Investing in Naples Real Estate

Overview

Investing in Naples real estate can also make a of sense, as there has been some outstanding deals. The key to buying real estate for investment, is solid information, and an understanding the potential risks and benefits.

What Type of Real Estate Investor are You?

Most buyers fall into one of the following categories.

 

• Investment Only - These buyers have no interest in using the property for personal use. The most important factor is what can provide the best overall return over time.

• Buy Now - This group is a resident of Naples or a second home buyer looking to get immediate use and enjoyment out of their purchase.

• Buy Now vs. Later - This group of buyers desire a foothold in the market place. They still have employment or other commitments and are unable to spend significant leisure time in Naples. Their strategy is to buy now, maybe rent and use their property for short visits. It's not particularly important that the property suits their future needs, but more important that they have a foot on the ladder in the Naples Florida real estate market.

• Buy and Use When Available - This group of buyers also want to get a foothold in the market place, but also plan on using the property on a semi-regular basis. Maybe they might want to rent it at times. In the future they might want to use the purchase as a second home, or trade up when the time is right.

The more you lean towards investment only, then the greater likelihood of getting a real deal. That is because there is just one basic criteria - the best deals. Also most of the best deals are going to need work, some just minor (paint, floors, countertops), some a lot more (new baths, kitchen, etc).

The more criteria that is added to meet individual use needs, the rarer it is that a hot deal happens to exists to meet all criteria, at any point in time. But in this market you can still expect a very good value meeting your criteria.

The deals are what sells, and the better the deal, the greater the likelihood that it will sell quickly. If you are an out of town buyer looking at online listings , then there is not much you can do until you are in town ready to buy. As any worthwhile property you happen to come across online, will be the next in line to sell. If the listings sits, as most do, then it was not a good value to begin with.

What is more important is what are the best deals that will be available when you are ready to buy. Only until you are ready to buy, can those opportunities be identified. And I can find them.

 

What's are the Best Types of Properties for Investment?

The Naples housing market, home prices and economy is driven by second home buyers. Each year thousands of new home buyers from outside the area are infused into the housing market. As that number ebbs and flows, so does the local economy. The greater the second home demand, the greater the demand for new construction and services, and therefore the greater the local employment needs.

There are two property categories for investment purposes. Those properties that appeal mostly to the second home buyer, or those that appeal mostly to local working residents. In many cases there is a clear distinction between the two categories in terms of it being appealing to a second home buyer or a local working resident. That distinction is important when you purchase, because that determines the future buyer of the property.

For a property to appeal to a second home buyer, it either needs a very good Naples location, or have many amenities, such as a golf course, or be in an upscale neighborhood. A property that appeals to a second home buyer can be rented either seasonally or annually. Learn more about renting. A property in a primarily working residents community would not generally appeal to a seasonal renter. So it would have to be an annual rental.

The best way to help maximize your return is by buying the property at a good price. That means you need to understand the property's true value. And not just within the particular community it resides, but in the Naples market place as a whole.

What's Area/Property has the Best Chance of Renting?

Any acceptable property can rent, it just a matter of the amount of rent charged. There is rental demand by annual renters all over the area, so for an annual renter, the location of the property is not necessarily important. For seasonal rentals, the closer to beaches, Olde Naples area, and type of amenities available can all play an important factor.

Rents vs. values in the are area are very low. Season rentals are based on value and amenities. Generally, three months of season rents covers all the out of pocket expenses, except for mortgage payments. In other words, add up the fees, the property taxes, insurance, and other costs. Then divide by three, and you will get a close approximation of what type of monthly rents you can expect in season.

 See examples of the rental potential for different properties in Naples.

The total amount collected in a year from an annual renter is usually only slightly higher than thee months of seasonal rents. But with a seasonal rental you will most likely have less wear and tear.

Learn more about renting here.

Investment Only Buyers and New Construction

Buying new construction for investment purposes in the Naples area has turned out to be very profitable for smart buyers. Others have gotten burned.

Based on the pre-construction project there is a chance you could find a similar comparable in the area for a less. Many investors bought pre-constructions solely on the basis that it was pre-construction, with no consideration as to whether it was desirable to the future end-user-buyer.

When you buy preconstruction, then your pricing fate is pretty much tied to how the builder continues to price after you have purchased. Once the builder has sold out, then pricing is up to demand and market forces.

You should make your purchase decisions knowing what similar properties have done in the past, and what the market is doing as a whole.

Appreciation Opportunity vs. Rental Opportunity

When looking at the overall income producing opportunity for a particular residential property in the Naples area, there are two main factors to consider: What is the overall appreciation potential and what has good rental appeal. These two factors do not necessarily compliment each other. Only appreciation will provide the return, with rents contributing to the overall return. No one can predict future appreciation or rental demand for a particular property. Only general guidance can be given based on trends and current market forces.

Naples Investment Properties Quick Facts

• The type of property will determine whether the future buyer of the property will most likely be a second home buyer, or a local working resident.
• The type of property will determine whether it can be rented seasonally, annually or either. Seasonal tenants are retirees, that will most likely leave the property in better shape then when they arrived. Annual renters run the whole spectrum - very good to deadbeats.
• If rented seasonally, the property needs to be furnished. Annual rentals are mostly unfurnished, but there is demand for annual furnish rentals.
• Properties with mortgages will not cash flow. Gains have to be realized through appreciation.
• Cash buyers, with good rental success, can get up to a 8% return on an annual rental.