Kyle Dreier - Mr. Critical

About three and a half years ago Amy and I purchased a condo which was simply a drawing of a floor plan and a couple of artist renderings. Construction was completed in September of 2007 and we began decorating and setting up our vacation home. We’ve decorated it and equipped it for our use as well as for guests.

March 1 officially starts the peak rental season and I’m rather pleased with how everything turned out. We’ve created a web site with additional information about our beach condo.

If you’re interested in getting discounts and last minute deals make sure to sign up via our www.1708shores.com web site.

::

::

::

::

::

If you are interested in rates and availability and additional photos please check our Shores of Panama web site.

See you at the beach!

- Kyle

I’m continually amazed at the strength of our local economy. There are many indicators but the one that I tend to focus on more than others is real estate.

I’ve seen my own home value increase dramatically in the past 6 years we’ve owned it. New construction is ever present and there is more and more infrastructure going in to handle the growth here in Franklin, Tennessee.

I recently saw a sign for a new development in our area. Carolina Close looks to be another high-end development beyond the reach of our financial abilities. But, it’s always nice to have high-end neighbors.

Residential lots are around three-quarters of an acre and start at $375,000. I look forward to seeing what they build there. I appreciate fine architecture, even when it is out of reach.
- Kyle Dreier

I just returned from a week in Panama City Beach, Florida. I’ve been involved with a number of preconstruction condos along the beach in this market and have watched the area mature as it works to shed the long-time moniker of “red neck rivera.”

What stood out for me this trip was how Panama City Beach is very busy on the development side. I liken it to a hostess preparing for a very large dinner party. Panama City Beach is fast working on beautification with major street scaping, retailers are going in left and right, supportive businesses are dropping anchor and residential development is pushing forward. There is an exciting buzz around town as everyone anticipates the coming visitors.
The pending start and completion of the new international airport is a huge driver of the redevelopment of this area. St. Joe has a huge vested interest in the new airport and has donated thousands of acres of land to see the airport become a reality.

There is certainly a great deal of speculation that accompanies development of an area like this. As is usual, everything takes longer than anticipated. I personally believe the airport is three to four years away, while there were some that thought it’d be complete by now.

All this means that my personal real estate investments in the market are simply going to have to wait patiently for all the great things to come to fruition. Yes, once again, time is the friend to investing.

So many people look to real estate as an investment. I am one of those. Any real estate I purchase I hope that when the day comes to sell I will sell it for more than I paid. That’s pretty much a no-brainer.

So, when do you really make money in real estate? I know … the first answer that comes to mind is “when you sell.” Sure, that’s when you receive your gains, but when do you really “make” that money. At closing? Think again.

The real money is made in real estate when you buy. Why? Think about how you buy. If you buy smart you’re going to buy in a market that is depressed or weak. Maybe you buy in a great market but manage to find someone who needs to sell. Maybe the seller is being relocated. Maybe the seller is in financial dire straights. Maybe the house needs a cosmetic makeover.

In any case you should buy in a market that has strong fundamentals. By this I mean a market that is on the growth cycle, a market that is low on inventory, a market that is in the path of progress. These types of markets all have great opportunities to purchase right … buy smart.

When you buy smart you are at an advantage over others when it’s time to sell. Your basis – what you purchased at – is lower and when you sell guess who makes more money? You. You made the money when you bought, you’re just collecting it now when you sell.

I’ve found this approach works with the home I live in. We bought right. Today our home, after 6 years, is worth 62% more than what we paid. This approach has also worked for preconstruction real estate I’ve purchased over the past three years. I purchased preconstruction condos as investment properties. Today, our equity position in these condos has produced a return on our cash investment of almost 500%.

I will say that I’ve also experienced purchasing at the wrong time. I’ve found myself in a position where I lost money on the purchase and am in a precarious situation with one particular property that if I sold today would lose money. That’s all based on how and when I purchased.

- Kyle Dreier

I love seeing little stories like this cross my desk. Maybe I’m poking too much fun at the media. What I do know is that in the world of investment real estate there is a level of educated and seasoned buyers that buy today, yesterday and tomorrow. They look at the underlying fundementals. But, there is also a level of buyers that are really less seasoned … almost wanna be real estate investors. These wanna be’s are waiting for the positive information to come across the evening news. I guess they’ll wait for the crest of the wave.

The head of the International Monetary Fund (IMF), which oversees the global financial system, said yesterday that ”a soft landing now seems more assured” for the United States, and world economic growth should approach 5 percent in 2007. read more

-Kyle Dreier

I used to watch the financial news every minute of the day either literally in front of CNBC or via my Yahoo! portfolio tracker – then I grew up. When I was in my early 30’s I thought I’d be smart and let every talking head determine my outlook on the financial markets. I did so little studying of the actual facts.

Today, I’m up to my waist every day in preconstruction real estate. I’m having meetings with developers, I’m talking to clients, I’m hearing from agents … nationwide. My perspective on the real estate market isn’t determined by pop-news.

Granted, there are some facts that are conveyed via the media channels. But, is “some” news telling the truth? By this I mean is half the story really the truth. There is so much news that never makes the airwaves.

So, if I’m so smart …

This recent bit of news just gives me one of those “I told you so” feathers for my cap.

Housing experts, speaking at a recent Real Estate Connect conference,
said stabilization or improvement in mortgage rates, residential prices
and household incomes will spark a rebound in the housing market by
the middle of the year. read more.

- Kyle Dreier

Now that we all know the sky isn’t falling any more … it has already fallen … it’s time to get back to business in the world of real estate.

Last Fall Steve Presley and I both concurred that we felt like the worst of the market correction behind us for investment real estate. That’s not to say that there won’t be deals here and there from fire sales and some speculators sell short, but today we are seeing signs that simply affirm our opinion.

One such affirmation is the following article. It just goes to show that the media doesn’t know anything. They’ve been prognosticating a doom and gloom fall of real estate. Those in the know have continued to invest in real estate and are making preconstruction real estate purchases, some for less than the cost of construction.

Read more.

What’s all this mean? Never believe the media and certainly be careful of what you read on the Internet.

-Kyle Dreier

What’s your first thought when you hear “a rising tide raises all ships?”

I think there are probably many ways to apply this concept. The people you with whom you associate? While that would be a great blog entry (maybe one for the future) I’d like to present this concept as it relates to real estate, specifically preconstruction real estate.

On a local real estate level it’s likely you, just as I, have experienced how property values are rising. I sit back and look at the value of my home as it approaches a 170% value over what we paid for it 6 years ago. I’m glad to see this appreciation but it doesn’t get me ahead if I decide to sell and purchase in this same market. Everything else has increased in value as well. Not only has my shipped raised but all those around have as well. Owning a home is really more like hedging against inflation.

Real estate is not only a hedge against inflation but also a way to us appreciation to get ahead. How so? I’ll explain a few.

This might seem rather elementary but you can look at it like Rick Dad, Poor Dad by Robert Kiyosaki. If you live in your home and it appreciates then you can think of yourself as a real estate investor. But, how are you going to use the gains? Are you really ahead? Not really. But, if you own real estate aside from your residence at it appreciates and you have equity, that’s when you have something you can use. Go buy a car. Invest elsewhere. You can’t do that with your own house. You still need to live somewhere. Sure, you could downsize. There’s just so many times you can do that.

Back to the “rising tide” concept. If I purchase real estate via preconstruction and it takes two years to build, we can assume that at the end of two years the cost of construction, materials, land etc have all increased. What’s that going to do to my investment? “All ships” are raised. That doesn’t mean that they all raise at the same rate but raising tides do raise all the ships.

I can’t begin to go into all the details of this concept or of my personal experience but if you like investment real estate keep this concept in mind. I hope to discuss this more in a later post.

-Kyle Dreier