Traditionally buyers and sellers tend to think of value for a home in a few ways. Some think of replacement cost, which is the value of the land combined with the cost to rebuild the home including permits, ground preparation, etc. Replacement cost is usually the upper limit of value, and certainly today there are some homes on the market priced far below what it would cost to build.
Other methods include comparing what like kind homes are selling for and making adjustments for things such as lot value, location, size, age, desirability of the floor plan, and more. Certain neighborhoods tend to sell for more than other nearby competing neighborhoods perhaps due to amenities, age, upkeep, etc. Of course every home is different, even if it’s the same floor plan. Each home sits on its own lot, has its own view, and has its own set of upgrades. Some homes require some adjustments on the market analysis or appraisal, and some require very few if any adjustments.
There is another method used to value homes and it’s called the income approach. Duplexes are often valued this way as is certain commercial property. In tourist areas where a home can be rented out on a regular basis, a home may have a different replacement value than it’s actual value because the home has income potential. Envision a cottage on Ft Myers beach. The cost to rebuild it might be minimal; however it provides excellent income, which in turn might affect its land value. In this case, the highest and best value for the property might very well be its income potential.
Sanibel Island limits owners to renting homes out by the month or longer, but Captiva on the other hand allows weekly rentals. This attracts more visitors, both from the US and abroad. It’s no wonder people from all over the world come to SW Florida to spend a week with their family in paradise.
The home pictured here is a home on Captiva and is a rare bank foreclosure. It has a view of the bay and is a 3 story home. 2 of the floors have their own kitchen, living room, and bedrooms, so two families can easily share the home on vacation. Quite often families travel together and look for a place to rent together.
This home is priced at $1,651,400 Other similar homes on the market now are priced $2.3 million to $2.995 million. We studied the MLS sheets which showed these homes rental history for 2010 ranged from $120,000 to $150,000. The home shown here features a pool, 6 bedrooms, 6 ½ baths and is walking distance to the beach, bay, shopping, restaurants, and gorgeous sunsets. The previous owner did take most of the fixtures in the home, so new owner is free to pick out and furnish the home to their own tastes. Former owner was a builder and built this home to his exacting standards.
If you’re looking for a vacation home with income potential, or strictly an investment property you might eventually retire to on Captiva, Sanibel Island, or Fort Myers Beach, give our office a call. While the home featured here is our listing, we have access to all listed homes and can sit down with you and discuss your needs.
Good luck, and happy house hunting.
Be sure to watch our December 2011 SW Florida State of the Market Report