They thought they had it made with their real estate investments in hot [tag-tec]pre-construction[/tag-tec] Miami condos. They were told their property portfolios could never hold enough of these nuclear deals. They were right on schedule to make a killing.
So they kept buying into it. First one condo, than a second one. Now speculative condos three and four could possibly bring this young couple to their financial knees. That’s because they are losing several hundred thousand dollars.
Natalie and David Luongo are not the only ones who were so involved in flipping real estate in Southern Florida. Many others are now losing their life savings also.
And as we remember way back in 2004, these were the people who would camp out all night just for the chance of putting 20 percent deposits on condos that hadn’t even been built yet.
Street people were paid to hold the spectators’ places in line. After all, times were good and these types of real estate investments were a sure thing for profits, right?
The lesson here for all us who were watching from the sidelines comes from crusty John D. Rockefeller.
Once after receiving a stock tip from his shoeshine man he immediately sold the stock. The premise was if everybody knows about the tip on the street, it’s too late to make a profit. He got out fast.
What can we learn about making prudent real estate investments?
We need to know exactly what the property can be used for.
Is there a demand?
Demand for properties comes from solid buyers and great tenants who have good jobs and incomes. They have to want to be there. Speculators who are only buying air will always get caught once the music stops.
We also need to protect ourselves from the hype and glitz
Sure, some people did well with their property portfolios in the [tag-self]pre-construction[/tag-self] markets, but they were professionals who knew those markets like the backs of the hands. Anyone else was simply playing with dynamite with these real estate investments. There is no substitute for doing your due diligence.