Vail Daily column: Should I invest in real estate or stocks?
August 28, 2015
In my opinion, the stock market is always a gamble. My wife and I argue about this all of the time since we do have stock investments. We worry because we have young children and we are trying to have savings to help them go to college in the next 10 years. Now, my wife's parents have driven up from Denver and they have joined in the conversation, since they are worried about their retirement future with the stock market's recent wobbles. Being a Realtor, I am sure you would recommend buying real estate instead of stocks, which I am in favor of doing, but I need some verbal ammunition. Can you help me out?
Dear Future Planner,
Actually I am in favor of diversification, which of course includes buying and/or owning real estate. I know it is an old saying, but you should not put all of your eggs in one basket. I know that might not be the scientific approach, but research will have a hard time proving it wrong. My husband and I personally have investments in residential real estate, commercial real estate, REITs, annuities, stocks and producing businesses. Almost every wealthy icon has many diversified holdings. Now, back to the question of buying real estate for specific financial purposes. I think you need to find a very well qualified Realtor who will help you find what each of you specifically need. The investment might be in Eagle County, or your Realtor may refer you to another competent Realtor in a location that fits your needs better. If your in-laws live on the Front Range, then according to the National Association of Realtors 2015 Denver-Aurora Market Report, a property they might have purchased in 2012 would be worth approximately 17 percent more this year. If they kept the property and rented it out, then the amounts paid in rent are at all-time highs in some areas. We have referred clients with small children and modest down payments to trusted Realtors in Grand Junction, and they have purchased homes that cash flowed there and then sold when their children went off to college to pay for their education.
I know it is an old saying, but you should not put all of your eggs in one basket. I know that might not be the scientific approach, but research will have a hard time proving it wrong.
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In the Vail Valley, we have historically had equity gains to gauge our investments progress, rather than being able to make good rental income on luxury properties. There have been exceptions where the rent is very favorable and the property was purchased right, so once again you would need to consult with your Realtor. The good news right now, in any and all of these potential residential real estate investments, was pointed out very well by a successful, helpful mortgage broker, Chris Neuswanger, in his article last Saturday about the effect of current global events. To quote Mr. Neuswanger, "When there is uncertainty in the air, investors have to park their money some place and it tends to be bonds. While that is not good news for your stock portfolio, it's great new if you are planning to get a mortgage, as capital to lend out for long-term mortgage loans is plentiful and rates are holding to their recent record lows." Now would be the time for you to have your Realtor and your mortgage broker run some numbers for you to make some very important decisions purchasing real estate for your family's future. Best of luck to you!
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, 970-337-7777 or http://www.SkiAndTeeHomes.com.
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