Forgotten Coast Real Estate is still a GREAT investment!

While the real estate market is still slow along the Forgotten Coast, owning property in our area continues to be a good investment.   The key to successful investing is to understand the cyclical nature of all investments, and the benefits of real estate investing.

#1.  Personal Use

Before the “boom” of the early 2000s, people came to St. George Island and the Forgotten Coast, fell in love with the area and bought property for long term investment.  All the reasons real estate was purchased then still exist. 

Our area is vastly different from other parts of Florida because of the tight restrictions on development and the incredible natural resources.  In Franklin County, the majority of property is owned by the government for preservation.  Development codes allow only low density projects and there’s a 35-ft height restriction from the first living level to the peak of the roof for commercial as well as residential development.  Access to the Gulf of Mexico, Apalachicola and St. Joe Bays, and the numerous rivers systems provide unmatched resources for any water-related activities.

The abundance of natural resources, wildlife and marine life create an environment unlike any other resort area.  Fishing, boating, birding, hiking and beach activities provide endless opportunities those who love the outdoors. 

#2.  Tax Benefits

Real estate offers several important tax benefits that make it the investment of choice for sophisticated investors.  First, there’s depreciation, a paper loss for wear and tear on structures which generates tax savings with no out-of-pocket costs.  Depreciation can be applied to rental houses, condominiums and commercial buildings.  Next, some people may qualify for additional deductions by materially participating in the management of their properties.  Best of all, real estate investors can delay paying capital gains tax by exchanging or reinvesting the proceeds into like kind property.  

#3.  Cash Flow,  Leverage & Risk

When an investor buys stock, he pays cash for 100% of the value.  When purchasing real estate, the investor usually puts around 20% cash down.  Despite the recent market slow down, banks are still willing to lend money to qualified investors at favorable terms.  This increases both buying power and the potential for earnings over a period of time.  Beach property is limited in supply and has universal appeal.  You can generate income from vacation rentals that will offset some of the costs of ownership.  And insurance is available for the structures. 

#4.  Appreciation

While most beach properties do not provide a positive cash flow, the long-term investment potential is excellent due to appreciation in property values.  For about five years in our area, property values appreciated at rates of 30% to 50% per year.  Prior to that, from 1976 to 1999, property on St. George Island appreciated at rates averaging 12% to 15% per year.  We are currently at a low point in the overall investment cycle, but our market should stabilize over the next year.  Then, appreciation should return to rates of 8% to 15% per year.