Growing up in the Philadelphia area, summers were spent down the Jersey Shore or just “the shore”. For me, that meant weekends with friends and family in Wildwood Crest. Having spent the last few days down the shore, I decided to write a locally-focused post. I’m not too in-tune with the local market, however I’ve spent the last few days biking through town and I’ve made a number of observations. From a real estate standpoint the Crest is characterized by classic Victorian-style architecture and Doo-Wop motels. However, over the last 10 years, the Crest experienced an unprecedented amount of development from luxurious bayfront homes to upscale beachfront condos.
The market downturn has left many projects half-finished and created a number of unique opportunities for cash-rich investors. However, lenders are extending the developers loans on many of these projects with the hopes that the market recovers and they don’t have to take massive write-downs. Although, this “extend and pretend” method can work, many developers are incurring carrying costs which force them to sell at discounted prices. I’m going to walk through a few ways investors can benefit looking specifically at the Wildwood Crest market. As always, keep in mind that I’m taking a cursory glance at the market and there are most likely additional issues that would arise upon further inspection.
An increasingly popular trend amongst troubled projects has been to resort to auction. Projects such as these 24 luxury beachfront condos previously asking $1.6MM are guaranteed to be sold with a starting big of $125,000. This is an opportunity to pick-up prime-located assets at extreme discounts. These properties can then serve as great rental properties or investment properties to hold and sell as the market recovers.
Pre-approved Vacant Lots
In the Crest there are a number of vacant lots completely approved for condo developments. If you can acquire the lots are the right price and can afford to hold onto the property for a while before beginning development, then there is potential for high returns. At this time I would only consider the best located properties (i.e. Bay-front or Beachfront).
This beachfront lot is pre-approved for 19 condos. It’s zoned M-1B which also allows for hotel, motel and condo-hotel development. Vacant beachfront lots are hard to come by and this parcel could be a great site for high-end condos in the future.
This next lot is ideal to develop luxury bay-front condos or a single-family home situated on Sunset Bay which produces some of the most stunning sunsets each night.
Broken Condo Developments
Scattered across the island there are partially completed condo projects that are for sale. Developers in the right financial position can work with the banks and bring in their expertise and equity to complete the projects. Again, such developments would require a high return to incur the amount of risk associated with the projects.
As I mentioned earlier in the post, each of these opportunities have issues, but also present great potential returns if one can be flexible and patient.
What opportunities do you see in the current market?