Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Hard-Earned Truth About Recreational Real Estate

Housing-Market / US Housing Mar 27, 2015 - 05:52 PM GMT

By: DailyWealth

Housing-Market

Peter Churchouse writes: A group of us were having lunch on my recent ski trip to the French Alps.

One of the guys leaned across the table and showed me some photos on his iPhone.

The images showed a stunning piece of property. A gorgeous chalet set amongst the trees and snow of a mountain resort in western Canada. A very seductive piece of real estate.


I commented that he and his wife must rattle around in there like peas in a pod given how big the property was.

"Yep, we do, now that the kids have grown and are off doing their own thing."

"Expensive to run?" I queried.

"Very" came back the reply, instantly. "In fact I could take two months holiday each year in some of the best resorts in the world with the cash that I pay just to manage this place."

"Do you have any plans for the property? I asked.

"Absolutely. We're trying to sell the place... It's been on the market for nearly a year. No serious buyers yet."

I hear this story repeated constantly from friends and acquaintances all over the world.

They fell in love with a piece of "recreational real estate."

The family doesn't really use it much these days. The kids have flown the nest and have their own agendas.

Maintenance and management costs are very high. This isn't a simple lock-up-and-leave apartment.

Worst of all, the property cannot produce a decent reliable rental income stream.

And this all comes just as retirement is hitting home and that regular paycheck is fading.

I know other owners of recreational-type real estate in France, Italy, Spain, Croatia, New Zealand, Australia, even Canada and the U.S. who are trapped with their properties.

Yet, in major cities in these countries, real estate markets are often doing well. Prices have recovered. But more importantly, there is liquidity. By that I mean deals are getting done.

That is not the case in those wonderful beach, river, mountain, and lakeside locations.

In my opinion, recreational real estate is often not an investment at all. It is an expensive consumption item.

We all have the potential to get seduced by that wonderful country cottage, the beach house, the chalet in the mountains. I have almost succumbed to this temptation a number of times myself.

I remember sitting in the enormous garden of a friend's house in the south of France one sunny summer afternoon a few years ago, drinking rosé and thinking, "I could make this work." I even got in touch with a few agents... But fortunately, I came to my senses.

The trouble is that rationality tends to fly out the window when we look at these beautiful examples of the builder's art. There is no doubt that you and the family may love to spend a couple of weeks, or even a month a year there, if you're lucky.

But think about some of the realities...

Owning a recreational home somewhere narrows your options. Perhaps you might want to go to other places, experience other countries, locations, activities. Owning that cottage by the lake means that you may not get to enjoy other experiences so much, if at all.

And what about management of the cottage, chalet, or house when you are not there? Or when you do go there? I know people who spend the first week of their holiday doing maintenance chores and fixing broken gear at their holiday home. If that is what cranks your crank, then fine. But most of us view our holiday time a bit differently.

And who is going to manage the property for the many months that you are not there? To check that pipes have not broken and that the windows and roof are not leaking. And to ensure the place doesn't become overrun with insects, mice, cockroaches... It happens, I assure you.

And then there is the cost of that management service. Employing a professional management company can be expensive. You can pay anywhere from 10% to 40% of your rental income to your management and listing agency.

My email inbox is loaded with files of wonderful, seductive, gorgeous recreational real estate sent by agents from all over the place.

I do find myself having a browse and getting a sense of how markets are behaving. But I do not get tempted these days.

I have enough expensive vices in life as it is. Being a boat owner is one of them!

But don't get me wrong, I don't believe you shouldn't indulge your real estate fantasies. But recognize them for what they are. Just that – a wonderful fantasy to be enjoyed and paid for.

Worst of all, I've seen so many friends and acquaintances put their hard-earned money into holiday real estate without even owning proper investment real estate!

It's madness!

To my younger readers, the ones in their 30s who may now have a little cash in the bank, please ignore recreational real estate. Forget about it.

In my opinion, it only makes sense if you already have a property or two under your belt, like a home and an investment property.

I am a big believer in owning real estate for long-term capital preservation, growth, and income.

A small property or two in your investment portfolio can provide a big boost to your income stream later in life.

If you are looking at real estate, make sure it's at least a solid investment property.

And by that, I mean a nice one- or two-bedroom apartment. It should be in a location where people wear suits and ties to work. Somewhere you and a better half would be happy to live yourselves.

That's exactly how I've built my investment property portfolio. My properties all have one to three bedrooms. They're located in areas favored by professionals and are therefore rarely vacant. They are in major global cities with solid property rights and transparent legal systems. And they require minimal maintenance.

By the time you're in your late 50s, the mortgage will be paid off and you will likely be sitting on good capital gains. On top of that, you'll have an asset that's spinning off free cash flow month after month.

I can't tell you how many folks in my generation wish they had a couple of those kinds of assets right now...

Good investing,

Peter Churchouse

Editor's note: Peter Churchouse is a longtime friend and colleague. His newsletter, The Churchouse Letter, is considered required reading around our office. And he's agreed to offer DailyWealth readers a completely FREE copy of Steve's favorite issue of The Churchouse Letter. You can learn more about Peter and this exclusive offer right here. When you get the free issue, you will be given a discount code to subscribe for a limited time at a rate that is too low for us to print.

http://www.dailywealth.com

The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2013 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Daily Wealth Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in