Welcome to my first of many weekly (or more) thoughts of the current Florida realty market. First of all, we are an a cycle. I remember the savings and loan scandals of the late 80’s and early 90’s. Everyone thought that was the end of the world. Look what happened to real estate values since 1990! Had you purchased a home in 1990 as an investment for $50,000, in today’s “depressed” real estate market, you have a home worth $280,000 (better than average return). A 15 year mortgage back then and your house has been paid off for 3 years! You have a $230,000 equity position PLUS the income stream for three years of say $21,000 per year minus taxes and insurance ($63,000 in 3 years or $13,000 more than you paid for the house).
Before you scoff at the deal, consider the initial investment of say $2,500 out of pocket in 1990. It all boils down to patience! The best book ever written on real estate is “The Tortoise and The Hare.” All those “rabbits” of 2004-2006 lost their shirts. The old timers, who are patient, continue to profit from the glorious real estate market of South Florida! Bottom line if you are investing in real estate, BUY when everyone is SELLING (now) and SELL when everyone is BUYING (2004-2006). Take any 20 year cycle in modern history and real estate still represents a SAFE investment.
Vincent Arcuri
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