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I gotta stay local? March 6, 2008

Posted by shaferfinancial in Uncategorized.
Tags: , , , , , ,

I have  been talking to folks about an opportunity located in New England.  It is an land development investment.  It is something I have invested some funds in and find the potential worthy.  Several of the folks I talked to, flatly said they weren’t interested in any real estate deal they could not drive easily too.  This stunned me for several reasons. 

First, real estate investment in Florida, especially this area of Florida, is very questionable at this time.  We have a record supply of both new homes for sale and existing homes for sale.  Prices are high, compared to rents.  Developers are selling as much of their inventory as they can for as little as 50 cents on a dollar to major concerns who are content to sit and hold for a few years at that price.  In short, I think it will be several years before the environment makes sense to buy investment property.  Commerical property has been doing better, but over the course of the last year, vacancies has increased making it less desireable at this time. 

But other areas have different fundamentals.  Many which are much better than Florida right now.  So why not look around other areas?  I mean, if you invested in stocks, would you say I have to be able to drive to the company headquarters?  Well, no.  But, you would look at the business model, the accounting, etc. to figure out if you wanted to invest, right?  So why not the same with real estate?

Which gets me to the point of this post.  In order to build wealth you need to expand your horizons to a point where you can find deals that make sense.  And in this day and age, that is pretty simple with the communications, travel capacity, etc. that exists. 

I think that is where many amateur real estate investors have made bad decisions.  Wanting to invest in your own town is great, but not comparing your own area to other possibilities is a mistake.  Investing in your own area despite poor fundamentals, is a fatal mistake.

In our town, many people made that fatal mistake.



1. Blue Ridge Land For Sale - March 6, 2008

One thing for sure is there are many many investment opportunities in the US right now. I think some of the best may be in the SW in Arizonia. The prices of foreclosed homes are amazing and to someone retiring not needing an area that will provide a job opens up alot of Arizonia. The weather is great and I think many boomers will migrate there instead of Florida. I also see many buying vacation homes there. I still think there will always be a market in Florida and many of the south cities. But I think Arizonia may be it.

I have also seen that many hotels are over booked and raising rates and people are considering vacation rentals as options and even in urban cities. So maybe vacation rentals is to be considered.

2. shaferfinancial - March 7, 2008

As boomers retire, they will be well advised to look around many areas. Of course, a place to live, has a different calculus than a place to invest in. As you point out, if there are no jobs, then you are limited in your ability to attract folks, hence a questionable investment.

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