Monthly Archives: June 2010

The Best Deals Are In The Beach Block

When I look at the beach block market what really sticks out is how far some of the older homes have dropped in price. This is where I have directed my last group of investor customers. As an example, I will use a listing located at 30 69th Street. This is an older full size townhouse. The price is down at the 700k mark. If a new townhouse was in a location like this, the price would be $1,050,000. This is a 33% spread in value. Traditionally in Sea Isle, the spread between a new home and a quality older home could be as little as 7% with 10% being a more normal relationship. So why these enormous gaps in value?  The reasons are many and too much to try to explain here. What I can and have said to you and other customers this spring, is that these listings represent the best opportunity in Sea Isle right now. The last 3 people that I have worked with on these type of projects are in the process of extensive renovations with contractors that we have in line for this type of work. I have included photos of some of these reno projects. Take a look at these images and see if you can tell the difference between this home and a new one.  If a renovation of that type were applied to our example property, the all in cost would be under 800k with a budget in the 80K range for this scope of work. If correcting the neglected condition left you with a 26% spread, there lies the value. If the Unit could return to a relationship in the 12 to 15% range, you would pick up between 10 and 12%. And there’s a kicker too. The rental income of the fully renovated home could be in the same range as the new home for a purchase price of over $250,000 less. This model can be applied to more than a few properties listed for sale right now in the beach block and on the beach front where the examples are even more dramatic. If one of these projects seems like the deal you have been waiting for then give me a call so that I can fully explain this unique market condition.