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It’s already starting…the difference of opinion between family members about what the best move is concerning some real estate. As a personal finance writer, I know there are no easy answers or strategies to working through these types of disagreements. Maybe this blog can provide some insight.
Here’s the situation: My 78-year-old father owns a 2-bedroom condominium in the heart of downtown Aspen, Colo. He bought it for $30,000 in 1969 and it was recently appraised at something north of $800,000. Call him lucky. It is a ground floor condo with views of Aspen Mountain out the front windows and Independence Pass out the side windows. The lodge owners next door are planning a multi-million overhaul of their property which may or may not block our views. My father is considering selling, convinced that this new next door development can only hurt our property value. He isn’t in need of the money, but thinks he can find a better investment opportunity with the sales proceeds (hedge funds? stock market?).
I say, he’s wrong. The condo is already paid off, and at this point, is a cash cow—the rental income more than covers the expenses. Plus it is available for family members and friends to stay—and that is priceless. It is by no means a luxury accommodation, and is likely to need some remodeling work in the coming years, but it is perfectly adequate as a mid-priced rental right now.
My father responds to well-reasoned advice and recommendations, especially if it’s not coming from his three daughters. So I asked Jim Keene, co-author of the recently-published book Retire on the House (John Wiley & Sons) and a regional manager for Wells Fargo Private Client Services, what he thought we should do. Keene recommended that we hang on to the property. The real estate market is all about local markets and Aspen is Aspen—land in that valley is a limited commodity. That means there isn’t likely to be much that can negatively affect the property values there.
I figure as an investment property, it doesn’t get much better. But then again, I’m only the heir and not the owner.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.