Pre-Construction Property Investment Success Story
First time home buyer, John, is a young medical doctor who had been living in rental property in downtown Charleston, SC for the first 10 years of his professional career. In 2004, John was ready to buy a home. After doing some research, he discovered what an amazing investment beachfront property can be. Intrigued with the lifestyle of living in a beach home, John investigated further. He found that most oceanfront homes continually appreciate. Of course anyone will say any real estate will appreciate over time, but look closer at the market cycle. John found that while inland property value can fluctuate from one year to the next, oceanfront property weathers the up and down cycles at a much more constant upward rate.
John purchased pre-construction property on Folly Beach, at the Ocean Point Villa. He paid $525,000 for one unit. Before construction was finished, he was offered $615,000. Some speculators recognized the investment early enough to buy multiple units with intention to rent or sell after construction was finished. Within the time during construction, all units in the entire building were purchased.
After construction was complete in 2004, value continued to rapidly increase. In mid 2007, as the real estate bubble was at its maximum, John felt secure in the value of his home and finances… so he bought $150,000 Aston Martin sports car. Had he foreseen the real estate bubble breaking, would John have still purchased the car? Maybe not…
But, How Did John’s Oceanfront Property Value Weather the Real Estate Crash?
Currently in December 2007, home properties all over the United States are at record lows. No one is buying, and many analysts say the real estate market cycle is at its lowest point. So what is the current value of John’s property that he bought in pre-construction? A similar condo in John’s building is currently on the market for $895,000.
These pre-construction oceanfront condos, originally selling for about half a million, if sold during worst case scenario while the real estate market is experiencing a major crash would make about $370,000 in profit. It turns out, John’s pre-construction Folly Beach property is a very solid investment.