The 'Couv'

The 'Couv'

Tuesday, November 27, 2018

Is Real Estate a Good Retirement Investment?

This is a challenging question. Anyone considering investment opportunities for retirement of otherwise should always consult both a professional in the field of either real estate or securities as well as a tax professional.

Real estate can be an excellent investment vehicle for retirees as well as just about anyone in a position to buy property. For retirees or those looking beyond now to the retirement years, it has both pros and cons and both sides should be analyzed before investing.

Over the years I have been both a Realtor® and a financial adviser. I have always been surprised by the number of people that think real estate is a safe investment. Let's be clear, real estate as an owner occupied property is almost always a good thing. But venturing into investment real estate is a whole different animal. Real Estate is neither safe, nor is it stronger as a long term cash investment than many other vehicles. In my 2010 book, 'Don't Panic' I have a chapter dedicated to debunking some common myths about the security and investment value of real estate.

Some might think, "Geez, you're a Realtor®, you should be all in on real estate." I am all in on real estate, but I am also all in on truth and having my clients go in 'eyes wide open'. Historically, real estate has appreciated in value at a rate of about 6.5% annually. Blue chip large cap stocks average about 8%. As a cash investment the large caps are going to perform better and have less risk. There is a bit more short term volatility with the large cap stocks, but that is tempered by better liquidity. For long term investing large cap stocks are almost a buy and forget deal. Maybe a quarterly review and portfolio rebalance, but really not a lot of "work." real estate will keep you busy and can nickle and dime the checkbook with repairs, maintenance, etc.

The biggest advantage to real estate as an investment has much less to do with market gains and much more to do with leverage. Investment real estate is a high value asset that can be easily acquired with only 20% down. Even the richest people in the world can only leverage half of their stock portfolio, but real estate can leveraged to 80% pretty easily. Only the wealthiest among us can afford to buy stocks and other market securities in the $300,000 plus range, yet ordinary Americans, can often by investment properties in the $300k range.

The ability to take 50,000 in cash and leverage an asset worth $250k is the real power of real estate. Typically real estate values grow faster than the rate of interest on the purchase loan. But an investor is getting an average 6.5% rate of return on a $250,000 asset with only $50,000 invested. This is where real estate is king. The property is generating income in the form of rent while enjoying a modest growth in appreciation over time. The one-two punch of real estate is hard to beat when leveraging it with loans, however even as a cash investment, real estate is still solid. The issue with rental properties is much more complex than most people want to deal with, especially in their retirement years. One can always have a professional manage the properties but then that erodes the profit. Real estate is a busy activity for investors, but those that choose it rarely are disappointed.

For retirees or those looking ahead to retirement, real estate has some additional advantages. At age 62, reverse mortgages become an available option, and in some cases investment real estate can be converted to IRA funds. These are complicated systems that should always be discussed with proper professionals before action is taken. A reverse mortgage allows a qualifying senior the opportunity to draw the equity out of their primary residence as cash income for the rest of their lives. This is in effect an real estate annuity. With rates over the last several years being so low, this has been a solid tool for seniors. However rates may reach a point in the future where the reverse mortgage loses appeal.

People in their late 30s to early 40's willing to carry a few rental properties may find themselves in an excellent position upon retirement. Check with your trusted pros and see how you might fare with a real estate portfolio as you prepare for retirement. 

Tuesday, October 23, 2018

Should Retirees Avoid areas with Strong Economies?

That seems like an odd question, right? Frankly, it is odd, yet there is merit to thinking it through. A strong economy is very important for many reasons. There are lots of job opportunities, local governments tend to be flush with cash to keep things operating smoothly, property values tend to rise, etc. So why would all that be anything but great for a retiree? The answer is not yes or no, but rather, "it depends."

Generally retirees are not too concerned with the job market they are after all, 'retired'. Retirees are generally living in the last house they will ever own so property values that are high simply reduce the amount of house they can afford and any future profit is deferred to heirs.

But retirees living in an area with a depressed economy have other things to be concerned with. Crime, quality of services, etc. The retiree may be able to buy a much larger and nicer property in an area that is not experiencing an economic boom, thus quality of life could be enhanced.

In the end it really does depend. Retirees that are going to be on a tight budget may want to consider areas that are not quite as booming so as to keep housing expenses reasonable. Retirees in the middle of the financial pack can consider either scenario and those that are in really strong shape would probably benefit from the robust economic conditions of a boom economy.

Regardless of the financial standing of the retiree, a strong housing market is a valuable friend so long as the property is owned and not rented. Even though the appreciation in value is likely to benefit heirs, there are scenarios whereby that equity can be leveraged by the retiree later in life. A reverse mortgage for example can provide income later in life should other resources become scarce.

There are a great many things to consider before making that decision on where to retire. Consulting a professional financial planner is typically a wise move. Washington State offers a wide variety of areas spreading across a large swath of incomes and property values. No income tax and senior discounts on property taxes for qualifying seniors makes Washington State a fantastic place to retire.

Tuesday, September 25, 2018

Getaway destinations for the winter blues...

I posted this a few years ago and it still rings true today!

Tuesday, October 28, 2014

Warm Getaways that are Close!
As we transition into the dark and gloomy fall and it's colder big brother, Winter, some of our residents begin to think about getaways to warmer climates. Sometimes a trip to Hawaii or the Caribbean are just a little too much dough or maybe just too long a trip. Sometimes a weekend getaway is just what the doctor ordered.

Here in Southwest Washington we have great access to one of America's favorite airports. From PDX there are many destinations that are less than three hours air time away.


Las Vegas, NV

753 miles flight @ 2:05 or drive 1054 miles from the 'Couv'

January average temps run 39 low and 58 high. January averages just about a half inch of rain; so dry is almost guaranteed. Vegas can be chilly as it sits at an elevation around 2500 feet. It is high and dry and still much warmer on average than most of Washington State in January

Vegas is a great getaway destination. Flight times out of PDX run about two hours flat. Vegas isn't just about gambling. This town draws people from around the world for food, spirits, conventions, shows and yes even some gambling from time to time.

Los Angeles, CA

824 miles flight @ 2:20 or drive 970 miles from the 'Couv'

January average temps run 48 low and 68 high. January averages just a hair over 3 inches of rain. Generally it all comes in one storm. So again dry is likely. And daytime temps in the upper 60s, Yeah, that doesn't happen here in January. LA is basically at sea level.

LA is huge, They have more people than Northern California, Oregon, and Washington COMBINED! I am pretty sure you can find something to do there. The area is served by multiple airports. It will be crowded however so keep that in mind.

Palm Springs, CA

868 miles flight @ 2:15 or drive 1075 miles from the 'Couv'

January average temps run 45 low and 71 high. January averages just about an inch of rain. This is not high desert as many people think. Palm Springs sits at just 440 feet above sea level. It can get chilly at night but not as bad as Vegas and daytime highs averaging in the 70s in the dead of winter is tough to complain about. Palm Springs is not afraid of tossing around some 90s in January either.

If you like golf, then this is your ticket. This area has over 100 golf courses.

San Diego, CA

930 miles flight @ 2:25 or drive 1090 miles from the 'Couv'

January average temps run 49 low and 65 high. January averages just shy of 2 inches of rain. San Diego has what could easily be considered the best all round weather in North America. Of course I like four seasons and San Diego has only one; pleasant. It sits at sea level.

San Diego is a big city with much to do. It is less crowded than LA but more so than Portland/Vancouver.

Phoenix, AZ 

1000 miles flight @ 2:35 or drive 1341 miles from the 'Couv'

January average temps run 46 low and 67 high. January averages just shy of an inch of rain. Phoenix is not technically high desert as it is situated just above 1000 feet. It can be a bit nippy overnight but temps will average in the upper 60s by day.

This is another great golf getaway but Phoenix is one of America's largest cities and if golf isn't your thing there are plenty of other opportunities for getaway relaxation.

There it is in a nutshell; five great getaways to consider when the cold, gloomy winter gets you down!

Tuesday, August 28, 2018

The Big Washington Choice!

In my everyday dealings with clients I often come across a wise person looking to retire to our magnificent state. In fact I have such a person right now. The state of Washington is pretty big and we have an enormous diversity of climate, terrain, and landscape. The biggest issue can sometimes be, 'where in Washington shall I move'?

I have a coastal blog where I write about our wonderful beach towns and the immense value they bring to retirees. I will be showing homes on the Long Beach Peninsula tomorrow. Today however I travel to Goldendale to view some awesome big acreage properties. A couple with 20 acres in fact. Goldendale is quite a bit more dry than the locales on the west side of the Cascades. It makes for more sunshine but colder winter temps as well. Furthering the dilemma, Washington offers both east and west cascades mountain locations with rich forests and spectacular mountains.

This amazing diversity makes Washington State hard to beat for a very wide variety of retirees and climate and topographical desires. No my friends this isn't the southern sun belt so it will get chilly in the winter no matter what part of the Evergreen State you choose to reside.

Today I show this cool log cabin style home on 20 acres in Goldendale. It's small but hey 20 acres and $165k heck yeah!

Tomorrow I'll be out at the beach showing this $160k delight just minutes to the crashing Pacific.

From Vancouver each of these is in near opposite directions and both about 120 miles away. The beach will have moderate temps year round with little snow but tons of rain and clouds, while the Goldendale property will see loads of sunshine, hardly any rain, but some very cold winter temps and a fair bit of snowfall.

Pick your poison my friends because Washington has something for everyone and the lack of an income tax lets you keep MORE or your retirement cash!

Tuesday, July 24, 2018

Retiring with Land

There are some who want to retire to a little bit of a "spread." You know, some land, small acreage. You work, commute to a job and then reach a point where it's time to settle in for the golden years on a nice little plot somewhere. Southwest Washington State is an ideal place to do just that.

Although five acreage build able lots have crept up in value over the last 20 years they are still had for $150-$300k depending on location, level, views, perc, etc. Finding a home already built on a five acre parcel is not difficult at the $500k level. Although half a million dollars is steep when measured against the national median home price, it is not too heavy when contrasted against a West Coast typical suburban house in Portland, Seattle or most coastal California areas. A retiree can sell their three bed two bath ranch in the Seattle 'burbs for $450,000 to $650,000 and find a comparative palace on five acres in Battle Ground, WA

Small acreage that is level and grassy will require some maintenance but lots that are heavily treed or steep with a view are easier to maintain in general. The latter however is often less usable land. It all depends are what one is looking for. Use of a large space or privacy. Maybe a little of both.

Clark County, Washington offers a great variety of small acreage lots with or without homes and reasonable prices and most importantly, very close in to the city level services. Having a five acre spread and still making it o the airport in 30 minutes is wonderful. Having close in access to medical services and shopping is nice too.

Maybe you don't want five acres. Perhaps an acre is more your style. That's OK as these smaller parcels are around as well. The house shown here is listed at $589k and is a fabulous property with privacy and in real close to freeways and services.

What ever a retiree is looking for there is a great chance it can be found in southwest Washington.


Tuesday, June 26, 2018

Allergies? We aren't bad at all!

I suffer from spring allergies here in the metro Portland-Vancouver area and much to my surprise nearby Portland, OR was ranked last on a list of 100 worst cities for allergy sufferers in a 2013 report. Link here. Ranking last by the way, is a good thing, so this came as a bit of a surprise and in fact San Francisco CA was considered quite a bit WORSE than either Portland or Seattle the two Northwest cities west of the Cascades on the list.

We have so many flowering plants and trees I figured we would be up near the top. Yet there we are at the bottom of a list you don't want to top. It appears to be yet another reason to consider the Evergreen State as your final destination. Your place to retire. Seattle is a bit crowded, and VERY expensive leaving Vancouver as an ideal spot as the second largest city in the Portland,OR-Vancouver, WA metro area, and the defacto second largest city in the state.

With all the things we have to deal with as we get older, the aches and pains, the bum knee, sore back, yada, yada, yada... why suffer through allergies also? Well apparently here in the Evergreen State you get all the gloriously beautiful trees, bushes, flowers and leaves without that nasty allergic stuff. As if the natural grandeur of the Northwest, favorable tax environment, and relatively mild weather weren't enough, we are a bit easier on the eyes and nose as well.

Tuesday, May 22, 2018

New Tax Laws, Could Make the Evergreen State even Better

The new Federal Tax Laws offers a much larger standard deduction for all citizens. This is highly beneficial for retirees and empty-nesters that often have too few deductions to take advantage of itemizing. Now with the standard deduction nearly doubled retirees will keep more of their money and Washington's no income tax policy is that much better as the Feds eliminated a large portion of the state tax exemption. 

Washington again looks good against many of its Western State rivals. Our moderate climate on the Pacific side of the Cascades is a plus as well. Washington State also has a booming economy and that means local governments are flush with cash to keep roads, parks and other local services well funded.

Locally here in Clark County, Washington much is happening including the amazing Vancouver Waterfront project with the first five buildings rising up along the Columbia River. Thousands of housing units are coming online including senior housing both downtown and all over the area.

Vancouver and Southwest Washington are enjoying the fruits of the state and regional economic boom and a strong positive migration. This all points to good reasons to consider the area for retirement.

The local area has excellent health care facilities and a great deal of both indoor and outdoor activities to lead a healthy and active lifestyle well into the retirement years. Washington State is back as a top choice for retirees.