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Real Estate: Reasons and Priorities for Purchasing Property. It’s not just about Real Estate as an Investment. Copyright 2001 By Jody Hudson Real Estate can be a great investment with unusual appreciation. We have just completed two or three years of 20% - %40 per year appreciation in some of the beach areas. We are still having great appreciation, perhaps as much as 20% in some areas. But, it is not as extensive nor as much as it was. Real Estate as an investment can be fairly good over the long term; it has been in this area. However, there can be long periods when it does not go up in value much, if at all. In our area here, the appreciation on residential real estate as an investment was flat from 1987 to 1998 in most areas. In some areas, for instance 10 miles away from the beaches, some real estate actually went down in value by as much as 60% from 1990 to 1999. Another problem with real estate is that it is not liquid, that is, it is not easy to convert to cash, like stocks, bonds, and savings accounts are. Real estate is particularly non-liquid during a downturn in our markets. You will not likely hear this anywhere else, especially from other Realtors, but real estate is not a great investment, it is usually a good investment but not always, and not all the time. Too many people buy real estate as an investment and forget that there are other reasons to buy. I suggest that you will be much happier if you purchase real estate for lifestyle rather than as an investment, when it comes to your place of residence or your second home which should be almost entirely about lifestyle. After all, a second home should be a place to enjoy a lifestyle that allows you to relax and wind down from the rest of life. If you live a very public life, one where people are always seeking you out, where you are always in the light of public scrutiny and often in the press for instance. If your normal life is one where you must always been on your best behavior and always crafting each word and action for it’s best value – then perhaps a private place, away from others, a place where you don’t know your neighbors, is just right for you. For instance Hunter’s Point is a place where each home is so private that in most cases you could be a nudist, have the drapes open and none of your neighbors would ever know. http://www.kate-jody.com/homes/29hunterpoint.html There are also some communities that are unique. Kate and I live in one residential community, a private but friendly community, that we really love, it is Oak Orchard, Delaware. Oak Orchard has about 130 people year ‘round and another 300 – 500 part time folks, in the warmer months. Oak Orchard has no police, no mayor, no home owners associations, no city hall, no government of any kind and the county mostly leaves us alone. We have a great, live and let live community where neighbors are available if you want them or need them but not if you don’t. We all revere our own privacy and respect that of others. Waterfront homes are about one fourth of what they would be 7 miles from here in Rehoboth or Dewey beach. For instance; http://www.kate-jody.com/homes/waterfrontoasis.html is a nice two story, turn of the century home, that has been professionally restored, has a waterfront pool, a dock and pier and off street parking! It is on Mercer Avenue, here in what we smilingly call, Downtown, Oak Orchard, Delaware! Wow, and for only about 20-30% of what a similar home would be a few miles from here on the same waterfront! We live only three houses away and we love it. As I write this, I’m looking out across the Indian River Bay and off to my left is Dewey Beach, Rehoboth Beach and the Rehoboth Bay. But, there few if any have their own docks and piers, we do! This is a great lifestyle, for us. Homes that are not waterfront here drop by half again in price, or more. Some homes here are under $130,000 and have a view of the bay! Perhaps the lifestyle you want is right in the middle of everything. Perhaps you want Rehoboth, Dewey Beach or even Rehoboth Beach. We consider that Rehoboth and Rehoboth Beach are slightly different places. The difference between Rehoboth and Rehoboth Beach is determined by how far you are from the beach. Most people consider Rehoboth Beach to be east of Route One and south of Hebron Road, or what is known as West Rehoboth. Rehoboth Beach extends to the Rehoboth – Lewes Canal. Then we have The Forgotten Mile, which is between the canal on Route One and the start of Dewey Beach. It is neither in either Rehoboth Beach nor in Dewey Beach. Many of the locals like Forgotten Mile the best because there is that lack of city government that Rehoboth and Dewey have. King’s Row, for instance is in Forgotten Mile. Here is a little bit of data about King’s Row; http://www.kate-jody.com/homes/7kingsrow.html Take a look at our other properties for sale. Each of these properties has it’s own personality of location and lifestyle. Ask us for lifestyle particulars about any of them. Just go to our listings and then e-mail us. http://www.kate-jody.com/homes/index.html One of the things Kate and I try to convey to people who are at stages in life where lifestyle is really the only reason to purchase a home, is to think about only "lifestyle". Are you really trying to buy an investment that will appreciate over a period of time so that you can sell it for a profit in the future? Or are you trying to slow down your and settle into a lifestyle that will allow you to enjoy your home and surroundings and other aspects of your life? Perhaps your other investments are in place, you are seeking a retired life and you wish to enjoy the lifestyle of a million dollar home, but don’t want to take that money out of liquid investments, that you might need to access. In such a case, you might want to purchase a home on leased land. The owner of the land will get the appreciation but you can save, in some cases a million dollars or more, by getting a home on leased land. In some cases that might be a mobile home or manufactured home on rented or leased land. As far as depreciation on mobile homes.... No, they do not appreciate in value as a stick built house would, BUT as long as you keep your home in top shape and are in a desirable community, you are most likely not losing anything at all. If you are considering a community that involves leased land, or "ground rent" as some folks call it, then consider what else you may be getting out of the deal. Most parks provide some benefits such as swimming pools, private beaches, marinas, tennis courts, grass cutting, trash removal, etc. The communities that I know of that are in "fee simple", that is where you own your own land, do not provide these benefits, (though I do know of one that provides some). That is Long Neck Village, a manufactured or mobile home community that has all the amenities and you own your own land. Consider what it is you want out of home or out of a vacation home. If low maintenance is a priority for you at this point, the manufactured home community may be the best choice, perhaps. Also, you need to consider how much you are willing to spend on a vacation home. This will hold a major bearing on what you will eventually purchase. There are many options out there for people who are in your situation. You just need to balance your wants and needs in priority order, and also consider your finances. There are many desirable factors in owning each different type of residential real estate. All we ask, is that for YOUR improved happiness, please consider Lifestyle instead of only investment appreciation! Properties for Sale
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