Seaside Sales

Both homes are on interior lots, north of 30A. Seaside is much less spread out than WaterColor, and there is not as much of a price variance for properties north of 30A as compared to WaterColor.

The one selling at $3.3 Million --> Built 1994, 2680 sf, 4bd/4.5 bath
"This stately home of classical design features an open and light-filled great room with antique pine floors, fireplace, gourmet kitchen, master suite with whirlpool tub. Redwood siding, recirculating hot water system for instant hot water, rheostats on all light fixtures, two water filtration systems. Addl. 1160 SF porches/balcony. Includes 2 bedroom, 1 bath guest house (+- 850 SF HVAC) with fireplace. Featured in "Coastal Living"."

They paid $2.2 Million four years ago. Yep, real estate as an investment it just terrible. :funn:

The other house is older, built in 1989. Two Story, 3/3, 1700 sf, raised tower, room for carriage house on lot.

What did they cost back in the day?

Woulda coulda shoulda.

What did they cost back in the day?

Woulda coulda shoulda.

33 Pensacola - 1992 385K 1998 660K 2007 1.7 mil

Shelly, They paid $2.2 Million for the house and sold it for $3.3 Million. I think your math is backwards. :funn:[/SIZE][/FONT]

Please post 4 years of carrying costs + maint upgrades + maint costs + RE commission and let me recheck the math.


BTW, how long has this house been on the market (total time, not re-listed time) and was $3.5 the original listing price?

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They paid $2.2 Million four years ago. Yep, real estate as an investment it just terrible. :funn:

The other house is older, built in 1989. Two Story, 3/3, 1700 sf, raised tower, room for carriage house on lot.
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Good for them--they did make a tidy profit on these homes (roughly 8% to 9% annualized returns after considering commissions and carrying costs over the years), but they bought pre 2004. Anyone that purchased pre 2004 should still be in the money. However, many, many people are taking hefty losses on property bought in 2004, 2005 and 2006. I saw a specific lot purchased in 2004 and sold the other day at a whopping 50% LOSS to the seller. And, the jury is out on whether the new owners of these homes will make similar returns given the fact that historically real estate appreciation has tended to track only slightly ahead of inflation.

Also, consider that the same $2.2 million invested in an index fund tied to the Dow or Nasdaq in May of 2003 would have grown to about $3.4 million and $3.5 million, respectively. Plus on the index funds there would have been no property taxes, insurance, HOA fees, realtor commissions, utilities, maintenance and other carrying costs that reduced the ultimate profit taken out of the real estate investments. Of course, the enjoyment the owners undoubtedly got out of owning a beautiful home in Seaside far outweighed the additional profit they could have taken by owning a piece of paper. 😀

Investing in real estate, stocks, bonds, commodities, etc can result in positive or negative returns and leveraging any of these investments can increase your returns OR increase your losses.

They paid $2.2 Million four years ago. Yep, real estate as an investment it just terrible. :funn:

The other house is older, built in 1989. Two Story, 3/3, 1700 sf, raised tower, room for carriage house on lot.
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The house was probably on the market for 4 years as well. Many of the Seaside listings are 2+ years old. Most of what has moved is well under initial asking price, some of it was reduced by over 40 percent before it sold. They put a great deal of pressure on sellers not to lower asking prices in Seaside. It is a unique community which I like alot but the rental fees and management fees really squeeze the money making potential from these homes. If you really penciled this property out I bet it makes 5-7 percent annually through the biggest boom in real estate history.

As a second home if you have more money than you could ever spend it's a great place to spend time.

Please post 4 years of carrying costs + maint upgrades + maint costs + RE commission and let me recheck the math.


BTW, how long has this house been on the market (total time, not re-listed time) and was $3.5 the original listing price?

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Original asking price has no relevance here. What does matter is that they sold it for $1 million more than they purchased it. I have no idea on the carrying costs and other expenses, but for fun, lets say that they put down only 20% when they purchased it, and then you do your math on their return on cash invested, with good guesses on the other costs. Lets look at a 30 year loan at 7% in your calculations. While I haven't done the math on that, I don't have to do much calculating to know that the sellers faired well in this purchase and sale. ;-)

If you really penciled this property out I bet it makes 5-7 percent annually through the biggest boom in real estate history.

What you say is likely true, but only if you paid cash for the property, which does happen on occasion down here. I encourage to pencil out the math using their cash outlay and see if you don't get a different return on your money, and then you guys can compare that real growth to QQQ or DOW.

Newer isn't always better, especially if you're comparing new homes quickly built for spec with older homes designed as a custom residence.

Varying sizes of the houses might be a factor as well. The sizes of rooms has increased over the years, so a Watercolor house built in the last couple of years may have the same number of bedrooms and baths as a Seaside house that is quite a bit smaller.

I would assume that a Seaside home built in 89 or 94 has remodeled its kitchen so it would have the same amenities.

Don't factor out that Seaside homes tend to be closer to the beach and an active town center than a Watercolor home as well.

We finished building our house in Seaside in 2005 to new codes, have limited debt on it, it has remained cash positive every year, and we have very conservatively doubled out money on the property value.

Plus we have completely enjoyed using the house when we can.

Seaside is unique in that all properites are close to the beach, and it has an activity level in town that no other property on 30-A can match.

It has been a no brainer for us and that is just over the last 3 years.:clap_1:

What you say is likely true, but only if you paid cash for the property, which does happen on occasion down here. I encourage to pencil out the math using their cash outlay and see if you don't get a different return on your money, and then you guys can compare that real growth to QQQ or DOW.

You can use leverage with stocks and real estate. So, it's apples to apples looking at it from a pure cash perspective without hypothesizing the amount of leverage used.

You can use leverage with stocks and real estate. So, it's apples to apples looking at it from a pure cash perspective without hypothesizing the amount of leverage used.

That is true, but while the majority of real estate is leveraged heavily, can you say that the majority of people leverage their stock purchases as heavily? I have no stats on either, but I can make a good guess. On other difference is that when you use leverage to make stock purchases, the trading company comes knocking on the door for cash, or they will sell your shares at the market price, when the price of the stock drops too low. The same is not true for leveraged real estate when the market drops.

Original asking price has no relevance here. What does matter is that they sold it for $1 million more than they purchased it. I have no idea on the carrying costs and other expenses, but for fun, lets say that they put down only 20% when they purchased it, and then you do your math on their return on cash invested, with good guesses on the other costs. Lets look at a 30 year loan at 7% in your calculations. While I haven't done the math on that, I don't have to do much calculating to know that the sellers faired well in this purchase and sale. ;-)

I did a little back of the envelope figuring, assumed time value of money and interest rate were the same at 7%:

2.2 million carried four years at 7%: 154K/year
Tax/Ins/Upkeep/etc. (big guess on my part) 30K/year
Real Estate Comm: 6% (another guess) 198K

Total carrying costs: 934K

Depending on the amount of downpayment, not much of a return except for the fact they got to use a great beach house. Maybe they rented it out as well. Hard to say.

I know my figures are just a guess, but they certainly did not make anywhere close to a million dollars.

Flyguy

I did a little back of the envelope figuring, assumed time value of money and interest rate were the same at 7%:

2.2 million carried four years at 7%: 154K/year
Tax/Ins/Upkeep/etc. (big guess on my part) 30K/year
Real Estate Comm: 6% (another guess) 198K

Total carrying costs: 934K

Depending on the amount of downpayment, not much of a return except for the fact they got to use a great beach house. Maybe they rented it out as well. Hard to say.

I know my figures are just a guess, but they certainly did not make anywhere close to a million dollars.

Flyguy

I don't believe I said that they netted $1Million. My greater point to Shelly was that they didn't spend $3 million and are now left with only $1 Million, as he suggested in jest.

Using your numbers of real estate comm being at 6%, upkeep at 30K per year, and 7% interest, and adding to that closing typical closing costs on the sale of doc stamps on the deed being $23,000, with 20% down payment the return on cash is about double what was stated earlier. That number becomes an avg annual rate of return of 15% rather than the 5-7% which someone stated earlier, AND, they basically had a free house in Seaside to use any time they wanted. If this was their primary residence, that is free rent and no limited capital gains taxes.

I don't believe I said that they netted $1Million. My greater point to Shelly was that they didn't spend $3 million and are now left with only $1 Million, as he suggested in jest.

Using your numbers of real estate comm being at 6%, upkeep at 30K per year, and 7% interest, and adding to that closing typical closing costs on the sale of doc stamps on the deed being $23,000, with 20% down payment the return on cash is about double what was stated earlier. That number becomes an avg annual rate of return of 15% rather than the 5-7% which someone stated earlier, AND, they basically had a free house in Seaside to use any time they wanted. If this was their primary residence, that is free rent and no limited capital gains taxes.

I come up with 8% ROI. But I agree with you that all in all it worked out fine for these owners given that the return also included the use of the house. I would have gladly taken the same deal if our numbers are correct. And it was someone else earlier that mentioned making a million on the deal, sorry.

Flyguy

I come up with 8% ROI. But I agree with you that all in all it worked out fine for these owners given that the return also included the use of the house. I would have gladly taken the same deal.

Flyguy

Using $2.2 Million loan, you probably get about 8%, but that would be with zero down payment. Their purchase price was $2.2 Million, and my example shows 20% down, thereby leaving $1.76 million for the loan.

flyguy, thanks for bringing up the subject though. I'll take it to. I have posted several times that there was a time, not too long ago, when second homes were purchased as luxury items, not investments. Sure, they might have been a sound investment for the buyers, but that was not the buyers' motivation. We will get back to those times in the future. I don't think the people spending millions of dollars for luxury lots, planes, RV's, mountain homes, beach homes, private club memberships, etc, are doing so because it is a great investment. It is just the cost to play with the big boys and girls.

Using $2.2 Million loan, you probably get about 8%, but that would be with zero down payment. Their purchase price was $2.2 Million, and my example shows 20% down, thereby leaving $1.76 million for the loan.

flyguy, thanks for bringing up the subject though. I'll take it to. I have posted several times that there was a time, not too long ago, when second homes were purchased as luxury items, not investments. Sure, they might have been a sound investment for the buyers, but that was not the buyers' motivation. We will get back to those times in the future. I don't think the people spending millions of dollars for luxury lots, planes, RV's, mountain homes, beach homes, private club memberships, etc, are doing so because it is a great investment. It is just the cost to play with the big boys and girls.

It is 8% before the community fees, 5-7% after them. I have looked at at least 10 deals there in great depth. Love it there, but this little town still falls into Joe's luxury category and always will in my view. Not a bad thing.

:( :( :( :( :( :(

Thousands of innocent balloons were sacrificed for just these two sales!!

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Funny, it was a friend of mine from "Bama" that bought the home for 1.7, cash.