YOUR GUIDE TO INVESTING ON LBI
Maximize Your Real Estate Investment Potential
Long Beach Island Real Estate Spec Homes and House Flipping
House flipping has gained popularity nationwide, but the traditional fix-and-flip model seen on TV isn’t as practical on Long Beach Island. Instead, the most profitable approach in the LBI real estate market is building a new home on spec.
A true "house flip" is defined as buying and selling a property within a year, often involving renovations or a simple buy-and-hold strategy. On LBI, the most successful flips typically involve purchasing vacant land or a teardown and constructing a new home to sell on the open market. This method offers strong potential for return on investment and remains a popular strategy for real estate investors in the area.
Returns and Potential Profits
I have put together a basic scenario for a home in the LBI real estate market. I am happy to run specific numbers for any property and give some insight on what the actual profit potential would be.
1 Cox Ave Estimated Numbers
Land Purchase: $950,000
Estimated Build Cost: $1,000,000
Estimated Closing Costs: $130,000
Estimated Carry Costs: $120,000
Total Investment/Costs: $2,200,000
Estimated Gross Pre-Tax Profit: $500,000
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Building a Spec House in LBI
When looking to invest in the LBI real estate market as an investment and build a new house, there are a few important points to consider:
Location matters above all else. Generally, a spec project should focus on the oceanside or oceanblock
The width and size of the lot is important to be able to design a functional home that will be well received in the LBI real estate market
Keep an eye on the neighborhood as many buyers of new construction will look for an area of well maintained or new homes
The old adage of location, location, location cannot be over emphasized when looking to build a spec home in the LBI real estate market.. Generally speaking the oceanside, oceanblock and oceanfront locations will see the best returns as spec investments. Oceanfront homes will generally sell at a Premium and will in many cases offer the highest profit however the high price point can exclude many buyers. This will also be the most expensive project which will increase your carrying costs. Oceanblock and oceanside spec houses tend to be rather easy projects and have mass appeal to buyers in the Long Beach Island real estate market.
The right lot size is essential buying a smart investment in the LBI real estate market. Most of the value for a home in the LBI real estate market is in the land. A wider, deeper lot will allow for more flexibility in the design of the house you are trying to build. Generally speaking, an investor should look for a 50 foot wide lot or larger as this will accommodate a nice design and layout with adequate square footage. A spec house should offer at least 4 bedrooms (and so much the better if 5 can be accommodated) and about 2,200 or more square feet. For most of the towns on Long Beach Island, this style of house can be built on a 50×80 lot or larger which is the general minimum that should be sought when looking to buy a tear down on LBI.
While the location of the house is important, so too are the houses around it. Most new construction on the oceanside will be priced over $2,500,000. Most buyers who are looking to spend this kind of money will be looking for a nice area with nice homes. The old saying of, “buying the worst house on the best street” should be followed when looking at Building a Spec House in the LBI NJ Real Estate Market.
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REAL ESTATE TIP:
When building a new home be sure not to over improve the site. It is easy to let a construction budget get away from you and this can be a costly mistake.