Can we really call a property an investment when it caps @5%??

By
Real Estate Agent with Beach Realty and Construction

I makes no sense to classify a Beach House as an investment when it only does 5% gross return on income. Once you deduct the operating expenses you are at about 3% or less!!!

I would rather buy a CD or something that will put$$$ in my pocket for an investment. Real investors laugh at listings that are $2,000,000.00 and they are grossing $98,000----

 Everyone  one is tired of looking at them collecting dust on MLS-!

 If I want an investment and by that I mean something that will pay on principal then I will buy a bond or CD or something that will actually put the $$ in my pocket and guess what?? I will never have to paint it or cut grass or fix he water heater.

NOW- if I want to buy a beach house and get a little help with rent then I can understand the 5% Gross rent.  Still the savvy buyer wants closer to 10% - we have a Mexican stand off here on the OBX concerning price - be not afraid though because every week or so a seller decides to get real and listen to the professionals .The results??  a contract and quickly!- of course NRA stats suggest it has taken the average seller decide to believe in the suggested price 1.5 years later than it was suggested - what happens then?In most case they have thrown away $$$$$ and for what?

The sooner they decide to list at a price that will cause the home to sell the sooner they will get the place sold and move on.

The housing boom bar is CLOSED, last call was in 2005!! smokem if you've gotem, you don't have to go home but .... you know the rest.

Let me know what you think--

Blaze on the Outer Banks signing off

Comments (2)

Anthony Kirlew
Group 46:10 Network @ eXp Realty - Gilbert, AZ
Helping You Make Fiscally Sound Choices

There are two approaches to investing in the market (which is awesome by the way)

1. Short Term. You make your money when you buy the property.  If you buy it right, you will clearly make more than a 5% return.

2. Long Term.  a long term investor will not look at the short term return, but the fact that over time real estate always appreacites.  Case in point, I don't beleive there are any homes today that were worth more than they were 40 years ago - 2 years maybe, but historically, they will go up.

Aug 05, 2008 04:14 PM
Steve Blaisdell
Beach Realty and Construction - Nags Head, NC
FOC

Amen - Real estate is a great LONG term investment - no  need to confuse your long term investment with what we call an investment property -

I just think an investment property is more like a 4 flat or some storage units!

Aug 05, 2008 04:27 PM