Would a Ft. Lauderdale condo appreciate 10% a year and be a good investment?

Hundred dollar bills in shape of house

Q. I am thinking of buying a one-bedroom, 560-square-foot condo one block from the beach in Ft. Lauderdale. My mortgage, taxes and insurance would be about $1,950 per month after paying $310,000 with a 20% down payment. I can get a renter in for $1,000 a month without blinking. Am I realistic to think that I could get 10% yearly appreciation? If I only plan on keeping the condo for 5 years would I be better off not buying and investing in stocks or CDs instead?

A. It's very unrealistic to expect 10% annual appreciation from any Florida condo right now.

According to the Florida Association of Realtors, the median sales price for a Fort Lauderdale condo was $189,600 in the fourth quarter 2007 (that's October through December), down from $205,800 in the fourth quarter of 2006 -- an 8% decrease.

South Florida was a hot real estate market during the boom years of 2003-2005, and investors were buying condos like crazy.

But the bottom fell out of the market in 2006 and there is a glut of condos -- far more than there are buyers.

As a result, Fort Lauderdale condo sales were down 18% in the fourth quarter.

In the world of investing there's no such thing as a sure thing. But hoping to make big, short-term gains on a Florida condo looks like the wrong move right now.

You'll also be losing $1,000 a month in out-of-pocket expenses even if you rent your condo.

Most real estate investors expect the rent to at least cover their costs, such as monthly mortgage payments and condo fees. You're not even close.

Does your employer offer a 401(k) plan?

If so, are you putting in all the money the government allows? If your employer doesn't offer a 401(k) plan, do you have a Roth IRA?

These tax-exempt retirement plans allow you to invest in mutual funds and usually offer the best way to start saving serious money.

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