Top Investment Specialists Weigh In On the Topic…
Many people want to know: is it a good time to invest or is the opportunity in the rearview mirror? There are many questions that need to be answered before moving forward with an investment purchase. What type of property is best to pursue: single family, condominium or duplex? Is the property in the right location? How will you finance the property? It is also important to have a strategic plan.
According to Zillow and Prudential Network Realty, the real-estate market is clearly recovering: U.S. houses lost $489 billion in value during the first 11 months of 2009 which was significantly lower than the $3.6 trillion lost during 2008. Nationwide, homes typically sold in 83 days in the second quarter of 2013, 14 percent faster than 2012, according to Realtor.com. At the same time, the median list price rose 5.4 percent to $196,000, and the number of homes on the market dropped by more than 10 percent.
In Northeast Florida, homes typically sold in 85 days and in some areas 72 days in the second quarter of 2013, 14 percent faster than 2012, according to NEFAR MLS. At the same time, the median list price rose 7 percent to $195,000; investment income and apartments actually rose by 48 percent. The number of homes on the market dropped more than 5 percent.*
“Investing in real estate while interest rates are still extraordinarily low and the economy is in the beginning stages of recovery is generally a good move. Working with a Realtor who is versed in investment property and understands the nuances is extremely important,” said Prudential Network Realty Founder, President and CEO Linda H. Sherrer. “Our agents work with numerous investor groups, including hedge funds and venture capitalists, and are equipped to provide our clients with all the pertinent information needed in order to make an educated decision.”
We asked the experts at Prudential Network Realty to shed light on the top three questions asked by those contemplating the decision to invest.
Q: How important is access to top rated schools, area attractions and nightlife?
A: “Location is very important as it determines the type of renter you are targeting. The better the location, the higher the rent. A one- or two- bedroom in an area with nightlife makes more sense as does a three- plus bedroom house in a good school district. If it’s your first time investing, it also makes sense to choose a neighborhood where you would be comfortable living. This often results in the happiest and most successful investors.”
– Liz Bobeck and Josh Nugent
“I think is very important. Based on the latest statistics in Duval County, homes located near A-rated schools attract more buyers and renters. If area attractions are located to A-Rated schools it would be a double plus and I would recommend investing in areas such as these.” – Al Kekec
“I have found that it really depends on the investor. Some properties located in top rated school districts rent a lot faster and have less vacancy. Properties offering a quick commute to downtown with great shopping and restaurant opportunities keep properties filled which makes them attractive investment opportunities.” – Allison Steilberg
Q: Is choosing a newer home as opposed to an older home with “character” a better move? Does it matter?
A: “Choosing a newer home has more advantages for first-time investors as these homes do not require as many repairs as older homes. The older homes with more character have the potential for high returns but I would recommend these homes as a better investment option for those who are experienced in the market.” – Al Kekec
“There are benefits to both. Newer homes are projected to have less maintenance issues which can bolster the bottom line. Older homes with lots of character are especially popular in the Historic District and rent quickly.”
– Allison Steilberg
“There are definitely perks to both. For rentals, we believe it makes more sense to purchase a low maintenance property. On the flip side, there is a large demand in historic districts. Although maintenance costs may be greater, you may be able to command a higher rent and keep it rented longer.”
– Liz Bobeck and Josh Nugent
Q: Factors to consider for long term plan – rental investment vs. a resale investment?
A: “The holding time can be different from one investor to another. If the investor is looking for a quick turnaround and profit, I would recommend flipping the home. If the investor’s goal is cash flow and potential for long term appreciation, then converting the property into a rental would be the way to go.”
– Allison Steilberg
“Resale requires more capital but you receive the profits immediately. We recommend speaking with a licensed professional about your strategy and seeking advice on the best decision for you.” – Liz Bobeck and Josh Nugent
“There are many factors to consider for both avenues. Reselling the property would make for less repairs and a good location would allow for continuous rental of the property. Either way, I would recommend meeting with an expert before making a decision.” – Al Kekec
“We encourage those who are contemplating purchasing real estate as an investment to contact one of our agents to receive information tailored to their personal situation,” said Christy Budnick, executive vice president of residential real estate, Prudential Network Realty. “There are many factors to consider and each investor’s needs are unique.”