by Mike Sharkey
Staff Writer
Any smart investment broker will tell you that the best way to assure a comfortable retirement and the best rate of return on your money is to diversify your investment portfolio. Don’t load up on stock from a single corporation. Buy gold. Buy mutual funds. Invest in certificates of deposit.
What very few, if any, will advise is to buy residential real estate and there’s a good reason for it: they don’t get a percentage of the deal.
Enter Jim Geddes, the owner of Waterview Capital Group, a real estate investment company based in Neptune Beach with visions of Florida-wide expansion.
“Residential real estate is a new asset classification,” said Geddes, who moved to Jacksonville about four years for what he calls a great quality of life. “At 54 years old, I did not want to spend a million dollars on a house.”
Geddes is a Navy brat who actually lived in Jacksonville when he was 10 while his father was stationed at NAS. His professional career is as diverse as his addresses.
“I am a serial entrepreneur,” said Geddes. “I have started and sold software and medical technology companies. I have taken public and private companies and sold them. I have had numerous transactions in many different businesses.”
Throughout his professional career, Geddes has made many contacts, often with people who have expendable investment income and aren’t necessarily after a fast buck. Geddes looked around Jacksonville, studied the real estate trends over the past several years and quickly realized that residential property was one of the best, and safest, investments around.
A home in Jacksonville is a tangible product that is doing nothing but increasing in value. Unlike the stock market which can fluctuate wildly on not much more than whims and rumors, real estate in northeast Florida is a nearly foolproof investment.
Today, Geddes has four clients, all from San Francisco. They own homes in the area just west of the Intracoastal Waterway and east of St. Johns Bluff Road. They don’t live in the homes and don’t care to. They are investment properties that Geddes rents for them after a careful screening process.
Oh, yeah, outside of a digital photo that Geddes e-mailed, they have never seen the homes. However, since day one, their investment has gone up in value. Geddes says real estate is quickly becoming one of the safest investments in a country where the confidence in intangible investments is dwindling.
“There is a lack of trust in public equities; things like stocks, bonds, annuities and equitable funds. Waterview is a financial planning company that specializes in alternative investments. All we do is real estate. My clients can achieve the portfolio diversification they seek with real estate. In the past two years, I have probably purchased and sold 15-20 homes within a five mile of here,” said Geddes.
Geddes does his homework before he recommends any property to a client. Tons of research leads to a comprehensive spread sheet that is a life history of the home. He also includes, like any other financial planner would, the investment potential of the property.
Geddes also does all the legwork required to purchase the home for his client. He’s a licensed real estate agent but doesn’t actually sell the house. He’s the middleman who finds the property and helps the buyer with every phase of the purchase. Like investment brokers, Geddes gets a fee for his work. However, he says real estate is simply cheaper and safer than the stock market.
“When you buy stock, you have pay 100 percent of the cost up front,” explained Geddes, who asks that his clients put up 20 percent of the asking price and finance the other 80 percent. “Some banks will lend up to 95 percent of the asking price. Even if your stock broker will sell you stock on margin, he is going to cover no more than 50 percent of the price of the stock. Why? Because stocks can go down.”
Even though his clients could probably afford it, Geddes doesn’t pursue waterfront property or houses at the beach. Rather, he targets homes in the $200,000 to $250,000 range in the Kernan/Beach/Atlantic area for two reasons: 1) they are in a fast-growing area of town and rent easily and 2) they are relatively cheap in comparison to similar homes in San Francisco, Chicago and the Northeast. His clients also don’t care about an immediate return on their investment.
“It’s up to them as to how long they hold on to them,” said Geddes. “As a financial advisor, I have a spreadsheet with the highest degree of predictability as to the best time to sell. My clients are not worried about negative cash flow. They are in it for the long-term appreciation.”
Geddes plans to expand the company to include Waterview Realty Group and Waterview Mortgage Group. He has a long-term business plan that also includes other cities in Florida, although he wouldn’t say where he’s looking.
“I have a plan and I have the financial war chest to enter those markets,” he said.
—May 18, 2005