Prices going up! I bet that caught your attention.

Well, as much as I'd like to say that was the fact for real estate, it's not. However, it is true about the price of fuel. The life-blood of any industry is transportation, regardless what many may tell you. Though we live in a highly technical world in which we can tele-commute, transmit over air, digitize documents and so on; it ultimately comes down to the most basic...transportation.

I've made many transactions across the United States. I've sold properties in Florida, Texas, Louisiana, New York, Virginia, etc. etc., but it always comes down to transportation. Whether it's a client flying cross country or a physical inspector on site, they all have the same basic necessity in common. Yes, fuel. The cost of fuel will continue to drive all market pricing, in all industries. From the price of potatoes to the price of properties. How can this be? Well, for one; there are material costs involved in the building of real estate. Along with those material costs are the fuel costs that must be considered in the process.

So, what does this exactly mean to an investor? Replacement costs! As I notice investment real estate being sold, there is one glaring point I come across. The price per square foot on income producing properties in growing areas. When you consider the cost to build or rebuild a property and the cash on cash return you anticipate, the final result should be an indication of your ultimate goal. Most investors will tell you that its cash flow, yet all investors want cash flow and appreciation. With this in mind, you should be cognizant of the facts that replacement costs vary from state to state and the upside in cash flow may not yield the appreciation you expect.

Certainly, having sold properties nation-wide with the Marcus & Millichap platform allowed me to analyze properties with my clients needs and goals in mind. I know I can do the same for you.