Posted on Tuesday, December 15, 2015
(owning an on water home might be more fun than owning an S&P 500 index fund these days)
11% or 3%? After some of the most turbulent US stock market results in recent months the S&P 500 Index has managed a year to date return of 3.02% (Yahoo finance 12/15/15). Naples real estate is up 11% on average over the last twelve months (MLS data).
Sure, there are portfolio allocations and risk to think about – but close to 800 basis points returns between equity and real estate is a big difference.
Real estate returns look tempting don’t they?
Enter Naples, Florida where real estate supplies are still low, demand is good, tourist season has started and prices look to increase further.
Should you consider investing in Naples, Florida real estate?
Please keep in mind you should consult with an investment professional before investing. We are not investment professionals. We are Realtors and we do a bit of real estate investing on our own. This article explores some ideas but it is not an offer to sell or encourage you to invest. The article is intended to explore some things we are seeing here in Naples. Once you and your investment advisor decide to move forward call our Naples Best Addresses Team at 239.595.3921 and we will help you get started.
(maybe a classic auto in the sunshine would be another nice portfolio addition)
Readers of our investor newsletter will know the historical tales of Florida real estate investing. Henry Flagler would go “all in” and invest his entire Standard Oil fortune for projects from St. Augustine to Miami to Key West building railroads, traveling in his private rail car checking on this and that and founding among other areas Palm Beach.
Barron Collier would plow his Street Car Advertising fortune into the southwest side of the state where few dared to go in those days and develop the beginnings of the trail linking Miami and Tampa and lay the ground work for my home town of Naples. They built, they gave back, they made a lot of money in the process. The families are still making money today.
(stunning views of the bay with a nice breeze though the lanai – beats stocks?)
Well so what? What does all of this mean for you ? You can still develop homes here both as a big company or as a private investor. Individual investors are enjoying a real renaissance building speculative homes, flipping, and renting.
Spec home builders look at land values to decide wether to tear down and build or just renovate. Land values also drive what product to build. What do I mean by this? Well land is so expensive in some areas spec home builders are forced to go big to cover the land costs over more square feet. 4,200+ square foot homes built right to the edge of the set backs are common solutions to the high land costs.
(and maybe the lifestyle of Naples living trumps it all anyway)
Is the market accepting these larger more expensive homes? Yes, so far. In fact, prices are rising in the upper end of the market faster than the middle part of the market. Off we go – big homes going up on lots or big homes projects tearing down the old stuff and breaking ground.
What about flipping? Yep, still an opportunity for all the usual reasons like finding a distressed property, pre-foreclosure properties or so-called “pocket listings” at good prices. Next you need to perform budget conscious improvements and sell with speed.
There is a factor at work in Naples which helps the flipper – buyers are severely discounting the value of a distressed home, more than the value of improvement would require sometimes. Why? We can only speculate why this is the case but there may be a couple of reasons for the steep discounting. First we are a tourist destination with a population swelling nearly 10x during season. Happy tourists want to go the beach they don’t want to paint and carpet and redo bathrooms. They want a place ready-made for a vacation. In addition an estimated 21% of our buyers are international. Want to run a renovation from a foreign country? Probably not. The local “on the ground guy” may have an opportunity.
(The Award Winning Naples Best Addresses Team At Coldwell Banker)
If you would like to invest don’t forget the rental market. Many, many people lost a great deal in the great recession due to decreased home values – in fact many people lost their homes. Many of these folks are now “house shy”, they do not wish to buy and they are looking for rentals. Well there may be opportunities here to buy and rent your place out especially if you can manage the rents yourselves. With prices rising you may want to speculate on further appreciation and let your rental property ride the tide of a rising market – buy, rent it, sell it down the road – or raise rents.
Lot’s of opportunity to think about.
Why not pick up the phone and let us know how we could be of help? Just give us a call at 239.595.3920 (Nan) or 239.595.3921 (Mark) or 239.285.2038 (David).
Please also consider reading our book “Understanding Naples Real Estate” to get you started on a real estate search https://www.naplesbestaddresses.com/offer/ or just give us a call about things to do here.
All the best,
Nan, Mark and David Goebel, PA’s
Co-Founders Naples Best Addresses
Mark Goebel, PA and Nan Goebel, PA
Coldwell Banker 5th Avenue South
Mobile: 239.595.3921 239.595.3920
No legal, investment, or tax advice is being given in this Blog. Consult with legal, financial and tax professionals before acting on any real estate transaction. Actual real estate price and sales results are subject to market forces and are not completely predictable. The writings of this Blog are intended for the sole use of our clients.
We are pleased to announce a portion of our real estate earnings go to support the The Naples Botanical Garden, Habitat for Humanity Collier Count and The Naples Winter Wine Festival.
Some of the data related to Naples homes for sale and Naples real estate for sale on the NaplesBestAddresses.com website comes in part from the Broker reciprocity program of M.L.S. of Naples, Inc. The properties displayed here may not be all the properties available through the MLS reciprocity Program. This information is deemed reliable but is not guaranteed. Buyers and sellers are responsible for verifying all information about their purchase prior to closing.
Mark Goebel, PA is a REALTOR with Coldwell Banker on 5th avenue in Naples, Florida with 35+ years of visiting and living in Naples. After 25 years at Accenture, Mark retired as a managing director and spends his time helping non profits and building a Naples real estate team with his wife Nan and son David. Talk to Mark, Nan and Dave about life in Naples and why they chose this place to live full-time over all others and enjoy Naples real estate.
Contact us to learn more about Naples real estate trends, the florida rental market, Naples design ideas like coastal contemporary and transitional designs or just get a feel for the place like Naples Florida population trends.