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Ask an Advisor: Is It Smart to Invest in Real Estate? Comments

buying real estate

What do you think about real estate investments (e.g. owning several rent-positive properties to generate recurring revenue in later years)? — Karen, Arizona 

There are many different ways to invest your money and many asset classes to invest in. Owning physical real estate is one, but be aware of what is involved: Unlike some other asset classes, rental properties have a number of issues — namely, cash outflow whether your property is rented or not. No matter what, your mortgage, taxes, insurance and maintenance all need to be paid on a timely basis. 

If you’re able, employ someone responsible to deal with the problems that can (and do) occur with owning townhomes, condos and apartments: the toilet backing up, the roof leaking at 2am, issues with other tenants (in a multi-unit complex), replacement of worn-out appliances, etc. If you don’t have a staff to maintain your property, recognize that you will be the one taking care of these calls. And don’t forget: There are things that no one can anticipate, such as a natural disaster like Superstorm Sandy. Many rental properties were wiped out from Sandy, but the owners still had to pay for their mortgages and taxes while they were waiting for their insurance to kick in.

Personally, I prefer assets such as quality stocks with solid dividends as a way to generate recurring income, especially for the future. Even when the market is down, the income from very high-quality stocks may hold steady and grow. In 2008-2009, we had a brutal bear market. The principal value of most equity owners went down during this very difficult period, but those who held high-quality, dividend-paying stocks generally maintained a steady stream of income.

Binney Wietlisbach has worked in the financial services industry since 1985 and has been affiliated with The Haverford Trust Company since 1992, acting as its President since 2008. She is a member of the Executive Committee, a voting member of the Investment Selection Committee and a member of the Board of Directors of The Haverford Trust Company. Binney is also the Vice President of Haverford Financial Services. She is the mother of two teenage children, an avid runner and plays on the first golf team for Gulph Mills Golf Club.

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