Always Invest In Proximity To Real Estate Anchors, Especially Property With Ocean View
One of the key factors in real estate investing is the concept of the anchor. For out-of-state investors the ideal is property with ocean view, but anchors are not just for oceans. No matter where you invest, paying attention to the anchors will help you weather the hard times that are sure to come.
Positive Anchors
What’s an anchor? According to Real Estate trainer, Todd Dotson, an anchor is a feature or structure that solidifies the economy of an area. The economic and cultural life of the community pulsates around the anchors. People need the services provided by the anchors and want to be close to them. Thus, it’s hard to go wrong when you acquire real estate near an anchor. Anchors tend to vary depending on the neighborhood. Dotson breaks it down into three categories:
Low Income Anchors
You want to avoid the “war zone.” That’s where you collect your rent with a bat. But one rung up from the war zone are the low income neighborhoods and these can be good to investors. These are the people who have been left behind in the inner city when the middle class flees to the suburbs. They rely heavily on the mom & pop grocery stores and the Laundromats. Other features of these areas are the universities and hospitals that were also left behind with the urban flight.
The owner-renter ratio in low-income neighborhoods may dip as low as 20-80. Renters look to the laundromats, convenience stores, etc. as readily available sources of necessities. Therefore, try to locate your investment within easy walking distance of these anchors.
Moderate Income Anchors
One rung higher, people in the moderate income sectors typically derive that income from blue collar jobs. By contrast, government assistance often fuels the low-income neighborhoods. Blue-Collar jobs often pay well, which lends stability to the moderate income area and makes them a more desirable investment target.
The owner-renter ratio in these areas is typically about 50-50. The greater stability in the area attracts some of the national franchises to serve the needs of the residents: stores like Walgreen’s, Rite-Aid, or McDonalds. These are your anchors.
Middle Income Anchors
Still higher on the socio-economic scale is the upper-middle income neighborhood, where home ownership may rise to 80%. These areas attract retailers who supply the wants, not just the needs of the community. This includes national chains like Starbucks, Barnes & Noble and Outback Steakhouse.
The important thing to remember about anchors is that they provide stability for an investor. Stick close to your anchors so you don’t get driven onto the rocky shoals and capsize in the storm.
Water As An Anchor: Property With Ocean View
There’s another kind of anchor that people don’t always think about. Water. For some almost mystical reason people are drawn to the water. That’s why property with ocean view is in high demand. Water can be calm, and placid, and peaceful. Or water can be wild, and tempestuous and threatening. Life and death mingle at its surface. Water is tantalizing. Property with ocean view allows people to experience the ocean vicariously.
Thus, the savvy investor will always keep an eye open for water. Even marshland is better than a desert and a home with a pool usually commands more value, for the right person. All else being equal, salt water is preferable to fresh water, the ocean having its own special mystique. A home on property with ocean view may not be affordable for many, but a villa or condominium may be an economical alternative. Especially if you look for something in a resort community, where rental income during the summer can sustain the property.
Footnotes: Copyrighted information related to real estate anchors supplied by Todd Dotson Training Systems, Arlington, Texas (1-800-RE-DEALS. See also our article on negative anchors.
Oliver Woods specializes in marrying deals and dollars (cash buyers) via his website for residential and commercial investors Or he can offer valuable advice to those who may be struggling to divest themselves of their home in a difficult buyer’s market — for more information visit his website for sellers
