By Joe Palumbo III
So when is the real estate bubble going to burst? I do believe some of the urban markets in New York City may very well have become overvalued. However, newer areas will unfold and become attractive and profitable, as other areas lose their luster. Like with all profitable investments, it's all about timing. FDIC economists found that only 17 percent of local U.S. housing booms in the 1978-1998 period ended in a bust, defined as a 15 percent or greater drop in nominal home prices over a five-year period. Real estate, though, creates leverage. Here's why: If you put $30,000 down on a $300,000 property and it appreciates 3 percent in the first year, you've just notched a 30 percent return, not including any rental income the property may be yielding. Some out-of-state real estate opportunities have even lower buy-in opportunities, like Florida, which Fortune magazine this year listed among the top 10 best areas to purchase property. Values in the Florida region have increased 37 to 54 percent over the last three years, with net profit returns to the investor, exceeding $20,000 at times.So how's business with regard to real estate? Real estate is a solid investment and one that can prove to be hugely profitable – both in the short and long term. Mark Twain summed up the advantages of real estate investing best: “Buy land – they've stopped making it.”Joseph J. Palumbo III is a managing partner for the Palco Group. The Palco Group deals in asset management, real estate, sales training and business consultation. Palumbo can be reached at 718-461-8317, or at palcogroup@aol.com.
