For investors in Charleston SC the real estate game is a tricky one. We all made thousands and — probably millions if you add it all up — flipping houses, leasing offices and renovating condos. Then the real estate market collapsed, throwing the U.S. into the 2007-2009 recession.
Now the prognosis for real estate investments is looking much better, though it’s anything but simple. Some commercial real estate has rebounded, with investors craving income that real estate provides, while Low-country residential Charleston real estate — particularly single-family homes — may be at once-in-a-lifetime bargain prices.
Four top experts were asked for their take on the the opportunities and potential pitfalls facing real estate investors in the coming years. Edited excerpts of their interviews follow:
Jim Sullivan, managing director of REIT research, Green Street Advisors
Every diversified investor should have some exposure to commercial real estate, and REITs [real estate investment trusts] provide a terrific, transparent and liquid way to get that exposure. Operating fundamentals in most property types range from good to great, with good being the shopping center business and industrial business and great being the apartment business. The economy is not doing great, but the silver lining for commercial real estate is how little new supply is coming on the market. Too much new commercial construction is typically what puts a halt to real estate recoveries. This time around, it’s just not an issue.
REITs tend to be specialized by property type. You can pick and choose, depending on what your economic outlook might be. If your forecast is a little rosier, you’d want to be in property types that respond well in economic recoveries — hotels, for example, or REITs that own shopping centers with lots of small tenants. If you wanted to be a bit more defensive, health care REITs are a terrific place to be. When investing in Charleston real estate the safe bet would obviously be in tourism based avenues considering that is the most consistent driver of revenue.
The biggest opportunity is buying distressed single-family homes, because that market has been completely beat up. The next biggest opportunity is buying land because very few people have been focused on it. If you have a long-term view, you’ll probably see a significant multiple return. Buying land is a complicated business, though. Mom-and-pop investors should not be buying land.
Lauren Pressman, director of investment research at wealth management firm Aspiriant
The U.S. is in a period of sustained but very slow growth. Job reports are huge factors for real estate, because jobs create demand for housing, for offices, for travel and at retail establishments. We’re wary of things like retail and office, except in very unique circumstances. Multifamily real estate (apartment buildings) arguably had all the tail winds at its back to do the best of all asset classes. However, be careful. There is so much capital chasing multifamily, and that can lift prices beyond a point where your return is commensurate with risk.
No matter what your strategy is always be careful and have a good local agent to help you navigate through the maze of options out there for investing in real estate in Charleston or anywhere. Find a great contractor in Charleston and let them help you with the renovations, and repair necessary to get a C.O. and move onto the next real estate opportunity.
One of the long tried and true income producing real estate investments popular in Charleston area is in beachfront homes or resort vacation rentals. It’s no mystery that homes in beach communities are very attractive year round and hundreds of thousands of visitors come to our beaches in S.C. to unwind. Homes for sale on the Isle of Palms and in Wild Dunes real estate make big money on weekly vacation rentals for their owners. Many developers and investors will even buy an existing home, tear it down and build a new one just for the returns it can produce. Weekly rentals on Folly Beach, Kiawah, Sullivan’s Island, and even downtown Charleston garner upwards of $4000 to $7000+.
There has never been a better time to pull money out of the equities market and into real estate, rates are low, and prices are too.
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