Opportunities Are Easy to Recognize...Once They're Gone!

I woke up this morning to another onslaught of bad economic news, along with the collapse of the giant Wall Street firm Bear Stearns. Each day we are bombarded with more and more stories of business tragedies, higher gas prices, and recession worries...along with sagas of people losing their homes to foreclosure, and plenty more that are deciding to just walk away from their mortgages rather than making payments on a place that is not worth what they now owe.

There is certainly no shortage of blame to go around, but a lot of the problem has to do with people not recognizing the reality that is staring them in the face. I thought it was pretty obvious a few years ago that appreciation of 10%-20% per year - on homes in many areas of Minnesota - could not continue very long, if wages were mostly stagnant. It seems that when times are good, a large portion of the herd forgets that they might not be good forever!

But I'm not an economist. I'm only a simple real estate broker who makes bad decisions on things...sometimes, just like a lot of other people do. However, one thing I do know a lot about is waterfront real estate, and the trends that point to strong sales for many years to come in those types of properties.

I would guess that about 98% of the population (if not more), wishes they would have purchased lakeshore property ten or twenty years ago. From being in this business, I have heard many of the stories of how some one's dad or grandpa could have purchased an entire mile of lakeshore on a now popular lake for perhaps $10,000...and they only had to pay $24 per month with 2% interest until it was paid off. Or they might remember the family cabin that six siblings could have bought for $40,000 in the mid 80s, but no one could scrape the money together. Almost everyone has at least one of these tales of woe.

After specializing in waterfront properties for over 20 years, I can tell you that I have never seen so many opportunities to purchase some pretty amazing real estate for less that what the real value is. When you consider the fact that many of the lakeshore lots have not really dropped very far in price (if at all), and the cost of building has not gotten any less expensive, you start looking at the ability to buy the structures on these lake lots for almost nothing. Even if it needs a little remodeling, you can end up with quite a place for way less than what it would cost to replace.

What makes this opportunity even greater is that most people love to follow the pack for reasons of safety. They love to recite "the sky is falling" comments that were stated by 237 different analysts on the thirteen different morning news programs they watched before work. And, they just don't want to take a chance at making a mistake on this important of a purchase!

I would never advise anyone to be reckless in the pursuit of any type of real estate. It only makes sense to do your homework, and use all the tools in your arsenal (including the market knowledge and sales data your Realtor can supply) that you have at your disposal, before you make any decision to buy a particular property.

But I would also caution you not to be overly hesitant on buying while the bad news is a brewing. Otherwise, when the herd starts moving again you might be at the back of the pack. And who knows what will be left over?