"I've found that when the market's going down and you buy funds wisely, at some point in the future you will be happy. You won't get there by reading "Now is the time to buy."" --- Peter Lynch.
For those of you unfamiliar with Peter Lynch, he's easily in the top 20 modern day great investors of our time. What I find particularly enjoyable about his books and investment concepts is just the plain old common sense strategy he employs in his books such as "Beating the Street". He attended the Wharton School of Business which can easily be considered one of the greatest business schools today and has notable famous graduates such as Donald Trump (Invanka and Donald Jr. Included) and Steve Wynn... two great real estate investors. (You might consider Steve Wynn a casino mogul but his biggest break came from purchasing a piece of land between Caesars Palace and Flamingo Rd. from the great Howard Hughes with "stated" plans for a gas station. Something Caesars Palace certainly did not want near their luxurious pool and payed a hefty profit for which Steve Wynn invested into The Golden Nugget.. the rest is easily verified history.)
Reading Peter Lynch's books such as "Beating the Street", he easily puts complicated topics into simple everyday language and instead of bogging people down with technical and complicated formulations for investing in stocks, he used common sense tips and ideas in leading an incredible mutual fund that turned ordinary people into Multi-Millionaires.
I came across one of his books in my library of books. I was looking for another book we use to help answer a question that another real estate agent asked concerning language used for common real estate contingencies and when I saw "Beating the Street" it immediately reminded me of simple concepts such as the opening quote in this post. A simple concept that I've always used since my passion for real estate investing began back in 1997. "You won't get there by reading "Now is the time to buy."
This applies to real estate as well and that's why the multiple articles including "Top 10 Cities, Where to Buy Now" by CNN Money bother me so much. This one bothered me so much that I'm now finally mentioning it seven months after it was published. The fundamental concepts about real estate investing by mass media outlets like this are what fueled the Speculation problem that has sunk some real estate markets and hurt actual residents in those markets in the first place. I can specifically speak about Las Vegas and give multiple examples of media reports that fueled investors that specifically were investing in Las Vegas Real Estate because they read somewhere "now is the time to buy". (Oh.. I certainly wish I had those posts from an online Realty magazine in 2004 full of real estate agents fueling this! Especially the ones that had an "In" with the new home builder about to open up for sales!)
I'll never forget being in a new home sales office in Las Vegas in the big hype of 2004 and seeing a Mother come into the sales office with four children needing to buy a home to be in the school district only to be given some outrageous prices for this particular project that she could not afford. A price driven up by speculators fueled by media stories of the hot Las Vegas real estate market. Honestly, these were some really dinky houses particularly for this national new home builder at outrageous prices and I think that is when the realization sank in to back way off of the Las Vegas real estate market as an investment that made sense in the terms of owning it for rental property.
It's easy to get caught up in a frenzy and get carried away. Heck, even when fishing if you come across a school of fish even the most novice fisherman can catch something. It does not mean you can fish... it just means you got lucky and were at the right place at the right time. If the media could predict when a school of fish were going to hit the surface for a feeding frenzy... how many fisherman will be there when the so called opportunity hits?
So, let's evaluate their prediction as Panama City being the city to buy in as reported in December of 2006 as the place to buy right now. (Don't get me wrong... I've been to Panama City several times and love their beaches!)
According to CNN Money as to why it is the best City to Buy in Right now, the population is going to increase from 166,000 to 187,000 in the next five years or a 12.7% total increase.
The annual income for residents is projected to increase from $31,000 to $40,200 (I would suggest you read this link concerning the 2005 average of U.S. incomes according to this report) or a total of a 29% increase. And... according to CNN Money the average real estate price is going to increase 72% because they are in the works to build a bigger airport?
I'm particularly interested in hearing from Panama City Real Estate agents as to current market conditions seven months later after this real estate report was published. I was actually shocked that Austin, TX was not in this list since I have relatives that moved there for a specific reason which was related to a tech heavy related job that I firmly believe is a much higher paying job then airport related jobs.
If you are serious about investing in real estate, there is a lot more to it then waiting for CNN Money to come out with a statement saying it is a great time to buy when they have extremely weak arguments to support their statements. More importantly, great real estate investments can be found in the area or surrounding areas you live in if you follow some basic fundamentals. You live there don't you?
Remember: You won't get there by reading "Now is the time to buy." It applies to Real Estate as well.
I would highly suggest anybody that wants to be an investor (especially real estate investor) to read Peter Lynch's books and make them an important part of your real estate investment library. Date: 2007-07-17 18:29:15