Real..Real Estate Investing

For years we avoided investing in real...real estate preferring to have real estate investment trusts to do my bidding. The reason is that the up front costs, personal involvement, and possible return were not worth the asset allocation. Frankly most of rental real estate is get rich real real slow if that. Things have changed.  Frankly good real estate can now be bought where you recover your up front costs the first day with asset recovery from the discounted selling price.  Funny thing is that for years people have tried to accomplish this little game of real estate quick riches by following the television real estate preachers who hook you with buying a book from them or going to a high priced class. Today you can actually do that to some extent sans the book and class price. 

The other concern about real estate for us can be illustrated by the old Jay Leno commercial.  Jay did a Doritos commercial many years ago that had him sitting in a chair talking about the great taste of the product that ended with the tag line, " eat all you want, we'll make more!". Now that little point of about "we'll make more" has always been the drawback for us regarding real estate investing.  The making more is the reason we had the real estate crash.  The huge oversupply of existing homes right now is the primary reason real estate can be bought at prices not seen in decades.  Even when the real estate market returns to something near normal builders will again have the option of making more anytime they want again putting pressure on values.  This is true for almost everywhere in the country except for a few locations.  One of those places are strong inner city cores like New York City where there is nowhere is to build and many people need to live and work. The other place is seashore real estate. In many places along the seashore almost all the open lots are built on now and the ones that are not built on require extensive environmental and local codes that make then much harder to build on. Therefore the real estate values at beaches however depressed should be the first to rebound in price and likely will stay that way. 

For the past year or so I have suggested to some of my more well off investor friends that one of them needs to set up a partnership of investors where they buy depressed price real estate on the coast of North Carolina.  Almost all of North Carolina coast real estate is 25% to 40% off in price compared to just a couple of years ago. Much of that real estate is below replacement value. Some of that real estate is bank owned or in short sale due to the purchase by people who were either investing thinking they would flip the home or someone who bought the home and now is unemployed and can not make payments.  Right now there is a small glut of mostly existing real estate in many North Carolina beach areas and the people who are trying to sell are being forced to lower prices and lower again to sell.  In those beach areas that are basically full built out due to the lack of available land once the oversupply is sapped up the prices will begin to rise significantly and before real estate recovers in other areas. 

Our personal favorite area is the Bogue Banks area. The real estate market there is all but fully built out, the vast majority of existing structures are single family residential, and the existing regulatory climate there is most positive.  The western end of the island known as Emerald Isle offers the most opportunities in our opinion due to the prevalence of all the factors noted above, plus some solid zoning and easy access via the local high rise bridge. There is also the fact that many families like to have a home to spend their vacations in and the rental market remains strong. 

The sweetener here are the lowest interest rates in years. Good credit and one can get below 4% 30 year loans currently.  Looking down the road 10 years rates that low makes one think that you will basically be paying back with inflation adjusted free money. 

 We suggest if you are in the market for real estate either as a home or investment take a look at seashore opportunities.