Tad SegarsWhen I first started selling real estate on Hilton Head Island in 1986, I was trained to help customers in many ways. Besides presenting  features, advantages, and benefits (FABS) of different locations I also was taught how to create SAMPLE cash flow analysis sheets. In other words, if someone wanted to buy a villa for $100,000 they, in advance, would like to know all associated costs and how much would be required for them to put down for a bank loan. Typically banks require 20% down with an 80% loan loan to value for closing.

I have said many times that when I was taught about real estate, I liked real estate and I bought real estate. What I did not know or realize as a rookie was that hardly anyone was buying real estate that year. As a matter of fact the market declined from 1986 to about 1991 before it started a slow turn upwards. As a rookie, I was full of enthusiasm and after training I was placed in ocean front models to meet customers. Any chance I had I presented sample cash flow analysis on villas around the island. I honestly I think I may have penciled 80% of all complexes and that is a heck of a lot of units!

What is so special about this? Hmmm, I bought a 2 bedroom Dunes Villa my first year for $50,000 and put down $10,000 to close. Even though it did not appreciate the next year it eventually generated a positive cash flow that was better than having my money in a bank CD. What really got me excited however, was that I did have faith that over time it would grow in value. Wow was I happy, it took 5 years but the appreciation was awesome. In 1991 it was valued at about &70,000! So, my $10,000 made $20,000?!? Yes, each year it was a positive cash flow and someone else was paying my mortgage! How high did the villa rise in price? OVER $200,000!!! Yes, if I had my crystal ball and sold at the peak, my $10,000 would have made about $150,000.

Fortunately I bought numerous villas and lots and sold some with huge profits. In hind site, although I had big profits, I wish I would have kept more and sold less. Ha, cant look back but live today and plan for tomorrow.  We have historical low interest rates and prices that will return. We have all the signs of a stable market. If HHI is on your mind I strongly suggest sooner than later. Our fall and winter will give buyers an advantage more so than spring when sellers have more rental income for the summer.

Top 3 Reasons I love real estate more so than stocks:

  1. 20% can buy and own 100%.
  2. Use and enjoyment. Touch, feel, smell. Vacations are PRICELESS!
  3. Pride of ownership.

Remember, buy what you can afford. We all work hard to reap the fruits of our labor and NOW IS THE TIME TO BUY and ‘smell the roses.”Consumer confidence has returned, buy now, especially on an island that is finite!”

by Tad Segars.