Thinking Of Investing On LBI?
Real Estate Investing 101
Investing in real estate can be a lucrative venture, but it requires careful planning and strategic decision-making. Here are the fundamental steps in real estate investing:
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Determine your investment objectives, whether it's generating rental income, long-term appreciation, or a combination of both.
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Gain knowledge about different types of real estate investments, such as residential single-family properties, multi-family, condos, commercial properties, mixed-use, and seasonal rental properties. Understand market trends, financing options, and legal considerations. Familiarize yourself with the island, understand the seasonality of the area, learn about each town, the rental market/process, insurance requirements, and more.
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Assess your financial situation and establish a budget for your investment. Explore financing options, such as traditional mortgages, private lenders, or partnerships. Have a plan in place in case your property underachieves. Make sure not to over-extend yourself. Keep in mind, certain property types may require different mortgages.
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Research potential properties that align with your investment goals and budget. Consider factors such as location, market demand, property condition, and potential for growth. As your agent, I will assist greatly in this step providing immediate knowledge in these fields.
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Thoroughly evaluate each property to mitigate risks and maximize returns. This includes inspecting the property, reviewing financial documents, analyzing market data, and assessing potential renovation or repair costs.
Long Beach Island investments in general provide the greatest return and appreciation based on property location, age, size, flood area, and town. By using an experienced local agent, such as myself, you will have immediate access to the necessary knowledge in order to make an informed decision.
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Once you've found a suitable property, make an offer based on your research and assessment. As your agent, we will look over comparable properties to determine what the offer should be, while considering current market trends. We will then negotiate terms with the seller to reach a mutually beneficial agreement.
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Finalize your financing arrangements and complete the necessary paperwork to close the transaction. Work with real estate professionals, such as attorneys and agents, to ensure a smooth closing process.
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If you're investing in rental properties, oversee the day-to-day management of your assets. This includes finding tenants, collecting rent, handling maintenance and repairs, and addressing any tenant concerns. While many rental properties on island only rent in the summer season, it is crucial to maintain your property. This will only help you as a landlord and homeowner looking to maximize appreciation and equity.
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Stay informed about changes in the real estate market, economic trends, and regulatory developments that may impact your investment. Adjust your strategy accordingly to maximize returns and minimize risks.
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Regularly evaluate your investment portfolio to assess performance and identify opportunities for improvement. Consider diversifying your investments across different properties or asset classes to mitigate risks and achieve long-term growth.
By following these steps and staying informed about market trends and best practices, you can build a successful real estate investment portfolio over time.
Purchasing an Investment Property
Many individuals purchase real estate on Long Beach Island not only as a first or second home, but also as a business/rental opportunity. Contact me today to learn more about investment properties on LBI and whether it is the right decision for you!
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The most common type of investment property on LBI is used for seasonal/year-round rentals. These properties often can be single-family, multi-family, condos, or mixed-use properties. The island is known for its steadily growing sales & rental market boasting a large boom in demand and price over the past 10+ years. To put this into perspective, the average weekly rate for a rental property in peak season (June-August) is roughly $6,000. This number has drastically increased over the years, displaying an average rent increase of about 45%-50% since 2018, adding to the already strong and profitable LBI rental market.
At the same time, home prices have increased over the last decade tremendously. While this may seem daunting when purchasing a property, it is important to understand your property’s value will appreciate over the years building equity. For example, the average sales price for homes sold on island for the year of 2016 was $899,519 while in 2022 it was $1,679,641. This is an increase of almost 87% in just 6 years! These numbers reflect only the average sales price of residential homes sold in 2016 and 2022.
Much goes into the due diligence and process of finding the right investment property for you. Reach out to me to learn more or start your search today!
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Commercial Use Properties on LBI can be quite lucrative as a landlord or property owner. The island offers many opportunities to purchase a commercially zoned property in order to establish a business or fill the property with a tenant. Usually, commercial tenants sign leases for 3-5 years on LBI, offering a potentially more stable rental income than single-family. When valuing a commercial property it is important to properly engage in thorough due diligence of the property history, past earnings, annual debt service, building operation costs, “cap rates” or return, and more. As your Realtor I will help guide you through this process. Reach out today to learn more about this!
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Mixed-use properties are relatively common on LBI. Many of the commercial buildings for sale also include a bonus residential space for you to either occupy or rent-out to a tenant. Properties such as these can offer a high-rate, long term tenant in the commercial portion of the property while simultaneously allowing for a long term winter or peak-rate summer rental.
Why Buy on LBI?
Average Sales Price By Year
Your Rental Investment Property
…So you want to buy an investment property on Long Beach Island… Is it worth it? What type of properties produce the greatest return? What is the market like on LBI for investment properties right now? When should I buy? Learn today!
While every investor has different goals and objectives, an investment property on LBI could indeed be profitable. It is important for a buyer to do the proper due diligence and understand the rental process, income potential, and annual expenses. If interested in learning about investment properties on LBI, please do not hesitate to contact me!
Important Information For Rental Homeowners
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Taxes
Taxes for rental properties can be complex, as they involve various deductions, reporting requirements, and potential tax implications. Here are some key aspects to consider:
-Rental Income: You must report all rental income you receive from your property on your tax return. This includes rent payments, security deposits that you keep as income, and any other payments received from tenants.
-Deductible Expenses: You can deduct certain expenses related to the operation and maintenance of your rental property. Common deductible expenses include mortgage interest, property taxes, insurance premiums, repairs and maintenance, utilities, property management fees, and depreciation. Keep detailed records of these expenses throughout the year.
-Depreciation: Depreciation allows you to deduct the cost of the property over its useful life. Residential rental properties are typically depreciated over 27.5 years using the straight-line method. Depreciation can provide significant tax benefits by reducing your taxable rental income each year.
-Passive Activity Losses: If you actively participate in managing your rental property, you may be able to deduct up to $25,000 in rental real estate losses against your other income, subject to income limitations. However, if your income exceeds certain thresholds, this deduction may be phased out.
-Reporting Rental Income and Expenses: You'll need to report your rental income and expenses on Schedule E (Supplemental Income and Loss) of your individual income tax return (Form 1040). Keep thorough records of your rental income and expenses, including receipts, invoices, and bank statements, to support your tax deductions in case of an IRS audit.
-State and Local Taxes: In addition to federal taxes, you may also owe state and local taxes on your rental income. Check with your state and local tax authorities for specific requirements and guidelines.
-Tax Filing Deadlines: Rental income and expenses are typically reported on an annual basis. The deadline for filing your federal income tax return is April 15th, unless you file for an extension. State and local tax filing deadlines may vary.
It's important to consult with a qualified tax professional or accountant who specializes in real estate taxation to ensure compliance with tax laws and maximize your tax benefits. They can provide personalized advice based on your individual circumstances and help you navigate the complexities of rental property taxation.
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Insurance
In New Jersey, if you are renting out your home, whether it's on a short-term or long-term basis, it's essential to consider obtaining a specialized insurance policy to adequately protect your property and mitigate potential risks. While it's not legally required to have a specific insurance policy for rental properties in New Jersey, standard homeowners insurance policies typically do not provide adequate coverage for rental activities. However, based on your lender requirements you may be required to obtain Landlord insurance or a similar policy.
-Landlord Insurance: Landlord insurance is essential for protecting your rental property. This type of insurance typically covers the physical structure of the building, liability protection, and loss of rental income.
-Types of Coverage: Landlord insurance policies may offer different types of coverage, such as property damage, liability protection, and loss of rental income. Make sure to review the policy details and choose the coverage that best suits your needs.
-Additional Coverage: Depending on your location and specific risks, you may need additional coverage such as flood insurance or earthquake insurance (not applicable in NJ). These are typically not included in standard landlord insurance policies.
-Regular Reviews: It's crucial to regularly review your insurance policy to ensure that you have adequate coverage. As the rental property market evolves and your property value changes, your insurance needs may also change.
-Professional Advice: Consider consulting with an insurance agent or broker who specializes in rental property insurance. They can help you understand your options and find the best coverage for your rental property.
By staying informed about insurance facts for your rental property, you can protect your investment and ensure peace of mind for both you and your tenants.
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LLC or Individual?
LLC or an Individual?
When deciding whether to have your rental property under an LLC or individual ownership, it is essential to consider the advantages and disadvantages of each option.
-Individual Ownership: Individual ownership is the simplest form of ownership for a rental property. It involves owning the property in your personal name without any legal entity. This option typically requires less paperwork and administrative work compared to an LLC.
However, individual ownership exposes your personal assets to potential risks related to the rental property. In case of lawsuits or claims against the property, your personal assets such as savings, home, or other investments could be at risk.
-LLC Ownership: On the other hand, owning a rental property through a Limited Liability Company (LLC) provides liability protection by separating your personal assets from the property. In the event of a lawsuit or claim against the property, only the assets owned by the LLC are at risk, protecting your personal wealth.
Additionally, an LLC can offer tax benefits and may provide more credibility to your rental business. However, setting up and maintaining an LLC involves more paperwork, filing fees, and administrative requirements compared to individual ownership.
Ultimately, the decision to hold your rental property under an LLC or individual ownership depends on your risk tolerance, financial situation, and long-term goals. Consulting with a legal or financial advisor can provide personalized guidance based on your specific circumstances.
Home Search By Town
Types of Homes on Long Beach Island
Long Beach Island has many different property types ranging from simple single-family detached dwellings all the way to commercial and multi-use properties. Click on the text below to search for a specific type of property on LBI!
Property Locations on LBI
Oceanfront
Oceanfront properties on LBI are some of the most sought out real estate in New Jersey, carrying the price tags to match the demand. As expected, waterfront properties also carry different building and construction codes.
Bayfront
Bayfront refers to property that is adjoining or fronting on a bay. Bayfront properties are typically lower in price than Oceanfront and often give an owner “more bang for your buck”. A major advantage of owning a bayfront property is the ability to have a dock and/or boat. Boat slips are expensive and rarely vacant on LBI.
Oceanblock
Oceanblock refers to properties that are located on the east side of Long Beach Boulevard and do not involve crossing any street to get to the beach entrance.
Lagoonfront
Lagoonfront refers to properties that front a lagoon or cove that opens up into the bay. Little Egg Harbor Bay, Manahawkin Bay, and Barnegat Bay all contain numerous unique and beautiful lagoons along the west side of the island. Lagoons provide additional protection from wind and wind swell during storms.
Oceanside
Oceanside simply means that the property is on the east side of Long Beach Blvd, but in some areas on island may require you to cross a street (such as Beach Ave).
Bayside
Bayside homes are located on the west side of Long Beach Blvd. As a result, these homes tend to be the most affordable on Island. There are only a few sections on LBI that require a longer walk (more than 5-10 minutes) from bayside to the ocean entrance.
Current Market Update
Buyer Information
Learn important information pertaining to a buyer in this real estate market. Learn about the process, typical closing costs, mortgage info, insurance info, local recommended professionals, and more!
Important Real Estate Links
In need of valuable resources to navigate the real estate world effectively? Look no further. My collection of crucial real estate links is curated to provide you with the essential tools and information necessary for your property endeavors. Ready to embark on your real estate journey? Explore my directory of links today and take the first step towards achieving your real estate goals. Your success story begins here.