Aquatera

SHELLY...my "tar" is the only bad investment I have in my life (a no brainer, really)...but at 350HP its a satisfying blast for a 45 year old trying to relive his youth.

I am disappointed. You were supposed to buy this Hennessey Venom 800 Dodge Viper which produces 830 HP

for your mid-life crises.

I
"From the start of 1980 to the end of 2004, home sale prices increased 247%. "

http://www.forbes.com/realestate/2005/05/27/cx_sc_0527home.html



SHELLY...my "tar" is the only bad investment I have in my life (a no brainer, really)...but at 350HP its a satisfying blast for a 45 year old trying to relive his youth.

with the economy the way it is, i bet the price of widgets increased the same amount over the same period. and real estate around here has increased 130%+- over the last 5 years, no?

i too am 45 but relive my youth in

I love it! Is it 4wheel drive?

I love it! Is it 4wheel drive?

the syncro and 4wd stickers didn't give it away? ;-)

However, historically real estate has done well over time and there is no reason not to take advantage of these statistics. Ergo.

"From the start of 1980 to the end of 2004, home sale prices increased 247%. "

Let's all get together in a circle and chant:

Past performance is not an indication of future results UM...UM...UM...

"One of Warren Buffett's early partner letters (with updated numbers) provides a great example of the irrational returns of today's real estate market. Back in 1636, the Dutch purchased Manhattan Island for $24 worth of glass beads. In 2004, the assessed value of all the properties on Manhattan was $186 billion. What a steal, right?

Well, hang on a minute. Do you have any idea what kind of annualized return you'd need if you wanted to turn that measly $24 into $186 billion? Just 6.37%. Real estate, or any other investment for that matter, will not increase at 20% per year for very long. Eventually, reversion to the mean kicks in."

(TF Tampa was spot-on: The math and assumptions used in the "feasible scenario" for 700K condo were far from feasible)

I don't know where you guys are coming up with 20 percent a year or 130 percent in 5 years but most properties I have watched in this area had increased more like 50-70 percent per year for the past 5 years, some properties much higher. This is the reason for the adjustment that is currently taking place. I know some of you were in the area in the late 70's when you couldn't give condos or even houses away. Prices dropped and stagnated for years then finally rebounded. The prices were then fairly constant (average increases) from the early 90's until around 99. If you're happy with 6-7 percent a year and agree thats the expected increase in value you should be ready for a rough ride to get back down to those levels.

Mortgaging a beach property with no money down isn't an investment by the way, it's like buying stocks on 100 percent margin. :scratch:

Past performance is not an indication of future results UM...UM...UM...

Do you have any idea what kind of annualized return you'd need if you wanted to turn that measly $24 into $186 billion? Just 6.37%.

(TF Tampa was spot-on: The math and assumptions used in the "feasible scenario" for 700K condo were far from feasible)

Well..I don?t know really, but..its OM...OM...OM.. haven?t you tried transcendental meditation? chant to calm your soul after a wee bit o' weed? Well now..

The drama and magic of compounding is pretty trite anymore..true but nevertheless trite. A little bit different with real property valuation.

Agreed that real-estate will not sustain itself at 20% appreciation rate ad infinitum and agreed that past performance is no indicator, but from what I've seen, for me, real estate has done better than 11% return for the last 25 years, consistently.

We can use a more real scenario..A Condo for $300K..3 bedrooms 2.5 baths can earn as a rental quite easily $36,000 a year..that?s more than a 11% return not even talking equity appreciation however small.

C'mon Shelly..there is money to be made here..and with values getting lower it may be time to load the truck up again...and if one thinks widgets can appreciate just as fast.. one should give them a try!

I have never seen any real estate holding become a 'penny' stock and fall off the face of the earth in terms of valuation.

36k rental minus:

12k management
5k property taxes
3k insurance
24k mortgage (no money down of course)
2k utilities
3k maintenance

I am being generous but you are huge negative cash flow if you mortgage and the return on cash is ridiculous. Biggest problem is a 300k condo probably will generate more like 20k in rental. 36k is more like a 550k condo then the cash flow gets nasty. I haven't seen anything in quite a while that will provide any rental return on the sowal market and I look alot. This really looks bad if there is no increase in value.

36k rental minus:

12k management
5k property taxes
3k insurance
24k mortgage (no money down of course)
2k utilities
3k maintenance

I am being generous but you are huge negative cash flow if you mortgage and the return on cash is ridiculous. Biggest problem is a 300k condo probably will generate more like 20k in rental. 36k is more like a 550k condo then the cash flow gets nasty. I haven't seen anything in quite a while that will provide any rental return on the sowal market and I look alot. This really looks bad if there is no increase in value.

Woah..just a bit.. You are INVESTING $300K of your money..not borrowed and manage and maintain the unit yourself. Rent for 12 weeks at a minimum..not hard to do. IMO.

Just did my taxes and am VERY pleased with the return on our investment. I'm assuming those who are criticizing people who invest in property and SoWal are doing extremely well with their choice of investments (and I'd love to know what those investments are so we can, too, can join in on these smart decisions).

As for our cottages, no -- we don't cover all of our costs through our rentals and I earn extra income by working extra (fortunately at work that I enjoy very much and would do even if I didn't have to pay for these cottages) to cover some of the costs of carrying these two cottages. However, a lot of the costs are indeed covered by rentals, moreso than I had initially expected. We have two properties and the combined rental income certainly pays for all of the expenses for one of those cottages after only 3 years of ownership of one cottage and 2.5 years of ownership of the other. And we've spent quite a bit of money to make sure the cottages had quality furnishings and equipment, so the start-up was pretty expensive. I think we're finally through with high-ticket purchases for a while.

We do indeed pay quite a bit for the management fees from our management company, but I believe they earn those fees and I'm happy to pay them to take good care of the cottages and guests since I can't be there to do it myself. Sure, the value of the cottages went way up and then settled down again, but they're still now worth a pretty penny more than when we bought them.

One thing I can't do with stocks or my retirement account is that I get to enjoy the cottages a lot now by myself, with family, and with friends. I get to meet and hang out with SoWallers who are wonderful, learn about life at the beach and the environment, so my life is even fuller than before (and it was pretty darn good before). If all goes well (which we can never predict because life can always bring in something unexpected -- but that could happen whether or not we had the cottages), I get to hand them down to the kids someday (along with all the memories they've made at the cottages with us, their friends, their kids, etc.). We didn't put all our financial future in one basket -- there are other investments as well so our future doesn't ride on the cottages. And like most people, we're thinking long-term not short term. Most people on this board who have bought property in SoWal are pretty smart investors and enjoy living well and see their property in SoWal as part of a broader life plan and financial picture.

The only thing I worry about is a devastating hurricane someday. Right now, that would hurt quite a bit because we'd lose rental income. But within about 5-8 years, even a hurricane wouldn't be devastating as long as we have insurance and aren't counting on rentals, though it would certainly put a dent in our plans. When I get nervous, I remind myself that, though possible, the odds of a high 4 or 5 level hurricane are very low. I remind myself that this is not the time to panic because if I do, I'd probably kick myself in a few years for having panicked.

Anyway, this is just one person's experience to throw out their as a possible scenario.

I have never seen any real estate holding become a 'penny' stock and fall off the face of the earth in terms of valuation.

The time is coming when you'll see some folks (who "invested" in condos) coming to the sales table and have to hand over a check in order to get out from under their investment.

Then there will be those who just "drop off the keys" and will find a 1099 in their mailbox where they'll have to pay tax on the difference between what they owed the bank and how much the bank got back when they sold the place at auction.

Then there will be those who just walk away from their 20% down (pre-construction) because they can't afford to get--or the bank won't let them get--a mortgage that is 2% higher than it was when they plunked down the money. They never planned on having to actually "pay for" the property--they only planned on beating back a never-ending line of buyers begging them for the chance to take the condo off their hands at a 200% profit.

Real Estate investing certainly isn't anything like investing in penny stock--it's FAR MORE risky.

(Disclaimer: I don't do penny stocks ;-) )

How does all this relate to 'Aquatera' specifically??

How does all this relate to 'Aquatera' specifically??

UPlug,

Ya know how you get on the internet to look up some information on Peru for your International Business class and about 2 hours later you find yourself reading about the 6-toed cats in Key West?.....well, it's kinda like that.

UPlug,

Ya know how you get on the internet to look up some information on Peru for your International Business class and about 2 hours later you find yourself reading about the 6-toed cats in Key West?.....well, it's kinda like that.

It's a disease that SHELLY is spreading. Thanks to her Erik Estrada post on another thread, I ended up peeking into some message board in the middle of some very heavy discussions that have nothing to do with overpriced desolate parcels. Not only do I blame SHELLY for the real estate slowdown, but darnit, I want those 10 minutes back!

Paula: I'm glad your cottages are working out so well for you. I think you have life nailed in general. ;-) However you did mention that you purchased about three years ago. I know people who also bought around that time, in very good locations, who have developed their rental network and are now able to almost break even on the costs of ownership, plus they are sitting on some nice chunks of equity. Which is great for them! But the time to pull this off was three or four years ago. We bought a year later and we are nowhere near breaking even, although we have had several difficult challenges that were just bad luck and we expect things will be better soon. However we do not expect to break even. (Which is OK for us because we have a decent amount of paper equity even with a correction, enough cash flow to handle it, and we are overall very happy with our purchase.)

The people who bought a year ago and are mortgaged to the hilt can forget it. From a logic (not emotional) standpoint, the best candidates for purchasing real estate in SoWal at the moment -- given that the speculators who could flee have done so -- are people who are looking to do 1031 exchanges, or people with large sums of cash to dispose of like a sudden inheritance, or people so wealthy it doesn't matter. The really wealthy ones are looking into the Retreat, Alys Beach, WaterSound, Rosemary, Seaside, etc. They are not so much affected by taxes and insurance costs. The sellers with the middling properties (middling being generally great but not top of the line) aren't selling because even the people with inheritances and 1031 exchanges to do are worried about insurance, hurricanes and property taxes and thinking about buying in the mountains instead. The main cure for this will be one or two quiet hurricane seasons and some insurance rebalancing. It is my opinion that once that happens, those buyers will start filtering back.

It is likely that those buyers will be looking for smaller, well-built places close to the beach but maybe not on it. Like Aquatera, maybe? Unplugged does that get us back on topic?

UPlug,

Ya know how you get on the internet to look up some information on Peru for your International Business class and about 2 hours later you find yourself reading about the 6-toed cats in Key West?.....well, it's kinda like that.

Here I am thinking this thread is about mid-life crisis dream cars.

TooFarTampa:

I think you have a good perspective on things, too! I definitely agree that we bought right before the prices skyrocketed and we're happy for that. Also, the interest rates were low at that time. Our cottages are small and simple (we figured if we couldn't afford them both, we could sell one of them and still stay in SoWal -- and if life throws a curve ball, we may still have to do that someday). And, of course, though the rentals pretty much pay for the basic costs of the equivalent of one cottage now, we do have to pay the carrying costs for the other cottage and I don't expect that will change for quite a while. If we had one bigger house rather than the two smaller ones, then the rentals would be covering about half of the carrying costs. So, we still have to plan carefully to pay for the cottages and I do take on extra jobs to help pay for them (as I said in another post, I felt the cottages were a good way to give us some financial discipline as well). Sounds like you make trade-offs to own your place as well because it is worth it to you probably for the same kinds of reasons ours are worth it to us. But it's not always easy for sure.

What would I do today if I really wanted to buy in SoWal or another beach community? Well, I wouldn't buy above my means because I wouldn't want to lose sleep over a vacation home. Right now, I think there are some good (not great) prices on mid-range places. These would be in the $400 - $500 range today in SoWal which is amazing that this would be called mid-range, which I realize is far from many people's reach, but it is within many people's reach -- especially middle class baby boomers who saved well over a few decades -- as well. I don't know how long I'd wait for the prices to go down more. I'd get to know some of the most knowledgeable people in real estate in the area who have a balanced view and seem wise (we liked the realtors we worked with very much -- and they showed excellent judgment in understanding our needs and helping us understand the trade-offs of different places). I'd be asking real estate agents I trust about the west end of Panama City beach if I couldn't afford SoWal (and I'd consider how that area would do in a hurricane). If I had the money to buy one big house but wasn't convinced I'd be able to afford it in the longer-term, then I'd be asking about two smaller places in one well-built and well-designed community so that I'd have more flexibility (e.g., be able to sell one and keep the other if times got tough). I'd definitely find out about the quality of the places that were built -- e.g., how well built they are and are they likely to withstand at least a category 3 hurricane.

I'd keep a close watch on the market through the MLS listings on the Internet to watch the trends. I'd get the Walton Sun online and look at the real estate listings. I'd negotiate a lower price when I found something I liked. I wouldn't buy for the short-term but rather for the long-term. And I wouldn't buy unless I was already maxing out my retirement.

I'd have to have money in the bank for a sizeable (sp?) down payment. I would buy to enjoy the place with family/friends and for retirement use more than as an investment (which is what we did the first time, it just turned out to be a good investment, too). I would plan to rent it out to take care of some of the expenses and I would take the initiative to figure out how to be a rental that guests would want to come back to and would tell their friends about.

For people who have enough income to buy something in SoWal, yet still have to be cautious about how they spend their money, they'd have to think through many details like this so that they can make the right decision for them. And then, once they buy a place, just enjoy it and not get hung up on whether the value is going up or down because it shouldn't be as relevant to them if they bought for the right reasons in ways that fit their lifestyle and financial situation.

Like you and many others on this board have said, the people who get themselves in trouble are those who paid more than their places are worth now, who paid a lot and hoped to flip in the short term, and who can't handle the carrying costs in a tough market. These are tough times for them.

It will indeed be interesting to see where the market is in about 5 - 10 years, but I guess we'll just have to wait and see. Kurt, I hope these threads are going to be archived somewhere so we can look back and see our old real estate discussions (on the other hand, I hope I have more exciting things to do in 5 years than to look back at old real estate discussions!).

In the meantime, I'll continue to drive my aging car around town and to the beach (and may still own it in 5 years if I'm lucky!). SJ, my dream car is an old one that still works very well and looks good enough to not embarrass the family.

Oh yeah, back to Aquatera... I like the community design -- I like places that feel like neighborhoods. And the location on the east end of 30A is a good one from what I can tell. I don't know how close to the beach the places will be - e.g. will it take 5 minutes to walk to the beach (or 10 or 15)? It will be close (within walking distance) to restaurants, shops, outdoor concerts/movies, etc., over time. For people who can afford places on the higher end, they have many very good choices these days. Where they choose to buy will depend on taste (e.g. architecture, life style neighborhood offers).

TFT and Paula....thanks for your well thought out posts about owning property down here. I enjoy your perspectives and agree with what you say.

I wouldn't buy anything that I would lose sleep over. That includes homes, cars, clothes, etc. It was almost a impulse for us to buy a place in WC back in 2001...we weren't looking to make a "killing" in the market, just decided to go for it and own a piece of the place we love so much. We are blessed.

Yes, Sueshore, we are indeed blessed! Thanks for reminding us of that (in a much simpler way than I said -- I really have to be more concise!).

Yes, Sueshore, we are indeed blessed! Thanks for reminding us of that (in a much simpler way than I said -- I really have to be more concise!).

BOTH of you have quite the way with words! :clap_1:

Enjoyed and agree with the thoughtful (lengthy) comments. Was hoping to read more content about Aquatera here
_________________________________________________

The most valuable of all talents is that of never using two words when one will do. ~Thomas Jefferson

Enjoyed and agree with the thoughtful (lengthy) comments. Was hoping to read more content about Aquatera here
_________________________________________________

The most valuable of all talents is that of never using two words when one will do. ~Thomas Jefferson

are you expecting more from a msg board than the developer's web page?
http://www.aquaterafla.com/main.php

Enjoyed and agree with the thoughtful (lengthy) comments. Was hoping to read more content about Aquatera here
_________________________________________________

The most valuable of all talents is that of never using two words when one will do. ~Thomas Jefferson

I lack the talents of which your sig line refers to....but, I play a mean washboard!!!

are you expecting more from a msg board than the developer's web page?
http://www.aquaterafla.com/main.php

Not necessarily, just insight & commentary to balance the sales perspective

Not necessarily, just insight & commentary to balance the sales perspective

I think it is too early to know much of anything other than what the developer tells us. Personally, I like the location, the architectural sketches and size of the homes. I think too many people have energy guzzling second homes, and am glad to see these smaller layouts, still with plenty of room. Having Camp Creek Boulevard (or whatever the name is) adjacent to the property, I think it will make travel north, east and west much easier.

I have not heard talk of prices yet, but I would guess they are going to be fairly strong, given the surrounding upscale communities.

Unplugged.

I agree with the Thomas Jefferson quote you have and let me give you about 6 paragraphs why...(just kidding). ;-)

Regarding Aquaterra, our places are on the east end of 30A and I think we'll be about 1/4 mile west of Aquaterra. I like Aquaterra's design that I saw on their website. It looks charming and the words to describe it sound good to me.

I think this part of 30A is excellent because:

(1) it's high on a dune so there's quite a bit of protection (as long as your not gulf front);

(2) the area has a lot of resources coming (which I realize in some ways is too bad because this was a nicely under-developed area just a few years ago and that's one of the reaons we liked it). But, given that the communities are here and coming, then we'll have our own good coffee shops (Fonville Press, Seacrest Cafe), ice cream shops (Rosemary Beach/Seacrest Cafe), restaurants, shops, etc., all within 1-2 miles for walking, biking, or a short drive, so you wouldn't really have to get stuck in the traffic on 30A during the busiest seasons. It will be interesting to see if we'll be able to handle these resources without as much traffic congestion on this end of 30A.

(3) the communities being built in the area for the most part have character and are nice to walk through and drive past.

(4) I think it will be easy to get to from the airport (the current and future PCB).

(5) It would be about 5 miles from Seagrove, 7 miles from Seaside, 10 miles from Grayton Beach.

(6) I think the beaches are quite nice in this area. I don't know what the benefits/risks are of the different beaches during/after storms are though (e.g., potential erosion) but it's worth finding out.

(7) Beach access will be important. I'd want to know where the deeded/private beach access will be, how far it will be, and if there's a public beach access nearby as well (having two beach accesses within walking distance is useful in case one is unavailable for some reason at any time).

(8) You would end up being more connected to Panama City than Destin if you wanted to get off of 30A for anything.

(9) If the monthly cost of association fees matters to you, you'd want to know how much the pools, landscaping, etc. will cost. The simpler the environment, the lower the association fees.

If I was looking for a place and had the $, I'd keep my eye on Aquaterra because I like the diagrams on the website and the location. There are so many communities now, it's really a matter of whether the place meets your aesthetic preferences and lifestyle choices (and of course, what you can/are willing to pay).

I hope that was helpful.