I've purchased a preconstruction property in Naples, Florida at the cost of $356,000 that is expected to be completed and closed by May 2007. The condo was purchased as an investment. The market in that area is extremely pour. This is a market that is saturated by investors which inflated the price of homes creating an enormous surplus and the homes are not being sold. I've put a down payment of $54,000 on the condo. I have from now until May 07' to withdraw at a $54,000 loss. If I do not chose to withdraw I can keep the property and get it rented by a resident and will still be taking a loss of approximately $18,000 per year because the rental market is also depressed and the rental income just does not cover the costs of the banks interest plus expenses. I may have to hang on to the property for probably 3 years or even more because the market "hearsay" is expected to decline another 20% over the coarse of the year . With realtor commissions plus closing costs and the $18,000 loss that I would be taking per year I would have to sell the property for about $440,000 just to break even! That's a big number. It may take years to recover. I do not want to make an emotional decision by having to withdraw and lose $54,000 of my own money but I am worried that bigger losses could await ahead if I try to hang on.

Please, advice only from an expert in Real Estate.

Thank-you

I'm wondering why you pruchased in the first place. I don't know if your analysis of the market in Naples is accurate, but going by what I know of other areas I would not be surprised that its very accurate.

The only one who can help you here is you. You have to determine how much you can afford to risk in order to not lose your initial investment. You can then make the decision. About whether to stick it out or not. All we can really do is advise whether your analysis of the market is accurate.

All real esate unless you are going to flip a house within a year is a long term investment.

Yes the market got over inflated in many areas, but then it is believed by some of us, to be a temp correction in the market and will start back up in a year or two.

What is the industry and what is the climate, will people stop moving in, or did just too many buiders build, if too many builders buid, then they will go out of business, stop buidling and move to another area to build.
So then values will start back up again.

If the area is secure as to holding the value my guess on a 7 to 10 year investment as doing good, but short term yes you would most likely have some loses.

Since there is no more land being created, land price will only go over over time, no matter what the market does. But in 10 years will that become a renters haven, and become a mid class slum of sorts over 10 years?

But if it becomes a up scale living and after time all units are sold, its value will start going up.

It is a gamble, You lose for sure if you pull out now, you lose some as you rent it, but long term, you either lose big time or do good.

Of course this is the market a lot of us like, ( short term) this is where you buy in cheaper when it is not going to be sold quickly and can be bought at a discount.

If his other units are not being sold, and you threaten to back out, he may negotiate the price again, ( not ethinical but I don't think it would be illegal to go back and see if the price can be adjusted, or other terms arranged because of market change.


What is the worst that can happen they say no and you are right where you are now.

What are the condos selling for now in the building you purchased in? If they are selling for cheaper than what you paid, I would go back to the builder and get them to write an addendum to the contract requesting that your purchase price be in line with what the most recent sells are for.

One of the last posts was right; it's a gamble. I know you're feeling like "damed if you do and damned if you don't" right now. I'm trying to be optimistic by letting you know I sell real estate in coastal NC----this summer was HORRIBLE but things are REALLY picking up already, not only with me but everyone in my area.

If you can afford comfortably to hang on to it, you will eventually profit, it just depends on what you can deal with financially right now. My husband and I have a water front town home we rent that we're holding on to in an anticipation of the next "boom".

What I've personally found in real estate is that everyone is like they're "following the leader"-----when everyone's buying, people want to jump on the bandwagon and buy, even start a bidding war. When everyone's not, then people aren't interested, EVEN THOUGH it's the BEST TIME for them to buy! I know you probably signed a contract a while back. I'd consider "vegas real estate's" advice and see if there's any way of possibly re-negotiating before backing out completely.

One of my co-workers and friend just purchased a beach front condo in future anticipation of the beach market. He is paying approx 10% over what the average rentals bring in yearly. I have only been in real estate around 4 years, but understand from the "experts" in my area that "beach" markets are always peaks and valleys, never in-between. If you can afford to wait for the next "peak" it's something to consider. Good luck!