Nathan Colmer | The Van Dyk Group
C: 609.290.4293 | O: 609.492.1511
Flipping homes has become big business across America thanks to the popularity of TV shows like "Flip or Flop" on HGTV. While house flipping as depicted on these television shows is not really practical on Long Beach Island, there is tremendous potential in building a new home on spec and selling it in the LBI real estate market. You can read more about the potential for this kind of project and see if it is the right investment for you.
The true definition of a "house flip" is buying and selling a property in less than one year. Most often this will involve some kind of renovation however it can also be simply a "buy and hold" scenario. In the LBI real estate market the most common and most profitable form of a house flip involves buying vacant land or a tear down and building new construction to be sold in the open market.
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:
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 $1,000,000. 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.
I have put together a basic scenario for an oceanside 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. You can also see some past projects by clicking here.
Land Purchase: $650,000
Estimated Build Cost: $500,000
Estimated Closing Costs: $100,000
Estimated Carry Costs: $12,000
Total Investment/Costs: $1,262,000
Estimated Gross Pre-Tax Profit: $345,000
One very lucrative area of investment on Long Beach Island is Building a Spec House in the LBI NJ Real Estate Market. Through this process, a buyer will purchase a knockdown or vacant land and build a new home to fit the trends of the LBI real estate market to sell on the open market. While this is a roughly year long investment, the return can be tremendous...MORE
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Buying a home in the LBI real estate market often is motivated by one of two purposes. The first is to provide a vacation home for personal enjoyment and the second is to provide a lucrative investment. In many cases, both purposes will be applied to the home as a buyer in the LBI real estate market can use their home for part of the season and rented for the remaining part thus generating income...MORE
One of the advantages of buying a home in the LBI real estate market is the consistent interest in summer rentals on Long Beach Island. The ability to rent a home not only keeps the LBI real estate market stable, especially in times of major economic trouble as we saw in 2008, rentals also provide an interesting investment opportunity...MORE