Local with a Global Outreach

Changing Real Estate Needs

Real Estate Needs Property Shop Wilmington
Monday, September 21st, 2015

Primary Residence, Investment Property.

 

Own, Rent, Buy, Sell

 

 

How important is real estate to your financial picture? If you are like most people, your home is your

biggest investment. An age old dream for so many is to have the opportunity to own their home. Put

down roots, raise a family, make improvements and enjoy your dream. We also have opportunities to

invest in income producing rental property or locations for our businesses. As a REALTOR® for 20 + years

I have had the opportunity to watch the changes to people’s needs and wants. Housing needs are

important to a community. As communities change, as our lifestyles evolve, as our family and/or

financial needs change, our housing choices can change. Consider the young family with one child.

When they were first married they rented an adorable 2 bedroom condo. Making good financial choices

they purchase their first home. They work hard, had their first child and continued to make great

decisions for their financial future. Along comes their second child, and they have outgrown their home.

I’m sure you can see where I am going with this. Fast forward 25 years, their two children are grown and

they are now empty nesters. What to do with this large home with all the bedrooms upstairs. The

marketplace is finding that downsizing is becoming a significant part of consumer needs. Communities

are being designed to provide an environment offering amenities and floor plans that will be attractive

to the young retiree, the empty nester, etc. The residential, primary residence story can be ever

changing. When this young couple was just starting out, they rented first. It is a possibility that an

individual investor owned that 2 bedroom condo. That investor was most likely someone making

investment decisions for their financial future by investing in real estate.

 

Consider the commercial need. You are a professional and are looking for a location for your growing

business. Do you buy or do you rent? Or maybe you are the investor and you own a professional

building that is just right for a young business to grow. Whether it is for residential or commercial needs,

you should have a team in place that can help you make the best financial decisions. There are ups and

downs to every situation, and you probably have questions. Pull together your financial advisor, who

understands your needs and can council you on strategy, along with your tax advisor who can help you

understand how the tax laws will contribute to the decisions you make.

 

Personally, I feel that owning your own home is the best way to grow wealth. Is it the only way, no. But

as you decide what your needs are, the direction you should take becomes more clear. The young

couple I talked about earlier will one day face a totally different decision. For different reasons they will

need to sell that large home. A few questions they should consider might be; Is our home in good

condition right now? If we stay here for 10 more years how much will we spend on maintaining and

updating this home? Would it be better to sell now before too much deferred maintenance reduces the

market value?

 

In my opinion the primary residence investment includes emotion. We will raise our family here and we

will make beautiful memories. And then there is the real estate investment that will bring them a certain

rate of return on their money; a Non-emotional decision where the numbers rule.

 

As you consult with the members of your financial advisory team, it might be a good idea to include a

REALTOR®. One scenario I will share with you is of a recent widow who had some cash. She was so afraid

of out – living her money. She always said she did not want to be a burden on her children. She was

willing to invest as long as her principal was secure. We were able to work as a team with her financial

advisor and took a percentage of her principal to invest in real estate. She held a first mortgage for a

young couple starting out and she purchased a small condo for rental purposes that a single person

could afford. She felt good about her investments, not only because she now had a monthly income

from her principal, but because she felt she was helping others to get started.

 

For over twenty years I have been involved in the many aspects of property ownership. I am a firm

believer in Protecting and Promoting Private Property Rights. Whether you are buying a home for

yourself, choosing to invest in rental property, residential or commercial, you have private property

rights. Cities and Counties work to have long range plans for growth and development. Property Rights

and Zoning play a big part in the overall development of an area. A healthy and sustainable community

depends on the wise use of the land. There is a balance that we all should work to achieve. When an

area has as much to offer as we do, there are ample opportunities for investment. Interested in a

second home at the beach? Drive a few hours for that mountain cabin? Not only can you keep these for

your own enjoyment, but you can place them on a vacation rental program, affording you a return on

your investment. Many clients that I work with are downsizing. As we mentioned before, the large

house served its purpose and it is time to move on. Consider the yard work you will not be doing, the

pool you will not be cleaning, the roof you will not be worrying about. But this brings a new set of

Property Rights into play and these rights are defined in the homeowner’s association documents that

will lay out the rules of the development.

 

Ask all your questions. Understand the issues and learn all you can. Own, rent, buy or sell. At different

times you will have different needs. Investment in residential and commercial real estate just might be

the key to your financial future, no matter if you are just starting out or looking to diversify your

portfolio.

 

 

By:  Patrice Willetts