The real estate market and avarage prices

I thought about the real estate market yesterday as an investor friend wanted to show me his boat.

real estate market

We drove out to a place he has on the gulf here in central Florida. As we got there he told about the house with it’s dock and deep sea access. According to him, he overpaid for it back in 2007 and it wasn’t until now he started seeing a chance of making some money on it.

He then showed me another very similar house down the street that he had bought 2 years later. For 35 000.. A bargain! His logic was that if he thought the first house was a decent buy for 100 000, he didn’t let the poor market make him belive differently about the second one.

As a result, he has two houses on the gulf for an average of $67 500. Prices in the neighbourhood today is north of $100 000 making his deals pretty good.

Not sure why, but the fact that we should focus on how we average in total hit me pretty hard on the drive back. By staying away from over extending ourselves, thus keeping from bankruptcy, averaging good profits through appreciation shouldn’t be that hard. Time is money