REAL ESTATE
by Jim Coleman, REALTOR®
RESORT AND SECOND HOME PROPERTIES MAKE GOOD INVESTMENTS
In the wake of recent market collapses and efforts to bail out and prop up the economy by the Feds, including real estate and the lending sectors, one may have cause to question the stability and sensibility of Resort and Second Home properties as sound investments.
It has been well established that real estate made for good long term investment. With the stock market plunge and working to stabilize, many investors are looking again at the foundation of real estate for placement of funds, if they were not totally destroyed when the bottom dropped out of the securities market.
The Baby Boomers who make up such a huge portion of the population with money and asset control, are not only wanting to buy into something that offers stability and general value retention with potential for sound appreciation, but they also are looking to position themselves for their pending retirement with contentment and peace at a vacation or get-away property. They also look very seriously at properties that qualify as investment properties with the tax benefits attendant to that classification of real estate.
Though real estate in general has taken a hit on the chin during this mortgage melt down and credit crunch resulting in some price adjustments from the inflationary phantom appreciation experienced the last few years, real estate has traditionally held strong with value retention as well as very favorable asset and equity appreciation. The current market offers great opportunity for these investor buyers to capitalize on the present situation and position themselves with a great acquisition of real estate. Many of these players can make a very smart investment of real estate that can serve either as an immediate second home for family vacation and retreat enjoyment as well as follow investment analysis and acquire properties that can be rented and achieve a cash flow. Some of these purchases are strategically made to permit the use as a second home for the immediate period, but then be converted to a primary home in the future. Baby Boomers buying second home properties today are buying much larger and higher priced properties than the typical second home buyer of a number of years ago. Their affluence has driven them to much more luxurious properties. This type of property allows these investors to diversify their assets.
As the Resort and Second Home buyer makes strategic moves in today’s market, there are a few considerations that are usually entertained. These include the following: (1) How much is affordable? (2) If financing is needed, how much money is available for a down payment? (3) Will the property be rented? (4) Is there a need or interest for a tax deduction that is available to the investment property owner? (5) Is there intent to convert this property to a primary residence at a time in the future? (6) Is the property in reasonable proximity and access for enjoyable use and/or management? (7) What is the maintenance status of the property? (8) Will a property be sold to acquire the new property? (9) Will a tax deferred exchange be part of the transaction? (10) Does the property lend itself to the location, location, location requirements?
Obviously, there are many other considerations that may be part of this important opportunity. But the timing and general conditions of the market are very favorable right now for investors with the desire, the means and the savvy to take advantage of present conditions. The immediate period is the time for smart buyers to make their move. Those who typically want to "wait a little longer," are the ones who generally cry later: "I should have done it sooner," when they do get around to making a decision and find the market has already slipped away from them as prices start back up again.
Seek competent investment counsel and advice. Make evaluations that make sense consistent with personal investment objectives and abilities. The Resort and Second Home market it one of great potential for those wanting to better their portfolio. It is often a matter of "timing" and "positioning" and both are right now.
St. George REALTOR® Jim Coleman is Associate Broker and Partner/Owner of ERA Brokers Consolidated. He Specializes in Residential, Investment and Commercial Real Estate, holding National Designations of Accredited Buyers Representative (ABR), Certified Residential Specialist (CRS), Resort and Second Home Property Specialist (RSPS) and Seniors Real Estate Specialist (SRES). You can contact him by e-mail at Jim@RealtorJimC.com. Call: (435) 674-0600; or write: Jim Coleman, 201 East St. George Boulevard, St. George, Utah 84770. This and other columns are available at www.RealtorJimC.com/articles.