If you thought that investing in the real estate market is just about the most exciting thing going, I’m about to burst your bubble. Sure, all your friends came back from wintering in Florida, and told you that they became players in the red-hot Florida real estate market. "You can’t miss" they told you. "Baby boomers by the boatload are buying everything in sight. The prices go up every day. We’re making a fortune!"

So let me tell you what’s really going on in Florida. It’s true; prices are climbing at dramatic, albeit unsustainable rates (35% last year) and nothing stays on the market more than a few days. However the cost of investing in Florida is very high. Closing costs can run up to $10,000, real estate commissions at the most recognizable brokerage firm have just increased to 7%, homeowners insurance, flood, wind and hurricane coverage are off the charts. And there is no rental market at the rent rates needed to cover these jumbo mortgages and taxes.

Tourists and part-time residents suddenly became "savvy real estate investors" and bought up all the "dogs" on the market, and after carrying the soft costs for a year, they hope for a big score next year. Well, guess what? A lot of these people are going to lose their beach wraps because price resistance is starting to creep in. There is not going to be much of a market for that "cozy, 650 sq. ft. beach cottage in need of a little TLC." People don’t really want a beach cottage that’s ten miles from the beach; where the driveway (unpaved) is under water six months of the year; and the living room becomes the master bedroom suite when you pull down the Murphy bed.

Finding a good investment is no easy task. We spent six months rejecting nearly 100 properties ("investors" scooped up everything we turned down). Here’s one example. Our realtor arrived at a house a few minutes before our scheduled appointment and rang the doorbell, which was promptly answered by the homeowner. He was wearing a grease-stained tee shirt and neither his hair nor his beard had been cut, washed or groomed in six months. From the open door she could hear the blaring TV and the vicious barking of the pit bull, noise that also carried out the foul smell emanating from the interior. The "Wild Man from Borneo" invited her in to preview the house, but she wisely chose to wait for us outside in the heat.

We arrived and went into the living room, which was cluttered with dilapidated furniture, used bath fixtures and other construction debris. Sara pointed to the noisy cartoons on TV and shouted, "You have kids?" He responded, "No, I live here alone." The entire house looked like the aftermath of a hurricane, except the garage, which housed a sleek 911 Porsche. The home’s asking price was $389,000 and I told my realtor that I would consider it at $250,000, only if he threw in the car.

At another location, a rental apartment complex was going condo and people waited in line overnight in order to purchase one of these 35 year-old, must-have units, which were being sold "sight unseen, as-is." It was reminiscent of buying rock concert tickets. . . without knowing who was playing.

So here’s my advice for all you wanna-be real estate tycoons. "Buy high, sell low, but do a lot of deals so you can make up the shortfall on volume."
Mike Sisti is a forty-year veteran in the marketing communications field. Most recently he served as Chief Communications Officer at Blue Cross & Blue Shield of Rhode Island. Mike and his wife Sara divide their time between Narragansett, Rhode Island and Sarasota, Florida.