Types of Investment in the Long Beach Island Second Home Market
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Who Invests in the LBI Real Estate Market 
Who Invests in the LBI Real Estate Market 
Who Invests in the LBI Real Estate Market
Long Beach Island Real Estate
Buyers in the LBI real estate market have many different reasons and motivations for entering into a real estate transaction on Long Beach Island, most buyers view their purchase, at least in part, as an investment. While there are many forms of investment, for example, commercial real estate, it is far less common than buying a rental property or building a new home. That begs the question, who invests in the LBI real estate market? In whole or in part, buying a home as an investment usually falls into one of two categories: those looking to rent and those looking to build. Each of these categories can be further broken down depending on the intended use. Generally speaking, buyers will:
- Purchase a home to rent as many weeks as possible and generate cash flow
- Purchase a house to rent and use with the rental offsetting the cost of ownership
- Buying and building a new home to rent or sell for a profit
By : Nathan Colmer | The Van Dyk Group
Cell: 609-290-4293 | Office: 800-222-0131 | ncolmer@vandykgroup.com
Click here to search all homes for sale in the Long Beach Island NJ real estate market
Who Invests in the LBI Real Estate Market
There is no right or wrong way to invest in the Long Beach Island real estate market, and each has pros and cons. Buying a home strictly for a rental can make a lot of sense, provided the home meets the criteria of the LBI rental market. The rental market on LBI rises and falls with the sales market and the economy at large, so if a buyer is buying a home strictly to rent, you want to make sure it meets the LBI real estate market demands and has value. In conjunction with this is the buyer who is looking to use and rent a home. When this occurs, you may not be as sensitive to the rental criteria because almost every house on LBI will rent at some point and at some price. If the goal is to use the home and offset the cost of ownership with rental income, this is a very easy thing to accomplish. The fundamentals of the LBI reale state market, such as location, home style, etc., should still be followed, but there is more room for personal preference when the goal is not only rental income. The last type of investor we commonly see in the LBI real estate market is the buyer and investor looking to develop a home for sale or rent. This is the most labor-intensive investment in the LBI real estate market and the one with the best return. Building a new home is unquestionably the best investment you can make on Long Beach Island, and it has two benefits. First, when handled correctly, there should be a roughly 20%-30% equity position in the finished product. This is an immediate paper gain and one that can save a great deal of money in the upfront expenditure. Secondly, since the cost of the home is about 20%-30% lower than comparable rentals, the rate of return will be far higher on a home that you build compared to a home that you buy. The downside is the time needed to build and the potential loss of an entire summer season if the house is not finished. Even with these risks, it still makes the most sense in almost every scenario if you are up for the project.
Types of Investment in the Long Beach Island Second Home Market
Investment in any asset always carries risks, and the LBI real estate market is no exception. While it is true that home prices on Long Beach Island tend to remain stable, there is always a chance they will fall. Additionally, there are tax consequences to owning a second home or investment property on Long Beach Island that need to be considered. Therefore, if you are looking to buy an investment property in the LBI real estate market, you should discuss the transaction with your accountant, financial planner, and tax planner to make sure it makes sense for you. There are tremendous upsides to owning a home on LBI for many people, but it is not for everyone! As a potential buyer and investor in the LBI real estate market, you should evaluate the pros and cons of owning a rental home and see if any of the above scenarios make sense! If you have any questions about buying, selling or investing in the LBI real estate market, please do not hesitate to contact me.
By : Nathan Colmer |LBI Real Estate Agent | The Van Dyk Group
Cell: 609-290-4293 | Office: 800-222-0131 | ncolmer@vandykgroup.com
Click here to search all homes for sale in the Long Beach Island NJ real estate market
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