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Dreamed of Owning a Beach House on the Outer Banks?
Make that possibility a probability. Our experts tell you how.
If improving your quality of life and spending more time with family away from the rigors and routine of everyday life are priorities in 2011, you can accomplish both by giving yourself an Outer Banks beach house.
Affordable prices, historically-low interest rates and a market that’s tightening should be enough to entice you to take the plunge.
Our inventory (of homes) is shrinking. It’s lower now than it has been in quite some time, said Pamela Smith, vice president of sales for Coldwell Banker Seaside Realty. People are buying now because prices are good and money is cheap. And contrary to what you hear, you can get financing on a second- and investment home and the rates are very good, even on the jumbo loans.
According to current sales figures, 2010 showed a 12-percent increase in local sales volume over 2009.
Out of the top 10 (real estate) firms (on the Outer Banks), all but one had a double-digit increase in sales for the year. That’s a good sign that buyers are out there and sellers are more willing to negotiate, said Smith.
Also, thanks to the lingering pressure from foreclosures, there continues to be a steady supply of lower priced homes.
About 37 percent of sales have been foreclosures, so there are definitely some good deals out there. You can find investment homes now that will give you a positive- or close-to-positive cash flow, while three or four years ago you couldn’t come close to that, said Randy Nance, senior associate broker with Village Realty OBX.
Prices have fallen enough that buyers, who couldn’t afford oceanfront homes in the past, are now able to purchase property on or near the ocean, Smith noted.
If we’re not at the bottom of the market, we’re close to it, said Tim Moore, broker with Joe Lamb Realty. He expects to see a resurgence of investment buyers this year because home values are down about 35 percent from their peak in 2006 and interest rates on investment homes are under six percent.
Buyers who have been sitting on the fence waiting for prices to hit rock bottom are motivated and moving. Realtors have experienced a consistent increase in cash buyers, investors and second-home buyers.
People are taking money out of their primary homes to buy homes in our area now,Smith said.
However, bargain-basement pricing doesn’t mean buyers should expect to find a million-dollar house for $500,000.
Some buyers still get sticker shock here because of what they see going on in California or Florida. They think that our homes have also dropped 50 to 60 percent in value. They haven’t because homes here didn’t get as overinflated as those in other resort areas, said Nance.
Another incentive for buying in 2011 is that the Outer Banks’ rental market has remained strong throughout the recession.
Rentals were up in 2010 over 2009, which was a good year at the time, Nance said.
Gordon Jones, owner of Seaside Vacations and Coldwell Banker Seaside Realty, said early indications are that 2011 will be another solid year for rentals.
Advanced bookings are about 40 percent ahead of last year here at Seaside. And we’re seeing more urgency and less hesitation from guests who are calling to get their places locked in for the summer, he said.
Great home values. A formidable rental market. Low interest rates. This could be the perfect combination to distinguish 2011 as the year you make that dream home come true.
To get you started, here’s some advice from the experts:
Define your dream home.
Whether buying for investment or for personal use, make a list of what you want in a beach house.
Some people are looking for a small beach-box and some want eight bedrooms because they’re bringing everyone with them, said Christine Wissman, reservations manager at Southern Shores Realty.Do you want a pool, hot tub? Is the beach important? What kinds of amenities are you looking for?
Jim Wagner, broker with Resort Realty, said that 90 percent of the property sold on the Outer Banks is either second or investment homes. If it’s a second home you’re buying, you need to find out what the different residential mixes are and where you want to live when you’re here. Probably the school system won’t matter much, but shopping might. How close to the water do you want to be? How many bedrooms and bathrooms do you need?”
Explore the area.
To get a feel for where you want to buy, rent first. Then go exploring. Spend a week in a rental house or opt for a shorter stay at the Villas of Hatteras Landing.
This is for those preferring an upgraded hotel-suite experience where they pay per night and are pampered. All the services are provided like daily housekeeping, full kitchens, shampoos, lotions and linens, said Cathy McIlhenny, co-owner of Toucan Hospitality
Associates, which manages the villas.
Examine your reasons for buying.
Are you buying on emotion or as a business venture? asks Cory Taylor, broker with Southern Shores Realty. When emotions are involved, people buy a house they would like to stay in instead of one that might give them a better return on investment.
Set your goals.
One of the first things decision-makers need to do is have an honest dialog and make sure their goals are in line, said Gray Berryman, broker with Carolina Designs Realty. The earlier folks understand their motivations, the more successful their search and investment will be.
Ask the basic questions: What’s the purpose of the home? Do you want to rent it? Will you only look at foreclosures or short-sales? Will you negotiate? How much can you afford? Can you get pre-qualified?
Right now you can buy some of the best houses with all the amenities in excellent areas with 20- to 30-percent down and they may actually cash flow, Berryman said.
Evaluate locations.
Where do you want to own property? On the beach, golf course, next to a maritime forest, near a marina, overlooking the sound?
Pick the area that appeals to you. If you want nightlife and shopping, look from Nags Head through Kitty Hawk because there’s more things to do there. If you want upscale homes with seclusion, go toward Duck or Corolla. If the ocean is the draw, look at the southern or northern beaches. If you’re into shoreline fishing, go to Hatteras Island, said Moore.
Margaret Dyer, broker with Karichele Realty, suggests that buyers explore the pristine four-wheel-drive beaches of the Outer Banks.
It’s a wonderful place to buy property for relocating, retirement, investment or second- home purposes. What you could get for your money has always been good here, but now it’s even better.
Choose amenities.
Renters are all about amenities. Gourmet kitchens. Home theaters. Elevators. Game rooms. Swimming pools with wet bars. Outdoor kitchens. Pet-friendly homes. The more you offer, the
broader the appeal.
Richard Hess, broker with Sun Realty, points out that, while large houses packed with amenities may seem expensive to rent, they only run about $100 per person per night...about the same as a motel room.
This makes them a good value on the Outer Banks, so rentals remain strong, Hess said.
Pick a property management company.
Even if you live close enough to visit your beach house daily, you may still decide to hire a professional management company if you plan on renting it weekly. A rental company will advertise your property, handle the rentals, inspect the home after renters and storms to make sure it hasn’t been damaged, supervise and complete repairs and generally make sure your home is competitive in the marketplace.
A lot of owners who handle their rentals themselves and post their own listings have almost become exclusively about discounting. Renters expect that from them. Owners might not be paying commission to a management company, but they are losing income by
discounting, said Jones.
Property management companies stay on top of the market and its conditions so they know when to discount and when to hold prices firm.
Plus they provide professional housekeeping, maintenance and inspections. It’s hard for owners to take care of guests’ needs the way a management company can, Jones added.
Think long-term.
Nance says buyers should expect to keep investment property for three to five years.
You certainly can’t buy a house to flip today; but, if you hold on to it, you’ll make money on real estate, Smith said.
Celebrate!
Unlike a stock portfolio, a beach house is something your family can enjoy year after year while it appreciates in value.
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