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Investing in New Orleans
I thought I would post this to shed some light on some great investment opportunities in South Louisiana, specifically the Greater New Orleans area.
Everyone knows that New Orleans, Louisiana is a vibrant and culturally rich city that is known for its historical architecture, delicious food, and bustling nightlife. As with most heavily touristed locales, it is also an excellent location for real estate investment. I will share some insights below.
Stable Housing Market - One of the key benefits of investing in real estate in New Orleans is its stable housing market. The city has a consistently high demand for rental properties due to its growing population and thriving tourism industry. Roughly 50% of all residents in New Orleans are renters, and multi-family homes make up a large portion of those rental homes (diverse, cashflow opportunities). In recent years, the city has experienced a significant increase in home values and, since 2004 has outpaced the nation in rising rents, making it an attractive location for real estate investors.
Diversification of Investment Portfolio - Investing in real estate is an excellent way to diversify your investment portfolio. New Orleans offers a variety of investment opportunities, including rental properties, commercial real estate, and medium-term vacation rentals. By diversifying your portfolio, you can reduce your overall investment risk and potentially increase your returns.
Low Cost of Living - New Orleans has a relatively low cost of living compared to other major cities in the United States. This makes it an attractive location for real estate investors who are looking to maximize their investment dollars. The lower cost of living also translates to lower property prices, which can be a significant advantage for investors.
Tax Benefits - Real estate investing in New Orleans also offers tax benefits. Investors can take advantage of tax deductions on mortgage interest, property taxes, and depreciation expenses. Additionally, the state of Louisiana offers a generous tax incentive program for investors who invest in certain designated areas within the city.
Tourism Industry - The tourism industry is a significant driver of the New Orleans economy, with millions of visitors coming to the city each year. This creates a steady demand for short-term rentals, such as vacation homes and Airbnb properties. Real estate investors can take advantage of this demand by purchasing properties in high-traffic areas and offering them as short-term rentals. The STR space has gone through some regulatory changes since the summer of 2022, so it's important to check zoning laws before making any purchases. As it stands now, all STRs are required to be commercially zoned. You can also reach out to an investor-friendly agent (me) to get more information.
Historical Architecture - New Orleans is known for its stunning historical architecture, which is a significant draw for visitors and residents alike. Real estate investors can take advantage of this unique feature by purchasing and renovating historic properties. By restoring these properties to their former glory, investors can create desirable properties that command higher rents or resale values. Most of the historic homes and districts in New Orleans are protected and require a specialized understanding of the building codes, which is critical when choosing a contractor. An investor-friendly real estate agent will put you in touch with the right crew.
Hurricanes - Not the alcoholic beverage, but the actual storms. New Orleans runs the risk of being hit by hurricanes and tropical storms during the summer months of each year. You are probably wondering how this could be beneficial so I will explain. While hurricanes are rarely fun events for anyone (except those who choose to stay and throw hurricane parties), they can be very beneficial for investors. Unfortunately for some residents, they do not have the means to repair damages that may have been caused by a storm. Sometimes the damages can be extensive and sometimes they can be small. In either case, every passing storm will cause damages that the owners cannot afford to repair and they are forced to sell their home, often for far below the market value. Investors will take advantage of this situation by making quick, cash or pre-approved financing offers to help get the family some much-needed funds to help rebuild their lives, and the investor gets a fixer-upper for below market value. A month or two of repair work and the home is ready to rent and the investor can start getting that ROI. When done correctly, both the seller and the buyer walk away happy.
In conclusion, New Orleans is an excellent location for real estate investment due to its stable housing market, diversification of investment opportunities, low cost of living, tax benefits, tourism industry, and unique historical architecture. By investing in New Orleans real estate, investors can potentially reap significant rewards and build a strong investment portfolio. If you are interested in learning more about investment opportunities in New Orleans or the surrounding area, you can leave a comment or message me directly.
Some links to stats on New Orleans real estate.
I purchased a new duplex back in February. Best financial decision I have ever made. I rented 1 side within the first month that pays for 60% of my PITI within the first month. I am sitting on the 2nd side to see how the STR rules work out. If not I will just rent the other side as an LTR and clear 1k mo on my first property.
Quote from @Damon Aniton:
I purchased a new duplex back in February. Best financial decision I have ever made. I rented 1 side within the first month that pays for 60% of my PITI within the first month. I am sitting on the 2nd side to see how the STR rules work out. If not I will just rent the other side as an LTR and clear 1k mo on my first property.
Glad to hear that! That's some great ROI. It's looking like they are going to make STRs all commercial-only but we have plenty of residential homes that are zoned commercially, and the permits are only marginally more expensive to upkeep.
Quote from @Jon Lester:
Quote from @Damon Aniton:
I purchased a new duplex back in February. Best financial decision I have ever made. I rented 1 side within the first month that pays for 60% of my PITI within the first month. I am sitting on the 2nd side to see how the STR rules work out. If not I will just rent the other side as an LTR and clear 1k mo on my first property.
Glad to hear that! That's some great ROI. It's looking like they are going to make STRs all commercial-only but we have plenty of residential homes that are zoned commercially, and the permits are only marginally more expensive to upkeep.
I know they were also gearing up for 1 per square block. Luckily there are also no existing or expired permits on my block currently. Either way I am furnished and ready to go. Just waiting to see how things play out.
Quote from @Damon Aniton:
Quote from @Jon Lester:
Quote from @Damon Aniton:
I purchased a new duplex back in February. Best financial decision I have ever made. I rented 1 side within the first month that pays for 60% of my PITI within the first month. I am sitting on the 2nd side to see how the STR rules work out. If not I will just rent the other side as an LTR and clear 1k mo on my first property.
Glad to hear that! That's some great ROI. It's looking like they are going to make STRs all commercial-only but we have plenty of residential homes that are zoned commercially, and the permits are only marginally more expensive to upkeep.
I know they were also gearing up for 1 per square block. Luckily there are also no existing or expired permits on my block currently. Either way I am furnished and ready to go. Just waiting to see how things play out.
Keep us posted on how things pan out.
Hi John!
This post was very insightful! I love NOLA and have been several times, always wanted a property there. My question is crime is not the best, does the reward outweigh the risk in this situation? Or do you know of any A-B neighborhoods in New Orleans that would cash flow? Any areas to definitely stay away from? Thank you in advance!
Quote from @Damon Aniton:
Quote from @Jon Lester:
Quote from @Damon Aniton:
I purchased a new duplex back in February. Best financial decision I have ever made. I rented 1 side within the first month that pays for 60% of my PITI within the first month. I am sitting on the 2nd side to see how the STR rules work out. If not I will just rent the other side as an LTR and clear 1k mo on my first property.
Glad to hear that! That's some great ROI. It's looking like they are going to make STRs all commercial-only but we have plenty of residential homes that are zoned commercially, and the permits are only marginally more expensive to upkeep.
I know they were also gearing up for 1 per square block. Luckily there are also no existing or expired permits on my block currently. Either way I am furnished and ready to go. Just waiting to see how things play out.
@Damon Aniton you're correct that under the new rules, only one STR or BnB is allowed per square block by right. But keep in mind:
1) The application period under the new rules opens July 1, 2023, and it’s only open for a limited period.
2) If two or more apply in one square block, and more than one application is complete and approvable, then the City will get out a bingo hopper and hold a lottery to determine who gets the one permit.
3) The lottery losers can apply for an exception in a process that involves input by neighbors and City approval, and the number of exceptions per square block is limited to 2.
4) Operators who live onsite will be required for STRs in residential areas. Consider whether another renter on a property would be willing to become the operator or whether it’s better to be an onsite owner operator.
There's more detail on the City's STR website about other requirements to get an residential STR license.