Investing in Naples Florida Real Estate
At Naples current home values
and real estate trends, virtually any property that can
be purchased at, or below its true value should end up being a
very good investment.
But of course, most sellers in the area want more than their property’s current value. So the challenge is finding that seller who is willing to be more than reasonable.
Naples Real Estate for Investment
All buyers seem to be interested in the investment potential of any Naples real estate purchase. But it is a matter of degrees.
- Buying in Naples Purely for Investment – These are buyer that are looking solely at the overall investment return from the property. Meaning it will be rented year round or seasonally, and no or limited personal use.
- Buying for Immediate Use – These are buyers purchasing for their own enjoyment. But if their purchase decision also results in a nice investment, then all the better.
- Buying for the Future – These are buyers purchasing for their future. They intend to rent the property, maybe for the full season or maybe part of the season. So a combination of rental income along with their own personal use. They usually want something that they find appealing. Some leans towards what they would like the most, some lean towards what is the better investment potential.
For out-of-town buyers, it is just a matter of planning a visit and seeing what is available. It is very simple, today’s deals are tomorrow sales. The best deals do not sit around, they get sold. But the deals continually churn, new ones appear. The bad deals remain behind in the listing data base.
Naples New Construction for Investment
For the uninformed, new construction can be very appealing for
New seems better than older (but it is not).
- Often they are buying homes to be built, so there is no carrying cost until it closes.
- When buying new, everything is in pristine condition and there is usually warranties that come with.
- The builder sales staff is great at explaining the investment potential of their product- its called selling.
There are examples in Naples where investors made up a large percentage of the purchasers. Buying in communities that had very little real end-user demand. They where buying in communities that had only investor demand. Unless there are unusual circumstances, buying new construction purely for investment may not be good idea. I believe it only make sense to purchase new for investment if it is in combination with at least some personal use. And the personal use is part of the purchase decision.
Naples Rental Income
The value in Naples real estate is the result of Naples being such a desirable winter home destination. That winter period is from October to May. The peak seasonal demand is January through March. For a property to rent in season, it must be the type of property sought after by seasonal renters. And that would be either:
- On or near the beach
- Something with a great Naples location
- Within a golf community were the golf membership transfers to the renter
- Within a community with wonderful amenities.
Seasonal renters place a high emphasis on location, meaning close to Naples major attractions and destination spots. Renters do not want to be in that new community located 20 miles away from the attractions. The exception would be golf communities. For those interested in golf, the golf course and community feel are more important than the Naples location.
All desirable seasonal rental properties provide similar annual returns. Generally, three months rents covers all the out-of-pocket expenses (not a mortgage). Add up the community and/or condo fees, plus property taxes, divide by three and that is the approximate monthly seasonal rental rate.
Naples Rental Income Examples
Naples Investment Property FAQs
What Naples area or community will appreciate the best?
During the price run up in 2004 and 2005, the prices of homes in totally different areas rose at the same rate. Subsequently, they fell the same. The best investment will be that property that can be purchased at the best price relative to it true value.
What price range is best for investment?
For now the lower price ranges seem to present the best opportunities. There is a greater pool of potential buyers in the lower price range, and available inventory is low.
What is the return on an annual rental?
Monthly rents for an annual will be much less than the seasonal rent. Annual rents will typically have a cash return in the 3% to 7% range after out-of-pocket expenses.
How do I get it rented?
For seasonal renting, owners that take charge of it themselves have the best results, by listing the property on a rental site such VRBO.com or community bulletin boards. Those that do not want to hassle with things will have the property listed with a local agent. For annual rentals, it is best to have a rental agent.
How do I manage the property?
If there is a rental agent, then they manage things while it is rented. And then most owners will have a home watch person that checks on thing while vacant. Home watch can also take care of issues while it is rented, for those owners not using a agent.
What type of properties rent the best?
Those fitting the descriptions listed above – golf, good location, etc. The majority of seasonal renters are just looking for a two bedroom or a two bedroom with a den. More condos rent than single family homes.
What type of rental restrictions are there?
Most communities will have a 30 day minimum rental policy. Most beach condos have a 90 day restriction. Some condos have 7 day or 14 day minimums, but these are viewed as more transient communities. Usually renter are not allowed to have pets.