Hanging on: One real estate investor's story

     It takes a strong stomach and some cash in reserve to be a real estate investor in this climate.  That said, what would you rather have now:  A nice one acre lot in South Carolina that has lost 20% of its value in the last year, or a portfolio of "blue chip" stocks that lost twice that much in the last week?  If all else fails, at least you can grow vegetables on your property.  With stocks this week, all you could grow was depressed.

    One of our readers bought three lots a year ago at the North Carolina golf community The Coves at Round Mountain, where Hale Irwin is designing the golf course.  He had visited and researched thoroughly a dozen communities in the area, set up a spread sheet to compare them, and then chose the brand new Coves because he thought it offered the greatest potential for returns in a reasonably short time.  Some other communities he looked at were more mature and, by definition, somewhat more stable, but the upside appreciation potential was not as dramatic as at The Coves.
    The research paid off, even though he will have to expand his time horizon a few years to get the appreciation he was looking for.
    "It seems everyone is tanking or battening down the hatch and riding it out," he wrote me about communities in the mountains.  "The Coves said they were considering downsizing their master plan and selling off some of the non-critical acreage to help them weather the storm.  
    "This is where the research up front was huge.  [The Coves is] still very attractive in terms of price and [they] haven't had to make any price concessions.   Other developers at the top of the market are undercutting their investors and selling at 60% of previous sales.  
    "So," he concluded, "fortunately [my] buy has kept its value (and hence has been a better investment thus far short term than my stock portfolios).  I'll still have to hold it for a few years, but that was my plan to begin with."