Waterfront property

[Old Town]

Have any of you considered waterfront property to invest in instead of the stock market? At 53 I've never put a dime in stocks. Don't even have an IRA. I work for myself building yachts and when I can accumulate enough money, go find another B&B or tourist related property in my hometown of Key West.

Being an owner is work but you get a steady income from the businesses and you gain the increased value of the actual brick and mortar. At any time you can sell and take a large sum if you want to. I do not do this but it's very comforting to know in your old age you have resources to liquidate when you need them.

The best places are located in tourist towns like I live in. Waterfront is prime as would be a mountain ski location with a view. Try to cater to the rich. They have what you want.

Old Town

 

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[birdman]

I agree 100%. Water front is the way to go if you have the money..

 

[LM]

It's usually wise to invest in what you comprehend.
A large part of the 'problem' is that markets have been generally strong for many decades and monkeys throwing darts could've made money (including a lot of monkeys in professional money management). We've entered into secular market changes that will make the investing climate very different going forward, yet these old 'fire and forget' mentalities still persist.

Very smart people spend their entire lives learning everything they can about the markets and still lose money. In markets like this, dumb luck is the only chance Joe Sixpack stands and arguably, he has much better odds of coming out ahead by going to the Roulette table and betting it all on black.

I bought my first piece of waterfront when the RE markets melted down and an investor I knew entered a severe state of distress. I stole it. There are tremendous bargains out there right now in RE to be sure, but you still have to be careful. A book I cannot recommend highly enough for anyone interested in raw land is "Finding and Buying Your Place In The Country" by Les Scher. It's a tremendous primer on the minutiae of buying undeveloped land, but things can still get hairy. Ask anyone who bought a building lot in Port Charlotte that they found out later was classified as "scrub jay habitat". Waterfront land has it's own unique set of circumstances in the way of building regulations; flood zone requirements, setbacks, runoff mitigation, etc.

It's smart to take a macro view of your financial situation and really ask yourself if land speculation has a place in your overall financial plan. Land does not throw off cash and actually has liabilities associated with it. 'Buy Land Because Land Always Goes Up' is one of those outdated mentalities and it might not be the best investment vehicle for people who aren't very liquid. Still, I do believe there are some great bargains out there, right now. As the old saying goes... You want to buy 'when the blood's running in the streets' and in real estate- particularly bank and institutionally owned properties that are part of a larger securitized bundle- the blood is definitely running. Thre are steals out there for people who have cash and can write big checks.

 

[Old Town]

Good post, Pokerplayer. I really do not know anything about other United States RE but for my home town. No doubt we have an unusual dynamic at play in Key West. During the late 60s and early 70s when I was growing up you could buy huge Victorian homes in bad shape for 5-10 grand. Today those homes fixed up are worth 1.5 million and up - way up. I bought one in 1981 for 45,000 dollars. I got very lucky as this was the end of the gravy train, and it was a great deal of work getting it livable and nice to look at.

I started buying bed and breakfast businesses in the middle 80s when I had the cash after having sold a large boat I built. I did not have to finance these first couple of buildings/businesses. Later I was able to continue selling my boats and cherry picking the better properties because I could now come up with a large chunk of dough along with borrowing money against the earlier B&Bs that were fully paid for.

If you have equity and a down payment the banks will do anything for you. If you pick up going concerns and make them better in a town that is not impacted much by recession, well, it's hard to go wrong. I've always found wealthy people in bad times DO NOT cut out their vacation time and pleasure. So places like Key West are not much impacted by down times.

I still believe a person who understands this and lives in any vacation area can make a bundle if he is careful and caters to the rich.

Old Town

 

[LM]

No doubt we have an unusual dynamic at play in Key West. During the late 60s and early 70s when I was growing up you could buy huge Victorian homes in bad shape for 5-10 grand. Today those homes fixed up are worth 1.5 million and up - way up. I bought one in 1981 for 45,000 dollars. I got very lucky as this was the end of the gravy train, and it was a great deal of work getting it livable and nice to look at.

You're older than I am, but in my own hometown of St. Augustine, I distinctly recall non-waterfront historic district 'fixer uppers' @ 50. Those same homes today are 300, 400, 500, even after the meltdown.

St. Augustine is a pretty prime location, but not quite as desirable as Key West. I definitely agree that you're in some rarefied air down there, as far as your tourist industry goes. There are any number of reasons for the differences in clientele between Key West and St. Augustine, but I think a big one is that St. Aug made a deliberate choice- very early in the game- to align its tourist market with a lower-end, T-Shirt/Postcard/Oddity-Museum clientele, whereas Key West isn't really like that (at least, not to the same absolute degree of kitschy-ness that St. Aug is. There are the occasional similarities on the margins). A bad economy is much more likely to hit a St. Augustine tourist than it is a Key West one.

St. Aug is presently trying to shed itself of some of the tackier stuff and reorient themselves more towards a Legacy Tourism type strategy, but some bells just cannot be unrung... It will take a long time for them to change their soul and approach the Key West model.

My gal and I will probably be down your way sometime next year, during off season. I'll shoot you an PM here and maybe you can cut us a deal at one of your properties

 

[Vodka1000]

I agree - investing in properties will pay off if you can sell it!
I have 3 mountain properties almost 100 acres. Raw land.
Value of them is going up every year about 5-8%
I'm trying to sell or trade them for gold/silver - no luck so far