September 01, 2012 2:00 AM
HACKENSACK, N.J. ? The stone house has small rooms, an overgrown yard and a roof that begs to be replaced. But investor Frank Oliveri and his business partner, Al Best, see the potential in its Wyckoff, N.J., address and the $125,000 in renovations they've got planned.
The house fell into foreclosure after selling for $522,000 in 2006, when the housing market was at its frothiest. Oliveri, of Rochelle Park, N.J., and his brother, Mel, bought it recently for $315,000, even less than its 1999 sale price of $339,000.
After extensive renovations ? including the addition of a master suite ? the investors hope to sell the property for more than $600,000.
If this deal works out as planned, it will illustrate the more favorable numbers that are slowly drawing investors back into the real estate market. After the housing crash left many with losses, some investors are now seeing the attraction of lower home values and interest rates, as well as higher rents. Home sales are running ahead of last year's very slow pace, and about one in five buyers is an investor, according to the National Association of Realtors.
"The flipping market is back," said Antoinette Gangi, a Re/Max agent in Woodcliff Lake, N.J.
That's certainly the case with Best and the Oliveris. They look mostly for short sales or bank-owned properties, because they have to buy the properties cheaply enough that they can still turn a profit after spending on improvements. That's easier to do in the current market.
"Prices have come down, and investors have a lot more room to wiggle with," said Frank Oliveri. His brother is head of Property Hub Realtors in Paramus, N.J.
Builder Lou Chiellini of Park Ridge, N.J., who buys and renovates or replaces homes, also said that he's been able to pay less for properties these days. At the same time, he's accepting lower profit margins than in the past, he said. "If you're not greedy, you can still make money," Chiellini said.
Some investors would rather hold properties, to take advantage of both lower purchase prices and higher rents.
"In some areas of the country, housing prices are down to the point where you can get a positive cash flow out of turning property into a rental unit," said Jed Smith, an economist with the National Association of Realtors. "In the past, they couldn't get a positive cash flow on rentals; they got a return based on appreciation. Lower prices make properties more appealing to investors."
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Source: http://www.seacoastonline.com/articles/20120901-BIZ-209010317
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