MARKET BREAKDOWN
Regional Spotlight: NewOrleans
THERE’S MAGIC IN THE BIG EASY, IF YOU KNOW WHERE TO LOOK.
by Carole VanSickle Ellis
N
he and his business partner are steering clear of purchasing rental properties in the area, not because he does not think they are a good investment, but because he believes the market is overdue for a correction. “We will be getting into rentals in the near future. We’re past due for a dip in New Orleans, so right now we’re focused on building up our capital so we’re ready to buy when that happens,” he said. “Prices will be lower, and we’ll be ready to act.” Ac- cording to ATTOM Data Solutions, Smith’s flipping strategy is perfect for building capital given his location: ATTOM’s Q4 and Year-End 2017 Home Flipping Report indicated that gross flipping return on in- vestment (ROI) in New Orleans was about 92.9 percent last year. In some areas of the NOLAmetropolitan statistical area (MSA), prices are already starting to level off and even decline, noted Real Property Associates in a report pub- lished earlier this year. “Single-family home sales were down in Orleans Parish in 2017 but rose in the suburbs,” analysts noted. The New Orleans metropolitan statistical area, the “metro area” for short, is com- prised of the eight parishes (Louisiana’s equivalent to counties) surrounding the city of New Orleans. According to that report, neighborhoods in the West Jefferson Parish boasted the biggest leaps in home value, adding 15.4 percent over the course of 2017. 10 ZIP codes in Orleans Parish lost value during the same period of time, with the largest loss one of 11.6 percent. Smith noted that he and his business partner are still active in Orleans Parish.
ew Orleans, Louisiana (NOLA), is anything but simple. From its 73
“official” neighborhoods that some locals claim do not really exist to its storied history replete with pirates, natural disasters, and one of the country’s first “skyscrapers” (erected in 1807), the city is a beautiful and confusing cultural and architectural mish- mash to outside investors. Within its highly specialized real estate investing communi- ty, however, investors are getting on with business as usual; although in this market the “usual” certainly has a bit of flair and, appropriately enough, a hint of mystery. A perfect example: “Right now, my part- ner and I mainly do rehabs and flips,” said Braden Smith, CEO of REvitalize Property Solutions. “We also do some new construc- tion,” he added. Smith noted that at present,
LOCAL RESOURCES CITED IN THIS ARTICLE
They recently purchased a “classic New Orleans shotgun double” (see an example of this architecture in the image at right) they are converting to a single-family home. He predicted that the renovation alone will cost in excess of $100,000 but will leave plenty of room to list the prop- erty for a relatively fast sale. “We focus on relatively lower-priced properties that sell, after rehab, around $350,000 or less because those move fast- er than anything else,” Smith said. “There is a severe lack of affordable housing
across the country, and that is definitely true in the New Orleans area as well.” He emphasized, “Speed is the name of the game, so we’re steering clear of high-end spec builds and renovations because they take longer to sell. You have to hold them longer while you renovate them, and both the holding costs and the rehab costs are higher.” In reference to the dip he sees coming, "We also just don’t want those high-dollar properties sitting out there on the market when the market takes a dive.”
BRADEN SMITH Owner, REvitalize Property Solutions
RON MAZIER Owner & Broker, Mazier Realty
A shotgun house is a small, narrow property with no hallways. This is a classic architectural style in New Orleans. New Orleans’ double shotgun houses share a central wall and generally are classified as “semidetached housing” but may be remodeled to create a single, larger home.
A HARD HISTORY FOR HOUSING New Orleans was founded by a French trader in the early
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