Cynthia Calisch and Preston Larus

In 2004, Cynthia and I were looking at buying a nice rental in our then-appreciating Sarasota hometown. The problem was that it would not cash flow! We walked away, shaking our heads and wondering how in the world anyone could justify buying a rental property and then writing a monthly check to make up the difference between the rent it brings in and the cost to operate it.

In 2008, fate has us listing that very same property for sale -- and, as of Saturday, we have it under contract. The list price is much lower than it was in 2004 ... and the contract price is lower yet.

Rents are lower too ... but even so, the property will cash flow quite well! This is something we haven't seen here in 5 years or so.

Eight years ago, the stock market tanked and investor dollars began to migrate from Wall Street to real estate investing - slowly at first, then with real velocity. The run-up in prices during the first half of this decade was driven a great deal by this investor migration. In the early years, the honest cash-on-cash return of a rental property was respectable and alluring. The "Leaders" of the trend made good buys.

Later, as prices rose, cash flow became non-existent. Paradoxically, the hope of continued appreciation kept a good many latecomers buying, even in the face of poor current return. Those "Followers" who bought late in the cycle are the ones hurting the worst right now.

Here we are 8 years later. Real estate prices have plummetted and the stock market is hurting. Once again, the return on investment for rental properties is attractive. Will there be another wave of Wall-streeters, hungry to snap them up?

We are already seeing some cash buyers in the market to snap up the bargains. Seems predictable that we'll see more of that ... and thus, the 8-year cycle begins all over again?

Up and down go the statistical curves ... up and down go the fortunes of those who play the game. As always, those who are out in front of the trend will most likely profit. Those who follow along later ... mmmmm, probably not so much.

I mentioned a month or so ago that it sure is nice when a listing client listens to pricing recommendations. The transaction I was speaking of closed just a few hours ago, so I can now say it out loud: Within 5 days, we got a full price cash offer.

(And no, it was NOT a fire sale. We actually set the current record for highest price per square foot. Our client gets the credit for having the cleanest unit in the whole complex!)

And they said there are no buyers!!

There are buyers, just no dumb buyers. One thing the Internet has done is to make it easy for homebuyers to do extensive research all on their own! By the time they start physically touring homes, they've surfed many, many homes -- and they know what value is. Hoping and praying that someone will come along and pay too much for an overpriced listing? Highly unlikely!

My seller and I went on our own tour together and looked at solds, pendings, and active listings. She got to self-discover what is happening in her neighborhood (Cambridge Village in Bradenton) ... then got to pick the price range that we figured would get her a contract within her timeframe (a month or so). We actually priced the house towards the high end of the range!

Just 30 days later, she is on her way to her new life in a new city with her cash in her pocket. Is she happy or what???

Here is the closing gift she gave us:

Why is the Realtor in the client's bathtub with all his clothes on??

The seller is a good friend and former co-worker of mine, and I helped her fix a dripping faucet in her tub (we provide many services for our clients but plumbing is not USUALLY one of them!). She caught me in the act with her camera, framed it, and gave it to me at closing.

What a great day, and a great transaction! Onward and upward.

Listening to or reading the news is a dangerous business these days -- dangerous for the piece of real estate between your ears!

Our real estate practice slumped like everyone else's when the Florida Boom started looking more like the Florida Bust -- but our business began to improve when we cut way back on reading newspapers. It's just too easy to get into the dumps about the state of affairs, and stop trying.

Even National Public Radio, long a bright spot for us in the gloomy landscape of news programming, began to be depressing! This development could be construed as an indicator that things really ARE that bad!! See what I mean about danger?

But today's NPR program "The Long View" was inspiring ... an interview with bilionaire Wilbur Ross, who for decades has specialized in buying companies that are failing and figuring out how to make them profitable again. These days, he's looking at mortgage servicing companies as opportunities at a time when others are running away from them.

He said that in an industry that has been in a relatively long term decline, it is typical for the managers to get a "loser mentality" where they blame things that are outside their control and become too bummed out to work on the things that are in their control. They go into blame mode instead of action mode. Very interesting.

But an important observation had to do with ideas versus implementation. The best ideas are very often simple ones, he says, not complex ones ... but execution matters more than ideas in the end. He paraphrased a favorite saying, that he'd rather back a mediocre idea that was brilliantly executed than back a brilliant idea that was executed in a mediocre fashion.

(Hear the entire story here)

Good thoughts to get the juices flowing in the right direction first thing in the morning!

North Port is an area of Sarasota County that experienced tremendous growth during the boom due to its affordability. With property prices in Sarasota proper going out of sight, the working person found good value in North Port, a 30-minute commute down Interstate 75.

That of course led to a boom in North Port, as developers scrambled to snap up lots, build spec homes, and cater to the crowds. When Sarasota experienced the bust, North Port felt it the worst.

We have recently become well-acquainted once more with North Port thanks to a few buyers in that area, and can report that there are some excellent values. There are a great many short sales and REOs in not-so-great shape ... good for handypersons or investors ... but a little determined searching will turn up some move-in ready 3/2's with pools for 140,000-200,000. Not bad for a starter home or a retirement home. We even ran across a canal-front home with dock on salt-water for under $200,000 (it was already under contract!). Try finding that in Sarasota!

One of the great things about launching the boat at Bradenton Beach, as mentioned last blog, is some of the territory it makes available. And one of the coolest destinations is the fishing village of Cortez, just a mile to the north.

Fishing was the center of Cortez for 130+ years, not counting many hundreds of years that Native Americans probably fished there. And there were dozens of villages like Cortez all around Florida before regulation, overfishing, and waterfront development pressure squeezed them all out.

Somehow Cortez has hung on (read more about Cortez here) and not been paved over or overshadowed by high-rise condos. There are several restaurants on the waterfront, a marina, a boatyard, and yes, still some commercial fishing boats.

Here, sun sets over some of the fleet.

Fishing shacks like this used to be all over. When nets were made of cotton, they had to be properly spread-out, dried, repaired, and stored, and these shacks were where it was done. Modern nets are tougher and more rot resistant. But this shack right near Cortez has been preserved. (The sign says, "Boiled Peanuts.")

Cortez is a heckuva place -- and just a few minutes from our home in Sarasota!