Vail Daily column: Should I invest in real estate or stocks and bonds?
Ask a Realtor
I have some friends who have bought real estate, especially in the last few years, but my financial advisor keeps presenting me with stocks, bonds and annuities to purchase. I am not sure what direction to take. What do you recommend?
First of all, it is wonderful that you have money to invest in today’s market. Secondly, I am not a financial analyst, nor a tax consultant which are both important people for you to consult. I can only tell you what I know from personal experience investing and what is being done by many Americans. I personally feel everyone needs a well-rounded investment portfolio. I think you should start with your own residence, if you don’t already own one. Then I think you should listen to your advisors and after you have adequate cash reserves, you can look into owning some stocks, some bonds, and definitely some real estate.
In 2012 there were 61 percent more residential purchases by investors (1.2 million) than in 2010. Many analysts are saying that the housing market recovery across much of the country has been largely because of the purchase of homes by investors. Who are the investors buying these homes? The National Association of Realtors says that the median age of the investors buying residential property is 45 years of age. It also states that 50 percent of these investors paid cash and that they plan on holding the homes for up to eight years. Even before the economic downturn with bargain prices on homes, I personally helped young families buy rental property that they held until their toddlers were ready for college and then sold them to pay for all of their children’s higher education. They might have made substantial capital gain if they had purchased stocks and bonds, but I don’t have any information proving that. I have to add my disclaimer that there can be varying market conditions. However, if you look at the long-term real estate statistics, real estate values have eventually trended upwards.
My husband and I and many of our friends have personally done very well with our investments in the Vail Valley and in Western Colorado. I have also helped many clients in and out of residential homes, multi-family complexes, businesses and commercial properties. There is always an opportunity in every real estate market and your knowledgeable real estate broker can show you those opportunities and can give you information on the past performance of similar properties. Real estate agents are never allowed to tell you that your investment will make money, but they can give you all of the facts necessary for you to make informed decisions.
There is one other factor to consider — not only will real estate not disappear (as my old airline stock did) but you can also enjoy your investment if you pick a location you visit now, or will be able to move to in the future. Choose places near sports activities you participate in, scenery you like to explore, or possibly near children and grandchildren! As Will Rogers said, “Put your money in land — they aren’t making any more of it”.
Joan Harned is an owner and broker for Keller Williams Mountain Properties and heads up Team Black Bear, her own real estate team. Harned has been selling real estate in Eagle County for 27 years, is a past chairman of the Vail Board of Realtors, past Realtor of the Year, past director on the Great Outdoors Colorado Board and a member of the Luxury and Land Institutes. Contact Harned with your real estate questions at Joan@TeamBlackBear.com, by calling 970-337-7777 or visiting http://www.SkiAndTeeHomes.com.