Video: Buying into ‘virtual realty’

By Scott Cohn Correspondent
updated 6/9/2005 3:18:49 PM ET 2005-06-09T19:18:49

Location is the most important thing in real estate, they say, but if you’re looking to invest in real estate, but don’t want to travel to any of the hot markets, the Internet has created a “virtual realty” just in time for the housing boom.

Take Mike Bozzo, for example. He owns a successful welding business in Dayton, Ohio. But every day, when he gets to his office, the first place he goes to is Florida.

“I like to spend about an hour looking at different properties,” Bozzo says, adding that he visits a number of different real estate sites every day. “This is something I’m looking to do for the future of my family.”

Bozzo says his Florida Web surfing is pay off. Over the last four years, he has made well into six figures by buying and selling Florida real estate online, and almost all of it has been sight unseen.

Indeed, a condominium Bozzo bought four years ago for about $220,000 is now selling for two and a half time that amount. One he bought earlier this year for $279,000 is on the market today for $379,000.

Mike Bozzo isn’t alone. With the housing market booming, 22 million people are visiting real estate Web sites every month. But before you jump on the Internet and start buying, beware — this is still a risky business, and it’s made even riskier by doing it on the Internet.

Bozzo confines his surfing to Naples, Fla. Not just because housing has appreciated 93 percent there in the last five years, but also because he’s been going there since he was a teenager and he knows the area.

“I’m a very detail-oriented person, and that’s the way I approach things,” said Bozzo. “I think it’s important that you understand the area that you're getting involved with.”

And Bozzo doesn’t only use the Internet to find properties through the Web sites of several local realtors. He also uses it to research tax assessments and recent sales — information that’s readily available online. And he always gets a properties inspected, and has a realtor he trusts in Naples who’ll check out the property in person if necessary.

Real estate expert John Reed says that’s important.

“The due diligence still has to be done,” said Reed of Real Estate Investor's Monthly. “And if you’re going to trust somebody else to do it, you better know that person really, really well.”

Bozzo hopes to retire on his real estate profits, which may be another benefit to investing this way. And while some people like to buy coastal real estate for the cash flow from renting it out, Bozzo cautions against counting on rental income to pay for an investment.

In Naples, for example, condos only rent three months a year, he points out. He also advises against getting emotional over a purchase. Set a price and be prepared to walk away he says. And whatever you do, don’t get caught up in the inevitable bidding wars in this hot real estate market he adds — especially if you’re bidding on property you’ve only seen online.

© 2012 CNBC, Inc. All Rights Reserved


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