybody to the Real Estate Pros podcast. I’m Mike Stansbury. We have a special guest today, Luis Noronha from Florida. We’re gonna get into his story in just a second, but wanna let you know at Investor Fuel, we help real estate investors, service providers, and real estate entrepreneurs, two to five X their businesses to allow them to build the businesses they’ve always wanted and allow them to live the life they’ve always dreamed of. Luis.

How are you today, sir? What’s it like in Florida today? What’s the time and temperature? Make me jealous.

Luis (01:02.749)
Today, I think we got 72, 74 degrees, sunny. We just have 30 days of rainy days here in Florida every year, so it’s pretty nice.

Michael Stansbury (01:15.306)
awesome. Well, Luis, you’re in the Florida market. You’re a real estate entrepreneur, developer, new construction. What are we doing today? What kind of problems are we solving in the Florida marketplace? What is the real estate market and what does it look like in there and how are you winning in Florida right now?

Luis (01:33.894)
Well, Florida, different than most of the US markets, but I think that Florida, Texas and a few other states, they benefit a lot from the post-COVID scenario where people started thinking about this place itself not only as a place to retire, but to live their lives since they can do work remotely. And with that, after COVID, a lot of new companies started moving their headquarters to Florida.

And with that, a lot of people with high incomes looking for new property, new construction, luxury product, and the inventory is not there. So we’re trying to fulfill this gap at this point of building luxury properties, very detailed finishes, high quality product to fulfill this demand.

Michael Stansbury (02:27.63)
Okay, so that’s the demand in Florida. It’s one of the things you just can’t get away from most people since COVID. And because of maybe the leadership in your state, it’s become very, very attractive for people to move from other states that aren’t so friendly to Florida. It’s kind of the vibe that everybody’s getting is you guys don’t have, your taxes are low. Yeah, and things like that. what, yeah, if you were to talk to your customers,

What’s the main two or three reasons why they’re choosing to move to Florida?

Luis (03:00.452)
I’d say the first one is real tax and that there’s no income tax on a state level, just on a federal level. So people that make a lot of money, they prefer not paying that much of taxes. So they come here. And also the weather, I think, right? So before people needed to be close to New York or Chicago or wherever they live because of work. Now, a lot of people are working remotely and this has also created an extra demand.

Michael Stansbury (03:31.426)
Yeah, so if you have a choice to live somewhere, Florida’s a choice if you have to work remotely. OK, so you actually, so we are Invest Your Fuel and the Real Estate Pros podcast. We talk a lot about people doing fix and flips. And that’s kind how you said you did that. You started out before you got into new development. Tell us a little bit about that. What’s your story? What’s your origin story with real estate?

Luis (03:57.153)
So I used to live in Brazil. I moved here to the US in 2014. So there in Brazil I used to work for a cement company and all my clients were builders, were construction companies doing big residential projects and I needed to understand the market because they pay like in installments they have a long period to pay for the product.

So I needed to do like, let’s say a bank analysis and demographic analysis to see if whatever they were building would finally sell and they will be able to pay me. So I kind of entered the real estate market through the back doors, learning how to analyze and understanding if the deals will pencil out, if the deals will make sense and always love the things, right? So later in life, I left this company, I founded my own

company related also to the construction industry there in Brazil. With that company I was awarded entrepreneur of the year by an NGO called Endeavor in 2012. Sold this company and decided to move to Florida. And there I started with real estate. I was a newbie, didn’t know much about construction, especially with the construction systems in the US. Started with fix and flips, buying

$250,000 homes, upgrading them and reselling. I tested out a couple of states. I did three jobs in Pennsylvania. did two in California, and I decided to stay in Florida.

Michael Stansbury (05:39.374)
Well, how is that, that’s different. Those are, that’s a triangle of distance as I kind of think about that. How did you manage that? Did you go to each place and manage it there or did you, wow. Yeah.

Luis (05:51.354)
I was tough. I was trying to choose where I was going to settle, right? I tried a little bit of all these markets and I said, I’m going to do three here, three there, and then figure out where I want to stay. And I did it and finally decided to stay in Florida.

Michael Stansbury (05:55.489)
Okay, gotcha.

Michael Stansbury (06:09.506)
Yeah, okay, so Florida, so, okay, so you were there and managed those projects. That’s interesting. And so how are your margins when you did fix and flips? Is that one of the reasons why you’re a new construction now or how’s that look?

Luis (06:22.201)
Well, the margins in Fix and Flip, they were very tight. Fix and Flip, they work really well when you have a market imbalance like 2009 or 10 that you would buy properties really cheap and you know that the properties would appreciate over time. yeah, it was really good in a sense that it ingrained in me the cost efficiency mindset for other construction projects.

But it’s really tough and I know the idea that everybody has, know, let me start with a smaller project because it’s less risky and whatever. On my experience, it’s kind of the opposite. When you go for higher numbers, you have more money, you can hire better crews, you can hire a better architect, you can have all the people that will work with you have a different level and that helps you out. So…

to me, I mean, I know you’re putting more money, but you reduce a lot the risk.

Michael Stansbury (07:21.996)
Yeah, and you’re in a good market where there is a need for that. That’s interesting. That’s a nugget for our audience. It’s really good because some people are just afraid to step out. And maybe they can’t because they’re not in a market where there’s a luxury. But if you’re in a market when you have a demand like that, it is, you say it’s easier. I will also say that it’s easier as well because that’s my experience as well. The low end stuff is always not as much fun, not as much margin.

Luis (07:51.032)
know, the problem I found, Michael, was when I was doing fix and flip, I would never, because of my conscience, put a lipstick on a pig. But my competitors were doing that. So whenever I was fixing a house and I saw electric is really bad, need to redo it completely. My competitors weren’t doing that. we’re disputing later on in the market with a price tag of a house that mine was completely different than theirs. But, you know, people don’t see it.

Michael Stansbury (07:58.904)
Right?

Yes.

Michael Stansbury (08:08.588)
Right? Yeah.

Luis (08:19.573)
And I said, you know what, I can show my progress, the difference of the quality of my construction in the slow end homes, people can’t see. Behind the wall.

Michael Stansbury (08:28.938)
Yes, yes, yeah. Yes, and that speaks to your integrity, and I understand that mentality as well. When you’re just changing out light fixtures and plumbing fixtures on a 50-year-old house, that’s pretty tough. Yeah.

Luis (08:44.984)
One of our parts in California also was featured in LA Times as House of the Week. We remodeled a 1920 Spanish home and kept the character of the house but modernized totally the house and we did the interiors completely. So that was really, really, really nice.

Michael Stansbury (09:04.322)
Wow.

Yes, those large old fix and fix homes, I’ve done a couple of them here in my hometown. are always, the margins always do, if you do them the right way, they’re not necessarily 30 or 40 % margins that you want. So let me ask you this, because I’m curious, is coming from Brazil, understanding those construction systems there, what’s the main difference between maybe new construction and how they did systems and processes there in Brazil and here in the States?

What do you like about both or what did you take from Brazil and maybe work in here?

Luis (09:42.2)
There’s no steel frame down there Nor even wood frame most of the construction is like with blocks Kind of what happens in Florida as well at least in the south southern Florida where the codes don’t let you do with At least the first story you can’t build with wood So that that is the main difference and what I see over there because the taxation system there is completely crazy

There is a verticalization. So you are the developer you are the builder you have your own factory to build the blocks you you do it all because

Michael Stansbury (10:21.102)
The supply chain is there? Okay, wow.

Luis (10:23.734)
It’s where people try to be very vertical, which is complicated because now you’ve got to master a ton of other business. You’re going to be the company that brings the window panels, you’re the roofer, you’re everything. And here you can specialize really well and use those teams that are specialized as well. So I found it more professional, more…

Michael Stansbury (10:39.363)
Wow.

Luis (10:52.619)
How can I say, easier to work. You don’t need to be the jack of all trades. You can find the right people for every job you need.

Michael Stansbury (10:54.787)
Right.

Michael Stansbury (11:01.004)
Okay, the puzzle pieces kind of come together a lot faster, easier here. Okay, yeah. So you’re originally from Brazil. came here in 2014. What were some of the obstacles that you felt like you had to overcome in order to get in the market and to be doing what you’re doing now? What are some of those things?

And we mentioned you yesterday or excuse me, just a few minutes ago, folks, could we have a pre show on the show and where we talk about some things before we talk about the podcast and you were involved in maybe a group or a guild or a mastermind. What kind of things did you learn from them and did it help you kind of overcome some of the some of the obstacles? Can you talk about that?

Luis (11:50.814)
Sure. When I came here and I started doing those fix and flip side law, I joined a local REA mastermind and I didn’t know about lending or private lenders. didn’t know nothing about due diligence in a property when you buy a property. So all those informations were really important because people don’t understand, people don’t know what they don’t know.

And and if you’re starting you don’t know you you you that’s that’s for sure you don’t know a lot of things and it’s best thing that you make friends or you have someone more experienced that you can ask things for them and See how they work. So when I first came here the first thing I did was start investing with other developers and Just be on the side asking questions and you know

trying to learn with their mistakes, not my mistakes. I know that my mistakes will be more expensive.

Michael Stansbury (12:54.976)
isn’t that the truth? another great kind of proverb there is you ask questions, hey, what did you do here? Tell me about, you asked these developers, what were the big hurdles and the big mistakes you made? So instead of making those, you can hear from them. And that’s the beauty of those groups of people of networking and masterminds is what you articulated. I didn’t know what I didn’t know. I was exposed to these people who were doing things at a level that I wanted to get to and I learned.

Luis (13:24.862)
insurance, how to write, what kind of insurance you should do, how to write a contract in a decent manner to protect yourself, your contract with your investors, how to be compliant with the SEC. There so many things if you’re syndicating, know, and we don’t know and we start doing, if you’re an entrepreneur, people start doing, right? And then they go, I did this wrong. And they try to correct. Sometimes it’s not expensive.

but most of the times it is.

Michael Stansbury (13:57.494)
Okay, so tell me about growing up as a child, you came to Florida for vacations from Brazil. I mean, what was that like and what did your parents do? What did they teach you about life and about real estate? Were they in the business at all? What did that look like for you?

Luis (14:19.189)
My parents were never in the business, but my mom, loved remodeling our own home. She was kind of an interior design by nature, by force of nature. And she loved it. She had a really good taste. And we used to like and see her doing it. I used to like it, right? So part of my link with real estate, think, comes from her. But my father used to work in a

paper company nothing to do with it but he used to have a second home here and while some of the holidays we would come with them and stay here in Florida was up in northern Florida in a place called Hutchinson Island. well so that was kind of my first experience spending more time here in the US and loving the culture loving the people and the American way of life.

And I put as a goal later in life to be able to come here and live here.

Michael Stansbury (15:24.014)
Okay, so what age was that?

Luis (15:26.741)
When I was between 12 and 16, I had the experience of coming here, going to Disney, going back, staying in that beautiful beach and well, created long lasting memories that still make me like the place.

Michael Stansbury (15:30.883)
Right?

Michael Stansbury (15:48.43)
Yeah, so that was always in the foreground for you, saying, I’m gonna be in America. What’s your family like, look like? Do have any kids, or what’s that look like?

Luis (15:56.916)
I do. have a 22-year-old boy that is still in university finishing business. My daughter is a 20-year-old. He’s studying here in Florida. My youngest daughter is studying in Colorado, Colorado University. She’s doing finance and he’s doing business.

Michael Stansbury (16:18.36)
Great. Do they participate at all or are interested in the land development at all? Or do they have a place for you? do you have a place for them?

Luis (16:28.019)
Actually, both already did some summer jobs with me. But I think they have their own thing and they want to pursue.

Michael Stansbury (16:39.598)
Oh, that’s great. So tell us about the product a little bit now. What have we built in the last six months? If we were to go online and take a look at it, where would that location be? And what is your core customer? Who you looking for?

Luis (16:56.275)
So after analyzing this new market in Florida, we came up with an investment thesis we call the Coastal Living Collection. So it’s a portfolio of unique properties tailored to this customer, affluent buyer that will come here and in places where the demand is outpacing the offer of new construction. So right now I’m developing one gator community in a place called Santa Rosa Beach.

It’s in the Penn Handle, very close to Pensacola, in a place, a magical place in the Amarillo Coast called 38. So it’s a 12-mile scenic highway where a lot of the African people from Tennessee, from Arkansas, from Houston, from Atlanta, they go to this place.

You have Britney Spears, Matthew McConaughey, you have Peyton Manning, have Admiral Lagasse, a lot of different names from different areas, right? They all live there. And this place is really beautiful. We’re building this 66 luxury single-family home, gated community there. At this stage, we just finalized the whole infrastructure. We replanted the parcel, and now we’re gonna start building, mid of the year, we’re gonna start building the homes.

Michael Stansbury (18:20.48)
And then what is our what’s the entry level on there? What are we starting at?

Luis (18:23.922)
The price of the house price tag from 3.5 to 5.5 million

Michael Stansbury (18:29.39)
5.5 million. What you just did is you just centered on a location. My family and I would go to Destin, Santa Rosa. I know that area very well. It is beautiful. I have a buddy of mine that lives right down the street from Santa Rosa. It is just unreal. It’s a great place.

Luis (18:49.075)
I can give a piece of advice also to your viewers. You’ve got to build as many connections as you can in real estate. imagine what happened with me. So I was dealing with a realtor there in Panama City Beach, which is really close. One deal that she was working with me fell through, fell off, and the sellers decided not to sell to me at the last minute.

And she was very sad because we put a lot of effort. She said, you know what? I’ll compensate you. I have a very nice deal that I’m going to bring to you. But when I call you, you come from Miami, you come here, and you got to see the property because this property is going to come to the market and there’s going to be like tens of offers. This was a property that used to belong to a developer.

In 2008 he divorced from the wife, there was a crisis, he lost it to a bank. Later on this bank broke, another bank took over. The property stayed like 12 years, so somebody decided to sell. And you know, because of the law, the banks can only sell for whatever the value they took the property for. So this guy, the previous developer, he bought it for 27 million. The bank sold it for 6, 12 years later.

Michael Stansbury (20:15.894)
and she sold it to you, then they sold it to you.

Luis (20:19.313)
I was being the beginning of COVID people 2000 people already dying here in Miami. I was my god my wife you’re not gonna catch an airplane. Yes, I will. So I got in the plane me and two other people with a lot of masks and stuff. When I arrived there nobody was wearing any masks anything. What you’re doing is this is what they tell to do in Miami. Take this off there’s only one case here nobody died. I said okay let’s go.

Michael Stansbury (20:47.176)
amazing. this is that’s a great nugget so a relationship you had you had a deal and then she had the lead on this development and you were the first person and and so yeah.

Luis (20:56.528)
Yes, one month before the property went to the market, I went there, I did my studies, my due diligence in the property, I came up with the numbers and I had exactly the offer at the asking price written. The first day the property entered the market, my offer was the first one there. Two days later, there were three or four more and one week after there was like 15 offers because everybody, the local guys, they knew that there was

Michael Stansbury (21:14.926)
How that?

Luis (21:26.2)
very good deal and they were pissed because an outsider took the deal I just could do it because I had good connection good relationship

Michael Stansbury (21:34.478)
That is amazing. And so if you were to dive into those numbers a little bit, so six million for the purchase and then for the 66 luxury single-family homes, how much is the infrastructure going to cost?

Luis (21:48.242)
We spend around 11 million in the infrastructure. So total in we’re talking about, let’s say, now I’m gonna put 1.5 in landscaping and other stuff. Let’s say 20 million all in. I got an appraisal requested by the lender a couple of days ago and they appraised the value when we finalized building all the infrastructure with the clubhouse and everything.

It’s gonna cost me three more million, maybe 25 million all in. They appraised at 53.

Michael Stansbury (22:23.118)
Ladies and gentlemen, that is what you call a, do you like baseball? Okay, that’s a grand slam in the bottom of the ninth to win the World Series. That is amazing. I love it. I love to hear of the wins and that is a huge win. I know that area and I know that that’s a great product. So three and a half million, four million, tell me about the product itself. What are we building square footage wise and

Luis (22:28.196)
yes.

Michael Stansbury (22:52.278)
as far as the size of the lot.

Luis (22:54.096)
Square footage wise, I’ll say that they’re gonna be ranging from 3,200 to 5,500. Depending on the lot size, lots are ranging from 6,000 square foot to 11,000. So you can build different size of homes. But we’re keeping like, on the HOA we created some rules. Nobody can build on the ground floor more than 50 % of the area of the lot. So they can build two, maybe three stories, whatever.

never more than 50 % of the lot. And we created an architectural guidance. All the houses, need to be cohesive so that the community looks beautiful. We created

Michael Stansbury (23:32.835)
Right?

Michael Stansbury (23:40.984)
similar to kind of a seaside, similar, similar, or would you say that it’s…

Luis (23:46.16)
More modern? We tried to create something unique like Alice Beach has its own character, Rosemary, the other characters inside and out, so we created our own but more on the modern side of it, contemporary modern.

Michael Stansbury (24:05.29)
That is exciting. That is really exciting. what we did in Brazil, right? Where they had the vertical, they did everything. So in these developments, do you have your own real estate brokerage? Are you guys handling that or are you outsourcing that or how does that work?

Luis (24:22.811)
No, no, we’re using Solibiz. They have a local guys over there. They sold last year $1.4 billion in property. So they’re the experts. They know everybody. I’m not going to try to do their work.

Michael Stansbury (24:35.33)
Yes.

Yes, that’s a beautiful thing. It’s one of those things. like, hey, you defer to the people that know the folks that are coming in. And yes, they’ve got really good market share there. So that’s awesome. I was just thinking through that, I have some more questions that I’m thinking about. So that’s the product that you’ve got. What amenities? Is it a strong HOA pool? Is there a clubhouse? Or tell me about that.

Luis (25:06.01)
Clubhouse with sauna, with a living room, big living room, summer kitchen upstairs, a gym, and two big swimming pools, a pickleball court, two pickle courts, playground for the kids, and most of the homes they’re going to have their own pool, but even then I think that people like to congregate, to meet each other, and so the clubhouse is a place where

Michael Stansbury (25:21.848)
Yes.

Luis (25:35.971)
Members get to know members.

Michael Stansbury (25:37.869)
Right, so my mother and my stepfather, they reside in Margaritaville in Daytona and they do the same thing. People have their own pools, but there’s also a nice clubhouse and some things as well. So I love the planet, it sounds awesome. And it just is a really neat testament to that power of relationships that you had and somebody that keeps their word says, hey, I’ve got this, Luis, I’ve got this for you.

and then you’re able to take action. knew exactly, hey, this is going to be a great deal. in a down market, that place is very well sought out.

Luis (26:19.12)
And it took a little courage because when COVID was started, nobody knew how that was going to end. But with such a margin in the product, I you know what, I know that 2008 prices were at the peak. This is going to take a long time to be worth 27 million. But even then, if it’s worth half of it, 12, I’m buying at six. So I got to buy this and wait how long this COVID thing lasts. Let’s wait here and build it when it’s time.

Michael Stansbury (26:47.534)
And you’re located in South Florida. So will you move up there and manage the project or will you do that from home base?

Luis (26:56.811)
For the vertical construction we are partnering with local builders Bringing them to the project so they are gonna be there every day and taking care of the job I I can think that I’m gonna be managing from that far away

Michael Stansbury (27:06.327)
Okay, awesome.

Michael Stansbury (27:12.086)
And timetable, when do you think the first house is going to be built? Infrastructure, what’s that look like?

Luis (27:19.375)
The infrastructure is all done. So the first house should start going vertical. I’ll say July, maybe August, depending on the city approvals. So we already are, we got, we designed seven different floor plans, different houses that the buyers can pick and choose one of those, or they can hire the same, we got three architects there. They can hire one of those and design their own house as long as they follow the guidelines.

Michael Stansbury (27:48.984)
Awesome.

Luis (27:48.994)
Yeah, so first first house are going to start being built middle of the

Michael Stansbury (27:57.004)
Wow, Luis, that’s exciting. I want to ask you, how can people find out more about you, find out more about Alana, and then find out more about this development? Where can I point them toward?

Luis (28:09.539)
Well, we have our website www.lennadevelopment.com. We’re also on Instagram, Facebook, or LinkedIn. They can find my name in LinkedIn or the company as well, Lennadevelopment. And they can contact through any of these medias.

Michael Stansbury (28:32.29)
Well, folks, Luis Noronha, thank you for being a guest on the Real Estate Pros podcast. Folks, if you want to contact him, if you want to go down to Santa Rosa and see what he’s got, go down there. Take a look. Thank you for being on the podcast, sir. And thank you guys for watching. Like and subscribe, and we’ll see you next time.