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The Tracewater Homes Podcast brings you inside the world of modern homebuilding, market trends, and the partnerships shaping the future of residential construction. Known for their innovative steel-frame homes, Tracewater dives into what today’s buyers want, how the industry is evolving, and the experts who help bring every project to life. Whether you’re a homeowner, agent, or builder, this podcast delivers insights, inspiration, and behind-the-scenes conversations from the front lines of construction.
Hey everybody, and welcome back to the Trace Water Homes podcast. As always, I'm your host, Brent. If you are an investor and you are looking to invest in the Florida Panhandle market, you're going to want to pay attention to this one. I am joined today by an entire team that's going to discuss how we can get you into a duplex, the newest plan on the Trace Water portfolio, and what the benefits of owning that duplex in this market are.
TJ with Avid Martin Group, if you kind of want to talk about the market and maybe some of the benefits of a duplex. I know you yourself have owned a duplex in this market, right? I guess I'll let you take it.
Yeah. So, I mean, well, first off, the simplicity of what Trace Water offers is really the impactful position of really looking in at this as an investment side of things. Because all you got to do is identify a lot. If you're unsure if it's the right fit, all you have to do is call these guys. They'll go do an analyzation of that lot, make sure it's zoned properly, make sure it can fit the duplex properly. And that that's just your first quick and easy step. Then after that, you connect with our finance team, the Fritz, who are absolutely exceptional, extremely creative. If you don't think you can do it, you're probably wrong, and they can probably figure that out. And then after that, you set up a time with the Trace Water design team, and they kind of help you run through the design. That's the scary part for me that I don't like doing. And fortunately, Jeannie Hannis has already done it for us, who has designed multiple properties that I've been involved in. If you've never seen her designs, they are exceptional, they are top-notch. And then after that, we connect you with the property manager, the right insurance company, and basically give you a full-faceted view to make this extremely simple for you to put yourself in a position with a duplex that is performing rental-wise in a way that you probably would never expect, especially because the versatility behind it.
With the Emerald Coast, you obviously have a lot of short-term rentals, but they all kind of do the same thing. The duplex kind of gives you some versatility. I see the vision in what you guys are putting together because not many people really understand what you can do with a duplex, whether it's long-term rent one side, short-term rent the other. Or when you're marketing that duplex, these that they have created each side as three bedrooms. Well, okay, you market them one side three bedrooms, one side three bedrooms, or what if you market it as a six-bedroom home? You got a bachelor party on one side, bachelorette party on the other, cheerleading team on one side, football team on the other. The versatility and the marketability of those duplexes is really what changes the game. But the biggest part that changes the game and takes the fear out of it is the systems and processes that you guys have put in place to make this not only a turnkey environment, but a turnkey home build, get it done, get it on the rental program environment.
It's kind of that really is a big piece of Trace Water Homes in general is the simplicity. But as we focused on creating this duplex scenario, putting it together a team that makes it just really, really easy for anybody that wants to get in the game to just say yes, raise their hand and say, "I want to do it," and we can make it happen.
Absolutely. So, why don't we run down those steps real quick? And just everybody can talk about how they fit into each one of those steps. So, identified a lot, I mean, obviously, you would work very closely with us on on that situation. Do you want to go into, you know, kind of some of the R2 zoning and some of those kinds of things? We have a lot of availability in our market to build duplexes.
Right, exactly. And a lot of people don't realize that because they don't get in depth on what the actual zoning of the property is. But especially that west end of Panama City Beach, there is a bunch of lots out there still that have that R2 zoning that give you the opportunity to build two units within one parcel. And if if you're scared of that or if you're unsure of that, please reach out to me or reach out to the Trace Water team, and they can 100% guide you in the proper way. And if you just say, "Hey, I don't want to look for it. I just want you to go find it for us." We can do that, too. So, you know, we take that step for you. But want you to be involved in a way that, you know, you can lean on us with questions. If you need advice, or if you have specific ideas about the acquisition or whatever it may be, we are here to help facilitate that for you in every facet.
Absolutely. And likewise, like TJ said, reach out to us, reach out to his team. I have been through this process before. I actually currently live in the duplex plan that we offer. So, I've built it. I've been through this process of identifying the lots. So, I I also have some some knowledge in the area. But TJ's team is is definitely the experts when it comes to land and real estate in this market. So, step two, financing. Tammy.
Well, finances come a long way for investment property. So, over the 35 years, investment property is so easy to purchase. Today, you have your full doc loans where we're verifying your borrower's personal income. And not only will we use their personal income, you can use 75% of the rental analysis. So, we have a rent analysis done for the units. And whatever that income comes in at, we will use 75% of that to add to their income to offset the payment. Now, that program is using verified income, their tax returns or W2s, their pay stubs. Every investor is different on how they want to proceed. So, if you want it fast, quick, and easy, I'm sure everyone's heard of a DSCR loan, Debt Service Covered Ratio loan. The only thing we're verifying on that loan is the rental income on the property itself. No tax returns, no pay stubs, no W2s. You can close them in six or seven days. Makes the process really easy. We're verifying credit score, assets, and that's it.
Wow, that's awesome. Six or seven days. It can't be any easier than that. Yeah, absolutely. Well, like like Matt said earlier, you know, if you just want to jump in, I mean, the now is the the time to do it. I mean, we've got the the people in place to make this happen. I mean, six or seven days, that's that's impressive.
TJ and I had one end of December. And not only was it it was a DSCR loan, but we set up the LLC in six days and closed it at the end of the month.
Wow, yeah, literally before the end of the year.
Yeah, that that is impressive, that is crazy. That's awesome. We're happy to have you on the team. Matt, I guess, would you want to go into the Trace Water Homes design-build piece of any steps?
Yeah, absolutely. Hang on here. Let me grab the shared microphone. As far as the the build process, it's really quite simple. We already have the plan design. We have all of the selections already pre-selected and available. And so, really once you decide you want to go, you can either go on our system, you'll have a a job portal, in our system, which is called Builder Trend, and you can make those selections yourself. Or if it's truly an investment property, and you're looking for a completely hands-off experience, we can have our design team also go on and make those selections for you from, you know, a fully curated set of of options that are available. And from there, it's really just we move forward with permitting and building. You know, some of the advantages that, you know, we'll maybe talk about a little bit are just our build process. So, steel framing, such a big thing. And I know, you know, you all have seen what we do with the steel framing. And the advantages there are so great because we live in a coastal area. We're getting, you know, much better wind load ratings for that. But it's not even just about that. It's about fire resistance, termite resistance. And then just the overall quality of the home. I mean, we were actually just having a conversation earlier about how we we had two houses side by side, one wood frame, one steel frame. And when you look down the siding on the wood frame wall, you can tell that the wood studs move around. You look down the siding on the steel frame wall, they're not moving anywhere. It's straight as an arrow. So, there're just so many benefits to the steel frame. And then when the house is completed, comes right down to insurance. So, we get excellent insurance rates on that steel frame piece, too. And we'll let Chris talk to that, you know, in a little bit here. Things like impact windows, impact doors. Our LP SmartSide siding, that's something that is such a benefit because of the impact resistance on that.
From an investor standpoint, all these things that you're mentioning are huge because they're protecting your asset long term. Right? And so you can buy with confidence knowing that you're not going to have, you know, massive repair expenses consistently coming up, especially in the area that we do live. I mean, you look at a lot of rental properties that are in this area that haven't been kept up with, and they deteriorate quickly. I mean, they start having issues and and repair bills and things like that. And we're mitigating a lot of that from the outset.
Yeah. Yep. Exactly. And I mean going back to the siding, I mean the the impact rating on the siding is like up to 200 miles per hour impact. And I mean we've literally had our sales people hit it with a hammer. We have demonstrations where we've got a sledgehammer that smashes into it, and it it just bounces off. So it's just such a great thing, you know, for that investor. And then it, you know, really comes down to the quality of the build and that we put into it. And we're putting the same quality into these homes from a workmanship standpoint that we're putting into homes that we build that are, you know, in the in the millions of dollars. So, all of that combines into just a great investment for anyone looking to, you know, get into this game. And then, you know, when it's finished and financing is closed, we need insurance. Then talk about the insurance. I mean, that that's been...
No, we are seeing insurance come down for new construction, whether it's primary, second home, or investment property. Yeah, I mean the the fact that it's a steel frame. Hardie board siding is rated as a masonry veneer most of the time with insurance companies. Brett, you're just telling me before we got going that your policy is with Olympus. So, they rate it as masonry veneers of frame, which have a better rating. And so, you just have all the benefits of the year built, the the type of construction it is, hurricane windows. All those benefits just make it so much easier for the client and buyer and investor, whoever it might be, to to make a simple decision.
Yeah. And and what people don't realize, too, like people hear the word "opex" all the time in the investor world, meaning operating expenses. Everything that they're touching on is an operating expense. So, if you can lower your insurance, you can have less damage liability, you can have less of a cost in all of your overall impact of what is happening on the exterior of your home with the LP SmartSide. All of that stuff comes into play for revenue at the end of the day. And so, from an investor standpoint, a lot of these people look at opex, and they go, "Okay, I got a 20% management fee and another 20% opex in regards to repairs and what I'm going to have to do for the home". I would go to say that a Trace Water home would probably take that 20 down to 5%. Because of everything that's the quality within those homes, the things that the the products that you guys are using. So, as an investor, when you see that leverage and you can understand the amount of savings that are actually coming with it that increases the revenue coming into your pocket, it changes the entire scope of what your cap rate is at the end of the day.
Absolutely. Yeah. I couldn't agree with you more. I mean, and that's why we picked the products that we did was, you know, for longevity, reduction in, you know, maintenance costs on these properties, all of those kinds of things. TJ, would you mind, uh, going into the property management piece of those four steps? I know you guys are are really well connected with a lot of property management companies in the area. And so, I guess, would you just speak to that for a moment?
Yeah, I mean, you know, from the property management side, you really got to have the right people in your corner to make sure that you are getting the exposure that you need to get people through the door. And to make sure that you're continuing to have revenue come through. And that's where I love the versatility of the duplex is because you could you get to market yourself as a property manager. They should love these items because they're like, "Hold tight. I get a three-bedroom, another three-bedroom, could be a six-bedroom. I can market it together. I can market it not together". And and all of those things help you win against your competition. There's a lot of competition out there. It's grown significantly in the last 10 years. And so if you can't figure out a way how to diversify and to make yourself just a little bit different, then it makes people want to come back. Think if you you've got two families, you got your adults and you got your kids. Let's say you've got a couple teenagers. Well, how much fun are they going to have if they got to be able to stay on one side with their own little three-bedroom? They get to hang out. They're not getting, you know, dictated by their parents the whole time. They get to play video games. They get to have that fun side. And think about being the parents where you can sit in quietness, have a glass of wine, and actually enjoy a moment to yourself for a second, but you're right next to each other. So, at the end of the day, you you still have the same environment, but it's different. And that's where the duplex that I had created strong revenue because we diversified in marketing in so many facets because you can touch so many different touch points. And that's where I think that the property management side of things, you can really ramp up revenue because you're able to compete against condos, you're able to compete against single-family homes, and you're able to diversify that you are totally different than either one of those. And I think that's really what's going to elevate your ability to get not only stronger nightly rates, but continuous nightly rentals.
Absolutely. And one thing that I I think is really important for people to understand is that there's a a connotation that comes with duplex of like an old 1980s like rundown building. And so, you know, when it comes to the design-build piece, you know, that we were talking about earlier, I mean, this duplex has all the same finish options that any of our other Trace Water homes do. And we're actually going to be going and taking some photographs later today of mine. And so we'll be able to get those, you know, out on social media for people to see. But I mean, this place looks as good as any rental condo or any new construction home that we build. So, it really feels nice. It's it's a luxurious stay. I mean, if if you selected a few of the upgrade options and stuff, you would have a really, really nice vacation rental property.
I mean, I just sold one of y'all's houses in Seagrove for $2.5 million, and you're using the same subs and very similar products in that home that you're using in this duplex. And somebody just bought it for $2.5 million. Yeah. Yeah.
So, it uh it is a really cool and and unique product that that we're offering for this market. I mean, you know almost every builder in this market. Is there anybody else that's doing anything like this? Don't know one, don't know one that's that's putting that kind of product on the ground. You know, it it's it's definitely diversifying. And I think that when you realize you own two assets technically, uh, within one that can both perform. And even if you wanted to make it to where you you feel like, "I don't want the unknown, and I want consistency, but I want to kind of dip my toes in the sand". Long-term rent one side, short-term rent the other. Yeah, I mean, on my duplex, I had a military guy on one side that was long-term rent. I gave him a pretty good deal because I said, "I need you to watch out for the idiots that are going to be the other side". And it worked out great. I knew I had a consistent paycheck coming in no matter what monthly, but then I had those very extreme highs during the summer months where that revenue just quadrupled. But I also had a really great tenant in one side. So, I mean, even that versatility kind of takes the scariness if you're a first-time investor or whatever out of it. Because some people get afraid of the ebb and flow, and it's like, "Hey, we'll throw actually throw two long-term renters in there, and now you're really cooking with grease". You know, it's it's it's the cap rates and the way that you can really deploy your money on a deal like this with Trace Water and y'all's ability to bring this in. It was what, $500 grand in build cost. So for $500,000, you get an extremely well-appointed three-bedroom duplex. So a total of six bedrooms. For $500,000, you get two units. So each side only $250 a piece. Go find that somewhere else. I challenge you because you're not going to find.
Chances are, it's going to cash flow from the beginning with the payment. Exactly. I closed quite a few duplexes this last quarter, whether they're two units or they're they're four units. And the rental income that's coming in on the properties is covering the dollar-for-dollar payment.
That's great. That is fantastic. Does anybody have anything else that they'd like to add on any of your respective areas?
You and like TJ said, I'm seeing a lot of new investors coming in that has not invested before, and they are a tad bit nervous. And a lot of the reasons they're coming in is for a tax shelter.
That's right.
They're closing in LLCs. They're taking the bonus depreciation. They're taking the write-offs the first seven years of the property because it's a way to pay less taxes.
That's right. Yeah. Well, and from that standpoint for a new investor, I mean, it can be really scary. You know, you're looking at sometimes you're looking at really, really expensive homes on the short-term rental market. And, you know, that that that's a big leap. Or if they're looking at, you know, larger complexes of, you know, apartments or something, that's also a big leap. Where this allows them to get in at a, you know, a really nice price point and and test, you know, test themselves in the in the real estate investment market. And then when they have a good experience now, they can do it again and again and again. It's just you can just keep repeating.
Well, it's building assets with a tax shelter is what it comes down to.
That's right. Absolutely.
It's easier to get into a brand new home to buy one that's built in 1980 or wherever it might be.
Yeah, for sure. For many reasons from the insurance standpoint, from in your world especially.
You don't know what you're getting into. Yeah. The age of the age of the structure is really important.
Yeah, for sure.
Even if you fully gut it and remodeled, it's still a 1980s house according to the insurance.
You have to you have to take it down so far with the county depending on the county that you're in, their credentials.
Yeah, usually it's you have to get to the studs. You have to take everything down. Especially in Walton County, you have to essentially start from scratch.
Yeah. I will clarify. I said masonry veneer earlier with the steel frame. It's actually masonry. Oh. Yeah. So, it's actually you got frame, masonry veneer, masonry, and superior, which superior the higher than four-story condos. Okay. So, these are right above that for masonry. So the the rating that the insurance company is is is as good as you can get in this product essentially because we're less than four stories. So yeah. Okay. That is that's awesome. That's great.
And we weren't going to jump into all of this yet, like we'll do this on another session, but and especially with Tammy involved because she's exceptional dealing with investors is the cost seg opportunity with some of this, too. You know what I mean? Duplex just like you said, apartments. You you you're a first-time investor or an entry-level investor coming in. You start with a duplex, duplex turns into a quadplex. You start with a quadplex that turns into apartments. That's 100 units, now it's 200 units. And you keep rolling that through 1031s. So you don't get because it's a tax deferment, but you keep rolling that. That just creates more and more value for you, a bigger and bigger portfolio for you, and you're hedging your tax basis. And that's, you know, that's where a lot of this comes into play, too. Where you look at all that, and that's all fine and dandy, and that's great. You can utilize those those different tax codes to to do those things. But let's also talk about $500,000 for a six-bedroom duplex. Like, please go find somebody who's going to build at the price per foot at the quality that it's built as for that number. You're not going to find it.
And it pay for itself. You know what I mean? And it pays for itself. And let's talk about this, too. Let's say you want to use it one weekend. Okay, you're still not losing revenue. You rent one side, you and your wife use the other side. You're not losing revenue, and you're still enjoying your asset at the same time. You want to come spend time at the beach, you don't have to lock down your entire property, just lock down one side. So, there's so many different assets that come with the duplex that really, if you hone in on it, the ability for that thing to generate income all the time is something that you just don't see in condos and single-family homes. You know what I mean?
True. Very true.
So, it's it's something that I challenge you guys. Find somebody to build you a duplex for $500 grand.
Yeah.
Well, thank you all for joining us today. And thank you all for watching. If anybody is interested in learning more information about this duplex or any of our plans, please reach out. You can find us at tracewwaterhomesfl.com. Again, thank you, Tammy, TJ, Chris, and Matt for joining us. As you can see, we've got an entire team here that'll take care of everything for you from start to finish. So, do not hesitate to reach out.