A very financially wise (and well off because of it) person told me last weekend, “Most vast fortunes were created by people who were idle when things were good, and active when things were bad.” This means they sat on cash during good times, and bought everything during bad times.
This conversation was about real estate and the regentrification of a bad area of town. The West side of Austin has historically been the posh side of town. All the skyscrapers, clubs, malls etc. are built on the West side, leaving the East side to deteriorate.
This is what West Austin looks like.
For example, West 6th Street is a bustling entertainment area. Cross the freeway (I-35), and East 6th Street starts out with a car junkyard followed by a string of run down buildings. There is a distinct difference.
The funny thing is, just recently land prices jumped in parts of East Austin, and some newer, nicer buildings have started to creep up. On a recent drive through the area, I saw a brand new condominium establishment amidst the old buildings. On the lot next to it, a bigger and better condominium establishment is under construction. These are luxury condo’s on EAST 6th street. I smell regentrification.
These condos are nothing amazing, but they by no means fit in with their less-attractive surroundings:
Spotting regentrification of an area is a common theme some business men I know have very profitably used. They buy old and unwanted properties in bad areas, fix them up, then sell at a premium as the area increases in value. Of course everyone thinks they are crazy when they first buy in these terrible areas.
The lesson to learn is not to jump in when everyone is jumping in. Since real estate is such a hot topic right now, I’m sitting out. The people who took the initial risk of building nice properties in East Austin will reap the most reward, as newer establishments will pop up right around them. The people who jump in after them can reap some reward, but not nearly the same amount.
Great riches will be found in this unconventional area. The builders can offer swanky accomodations that feature cheaper prices and cheaper taxes, yet walking distance to Downtown. Smart.