“Employment growth is better here, population growth is better here, so I’m not intending to go out of the state anytime soon until we really have got all of the opportunities in Florida covered.” – Keith Bass
“Everyone talks about Florida in totality, but Miami is very different from Fort Lauderdale, and Palm Beach is different from St. Lucie County, and Orlando is driven by something completely different than Tampa, and Naples is really its own animal,” Bass explains.
While WCI currently has plenty of projects in the works or coming under contract, Bass says he wants to do more deals on Florida’s east coast. Right now the company is securing only smaller projects in the state because land is tough to buy there, but he’s on the hunt for larger opportunities.
“There’s not a lot of reason, for us anyway, to go out of Florida and make investments outside of the state,” Bass says, noting that they haven’t captured all of the opportunity there.
As it builds homes, WCI gathers real-time market insight into buyer preferences from its Berkshire Hathaway realty franchise. Having a brokerage firm in the business helps for two reasons, Bass says. One, they can get agents’ opinions on properties and locations before buying, and two, they know what exactly is being bought before it ever reaches a public record. Yet, Bass says there’s one not-so-obvious bonus: knowing what they’re asking for but aren’t buying because they can’t find it.
“There’s no report that comes out that says that my buyers aren’t buying because they want a more open floor plan or they want bigger units,” he says. “That’s pretty valuable.”
A Path Forward
While Bass knows what previously made WCI a formidable competitor, he also knows what almost destroyed it—its balance sheet and foray into the Florida condo market, which nearly crippled everyone’s business in 2007.
The problem, says Bass, was that everyone built and sold to investors who put down small deposits and were only interested in riding out the flipping wave. When the market turned, those investors cut their losses by giving up deposits and not investing in the full product, leaving builders with unfinished buildings and loads of debt. Bass notes this happened across the industry—in single-family as well—but the losses were exacerbated in condo towers when hundreds of units close on one day.
“If you don’t have an end user, you’re at a massive risk,” he says.
Despite that experience, WCI is flirting with the condo market again. It’s taking a conservative approach with only a couple of towers within its master plan communities. Bass thinks being in a master plan offers as much of a safe haven as a developer can expect with towers. (During the restructuring, WCI sold off all of its towers outside its master plans.)
“If we design the right building and if we get an end user and they put up a big deposit, then I think the tower business makes all the sense in the world,” he says.
If anyone is prepared to navigate the next wild Florida cycle—towers, flippers, and all—it’s Bass. “I’ve been working the Florida market for all 25 years of my 25 years in the business,” he says. “This isn’t my first rodeo.”
