Vail Foreclosures and Short Sales

The Colorado 30 day delinquency rate on home mortgages is between 2-3%. Across the country, 12.87% of mortgage loans are 30+ days delinquent for a total of 16.3 million households BEHIND ON MORTGAGE PAYMENTS. Florida leads the nation with a 14.4% delinquency rate. Unfortunately, there is a large amount of "Shadow Inventory," which are homes that will hit the market for sale after they go through the foreclosure process and become bank-owned. As far as how this will affect our local Vail Real Estate market, we too will see shadow inventory but most noticeably in the lower price points. Our Vail and Beaver Creek real estate inventory is still very top-heavy which continues to push prices lower and will for some time to come.

Reasons to Buy Vail Real Estate #1 and #2

I just read the most recent Barron's which prompted me to again write about the REASONS TO BUY VAIL real estate. Interest rates are nearly guaranteed to stay low for another 2 years, and 15 year mortgages are available at 3.5%. I just recalculated my monthly house payment and deduced that for an extra $600 per month, we can refi and have our house paid off in 15 years! This is exciting to me as we struggle to find the bright side of lost investments, try to remain calm amid certain political and economic futures and continually digest a skepticism regarding the financial markets. With interest rates this low and expected to fall further, financing an investment property may be easier than ever.

Reason #2 is more subjective but revolves around the expected volatility of housing prices in Vail and Beaver Creek for the next few years. No one knows when we will find the bottom but given the positive demographics for our area and the fact that the first baby boomer just retired, I think the prospect for continued precipitous declines in value is negligible. Certainly real estate values have room to fall further, but echoing the sentiments of dividend-paying stock investors, why not invest in real estate that can generate a positive current return from rental income?

In the words of the famous Warren Buffet, "Be greedy when others are fearful and be fearful when others are greedy."

Buying Resort Real Estate in Vail and Beaver Creek with Retirement Funds

What if you want to invest in real estate in Vail or Beaver Creek but all of your money is in your IRA or 401k rollover account?  Did you know that you can use your retirement funds to buy real estate? Self-directed IRAs are becoming more and more popular with savvy investors. The process is relatively simple and allows you to actually receive the income from rental properties if you are of retirement age. If you are not yet of age to withdraw from your retirement account, you can invest the proceeds any way you see fit in your self-directed account or move those funds back to another investment. The IRS does have strict rules in place regarding the personal use of real estate held in an IRA. If use of a property is paramount in your decision making, then there are other alternatives available for you involving annuities which we can discuss. The benefits of buying rental real estate in your IRA are numerous and include the possibility of predictable monthly cash flow (with long-term rentals), price appreciation and less volatility than the stock market. You can also form an investment partnership with others and combine your IRA investment if you want to buy but either wants to limit your exposure or do not have enough money of your own to buy the right property. I have recommendations for selecting an appropriate rental property for this type of investment as well as suggestions for administrators of self-directed retirement accounts.

Is Resort Real Estate in Vail and Beaver Creek a Timely Alternative Investment?

With the Dow see-sawing on a daily basis and global headlines predicting another economic meltdown, why not consider investing in something that can generate current income? The price declines in Vail and Beaver Creek real estate have generated some outstanding opportunities to acquire properties that serve the dual purpose of vacation home and income producer. Recent resort sales of platinum rental properties have demonstrated gross current income of 5-8% before taxes and expenses. Owners typically pay 55-60% to the management company which markets to and books the renters, provides housekeeping, check in services, etc…   Owners can come and stay at their chosen times and still enjoy the benefits of strong rental income to offset expenses and taxes while typically enjoying substantial tax deductions. Ask your accountant if your travel expenses could be deductible as well.  Investors also benefit from likely future price appreciation in the Vail and Beaver Creek real estate markets.