Real estate anchors may be positive or negative, and property with ocean view is one of the strongest in the positive category. The first rule of real estate investing is to stick close to the positive anchors, so you’re not blown away in an economic storm. Hang onto your anchor.
Positive Anchors
Real estate trainer Todd Dotson defines an anchor as a feature or structure that solidifies the economy of any area. Think about some of the questions you asked the last time you bought a house? How far from the mall? How far from the school? People need certain services and don’t want to drive all over the place to get them? These are the anchors that you want to be close to. Bear in mind, however, that anchors vary with the neighborhood, which according to Dotson fall into three socio-economic categories.
Low Income Anchors
Urban flight leaves a preponderance of low income families in aging neighborhoods. These are usually renters who look to Laundromats, convenience stores, and pawn shops for basic necessities. These are your anchors along with hospitals and universities that have been left behind in the inner city.
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
Moving up a notch on the economic scale we come to the moderate income neighborhood. While lower income areas have a large portion of their residents on government assistance, moderate income areas have a large portion of their residents working in the blue collar sector. This stabilizes the area and makes for a more attractive investment arena.
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
Moving up another notch on the socio-economic scale we enter the upper-middle income community. Here we find retailers catering to the wants, not just the needs of the residents. You’ll find national chains like Outback Steakhouse, Barnes & Noble, and Starbucks catering to the wants, not always the need, of the residents. The ratio of owners to renters flip-flops to about 80:20.
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
The other kind of positive anchor that is sometimes overlooked is water. Water is appealing for its beauty and recreational value, whether it be river, lake, or pond. Property with ocean view is even more attractive. The only negative to consider is the flood plain, which is particularly important on river front property. Part of the reason water is attractive is its volatility. Water can be calm and placid or wild and tempestuous. It can be fun or fearful, with life and death co-mingling at its surface.
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 provide valuable assistance to those who may be struggling to sell their home in a difficult buyer’s market — for more information visit his website for sellers