| Copyright 2006 Have you ever seen such a
| |
| | have probably never heard of Marble
|
| crazy real estate market? Depending upon
| |
| | Falls, Texas which is located about 45
|
| where you live, you may be saying this is
| |
| | minutes west of Austin, Texas. The major
|
| the worst real estate market in 20 years
| |
| | attraction to the area is that the
|
| or you may be saying let the good times
| |
| | Colorado river is damned into LBJ lake
|
| roll. Talk about a real split
| |
| | that then allows very nice lake homes to
|
| personality situation.
| |
| | be built on its shores. In addition,
|
| Dont despair. No, the sky is not falling
| |
| | there is a tremendous amount of golf (5
|
| and actually what is going has been quite
| |
| | courses) in the area with a total
|
| predictable by many. When you go to real
| |
| | permanent population of around 5,000.
|
| estate markets that were hot 18 months
| |
| | After driving through hot Texas for
|
| ago, the savvy investors are laughing all
| |
| | hours, this location was truly an oasis.
|
| the way to the bank since they got out
| |
| | Even more interesting to me is the
|
| before it went soft. These investors
| |
| | tremendous growth that is going on in
|
| have absolutely no interest in buying in
| |
| | employment, population, press popularity,
|
| their local market unless someone makes
| |
| | etc in the area. In fact, Money magazine
|
| them a deal that they just cannot refuse.
| |
| | just ranked Austin #2 in best places to
|
| In other markets, you have savvy
| |
| | live and the area always ranks very high
|
| investors buying everything that makes
| |
| | on job growth since Texas is still very
|
| sense. In fact, there are some markets
| |
| | aggressive in corporate relocations.
|
| out there RIGHT NOW where the real
| |
| | Huge companies are moving to the area on
|
| investors expect nothing but growth for
| |
| | a regular basis due to low land costs and
|
| 3-5 years. And this is coming from the
| |
| | a very favorable tax situation.
|
| mouths of very experienced (20+ year)
| |
| | When you look inside Marble Hills, it
|
| investors who are actually putting their
| |
| | really is just a tiny town that for the
|
| money in harms way. For the average Joe,
| |
| | most part, services and survives off of
|
| how can you possibly sort out if you are
| |
| | the resort area. Like many resort
|
| dealing with a Dr. Jekyll or a Mr. Hyde
| |
| | locations, a lot of employment gets
|
| when you are considering a new real
| |
| | created however it is not high paying; if
|
| estate purchase? Its simple. Look at
| |
| | you look at most resort locations that
|
| the fundamentals.
| |
| | have experienced growth, lower end
|
| This last week, I was in two resort
| |
| | property has become in extreme demand for
|
| markets; Cape San Blas, Florida and in
| |
| | affordable housing for workers. Given
|
| Marble Falls, Texas. In this weeks
| |
| | the growth of the surrounding area, the
|
| article, we are going to compare two
| |
| | high dollar value of the resort type
|
| example properties to show how working in
| |
| | homes, and the lack of many true resorts
|
| this (or any) real estate market is quite
| |
| | in Texas, it is reasonable to expect
|
| simple if you follow the fundamentals.
| |
| | Marble Falls to follow the same path.
|
| Cape San Blas, Florida Have you ever
| |
| | In addition, when you go into Marble
|
| heard of this awesome beach location? If
| |
| | Falls, you see something very, very
|
| not, you are in the majority because even
| |
| | strange. For a town of such a small
|
| in Destin, which is about 90 miles to the
| |
| | population, you see essentially a new
|
| east, very few people know about its
| |
| | Home Depot, and a new Office Depot, and
|
| appeal. Over the Labor day weekend, we
| |
| | lots of signs of new growth. Hmmmmm.
|
| returned to this beach location that has
| |
| | Knowing that firms like Home Depot rarely
|
| been one of our personal favorites for
| |
| | miss on their analysis of future growth,
|
| over 20 years. The appeal of this
| |
| | that is really interesting to me.
|
| location, at least to us, is that you can
| |
| | So now, lets look at some numbers. We
|
| rent a beach house on some of the
| |
| | are working on a duplex project that we
|
| prettiest, but yet most desolate beaches
| |
| | hope to bring to our group over the next
|
| that Florida has to offer. The first
| |
| | week. Here are the rough numbers with a
|
| night we were there is pretty typical;
| |
| | purchase price of approximately $200,000
|
| as far as the eye could see down the
| |
| | ($100,000 per side of the duplex).
|
| beach, in either direction, and not a
| |
| | Net Income After Property Management:
|
| soul was to be found.
| |
| | $20,000 (We believe this to be
|
| In fact, when you go on the Cape, you
| |
| | conservative)
|
| better be prepared to be self sufficient
| |
| | Estimated Insurance:
|
| since the closest restaurants are 15+
| |
| | - $1,000 Estimated Taxes:
|
| miles away. Ever since we have been
| |
| |
|
| going to the area, there has been a
| |
| | - $5,000 Interest Only (20% Down, 7.5%)
|
| moratorium on commercial development.
| |
| | -$12,000
|
| Lots of beach houses (but not condos) dot
| |
| | Net Annual Cashflow:
|
| the beach view so it makes for a nice get
| |
| | +$2,000
|
| away.
| |
| | ** Note: Most people are choosing to
|
| Now, from the investment side. It used to
| |
| | finance with 10% down thus changing to a
|
| be that the Cape was undervalued
| |
| | near neutral cashflow position at current
|
| beachfront property. Even today, it is
| |
| | rents.
|
| priced MUCH less than Destin beach front.
| |
| | While these are just preliminary numbers,
|
| Cape San Blas was a location where
| |
| | they clearly show a night and day
|
| someone with reasonable resources could
| |
| | difference with the numbers in Cape San
|
| actually afford to own a beach front home
| |
| | Blas. Also, when you visit, you find out
|
| and rent it out. Boy has that changed
| |
| | there is very little property for sale
|
| recently.
| |
| | and very little for rent. That is a good
|
| The house next to ours was listed for
| |
| | combination in my opinion.
|
| sale.AND SO WERE OVER THE PROPERTIES ON
| |
| | Comparison Of Fundamentals For
|
| THE CAPE. It looked like a very nice
| |
| | educational purposes, lets just look at
|
| beach home, 3200 square feet, 0.7 Acres,
| |
| | the course fundamentals. Literally, you
|
| with a price tag of 1.99 Million Dollars.
| |
| | could put together this information based
|
| A friend of ours went with us and he
| |
| | on just a couple of phone calls to people
|
| and I have done a lot of investments
| |
| | in the area.
|
| together so we started doing the math.
| |
| | Cape San Blas Annual Cashflow
|
| Without officially verifying the numbers,
| |
| | -$146,000 Net Rent Multiplier ($1.99M
|
| here is what we came up with on an annual
| |
| | $25K) 79.6 Inventory On Market
|
| basis.
| |
| | Substantial New Commercial Growth Zero
|
| Net Income After Property Management:
| |
| | New Job Growth Zero
|
| $25,000 (that is being generous)
| |
| | Marble Falls Annual Cashflow +$2,000
|
| Estimated Insurance:
| |
| | Gross Rent Multiplier ($200K/$19.4K) 10.0
|
| -$25,000 Estimated Taxes:
| |
| | Inventory On Market Negligible New
|
|
| |
| | Commercial Growth Substantial New Job
|
| -$13,000 Principle + Interest (20% Down,
| |
| | Growth Substantial
|
| 7.5%) -$133,000
| |
| | Even though I would consider this at best
|
| Net Annual Cashflow:
| |
| | a first level analysis, I can tell you
|
| -$146,000
| |
| | immediately that I would have no interest
|
| Oh boy, where do I sign up? Notice that
| |
| | in the Cape San Blas property and I would
|
| even if you paid CASH, the property would
| |
| | be very interested in the Marble Falls
|
| not have a positive cashflow, especially
| |
| | property. Why? Simple real estate
|
| if you factored in maintenance. Sadly,
| |
| | fundamentals.
|
| we literally saw hundreds of for sale
| |
| | While there is lots of gloom & doom press
|
| signs on the Cape. I wish them luck in
| |
| | out there about the real estate market,
|
| trying to sell because I dont believe
| |
| | and some of it is actually true, never
|
| there will be many buyers for those
| |
| | forget that real estate markets are not
|
| fundamentals for a long time.
| |
| | coupled. That is, you can have a Mr. Hyde
|
| Marble Falls, Texas (Note: This article
| |
| | in one location and at the same have a
|
| was intended to be before our property
| |
| | very interesting Dr. Jekyll in another.
|
| release but had to be delayed)
| |
| | To sort them out, simply do the math.
|
| Like the resort market above, many of you
| |
| |
|
