Investing in Naples Real Estate

Overview

Making an investment at times in real estate can make a lot of sense, Investing in Naples real estate can also make a lot of sense at times. There has always been investment buying in Naples real estate. But in late 2004 and in 2005 the flood gates for investors were wide open (see background report).

Many investors knew when to buy back then, but did not know when to sell. Many more investors had the basic strategy of jump on the bandwagon, bought blindly and got stuck.

The key to buying real estate for investment, is you have to know what you are doing. 

What Type of Buyer are You?

Most buyers fall into on of the following categories.

• 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 importantly that they have a foot on the ladder n 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.

• 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.

What's the Best Area for Investment?

I get this question often. Property values have risen and fallen together over time relative to their values. In the price run up of 2004 and 2005, nothing was left behind, all prices rose.

The Naples housing market and prices are driven by second home buyers. In looking t buy and hold over a few years, I suggest something that will appeal to that future second home buyer. The best way to help ensure your return is by buying the property at a very 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 location of the property is not necessarily important, for an annual renter. 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 rents you can expect in season.

The higher the fees the nicer the community, the higher the value, the higher the property taxes, the higher the amount of total costs the higher the rent. But three months rents still basically covers the total costs in most cases.

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.

Great Investment Opportunity!

I love it when sellers, builders and listing agents state: "Great investment opportunity!" If you hear that statement from a party with interest in the property, then it is a questionable statement. If it's such a great investment, why don't hey hold onto it for themselves?

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 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.