As The Wall Street Journal notes, “real estate is a tricky asset” — but it’s one Cardan Capital Partners co-founder Matt Papazian typically considers when advising our clients. He recently spoke with the WSJ for a report about the different approaches financial advisors take to real estate investments.
From the article:
“Real estate is a tricky asset. It’s notoriously illiquid, subject to boom-and-bust cycles, and — especially in its role as dwelling place — emotionally fraught at the best of times.
“And the asset class is especially fraught for wealth managers. It means different things to different clients, depending on where they live, what they do and how much money they have. In turn, these variances call for different – sometimes radically different – approaches to real estate by financial advisors.
“… For clients of Cardan Capital Partners in Cherry Creek, Colo., a suburb of Denver, real estate is often more personal, as it can have a direct impact on retirement strategies.
“Denver’s attractions as a business and cultural center with a good climate and beautiful scenery have made it a magnet for technology startups – many of them priced out of traditional tech hubs like San Francisco. This gives the advantage to sellers, says Cardan’s Matt Papazian. And it colors retirement plans for clients who may have raised families in large homes on the city’s outskirts and now want to scale back in the name of savings by moving closer to downtown.
“Put simply, rising prices in Denver mean these imagined savings don’t always materialize.
“’You have to take real estate into account in the entire financial picture, including carrying costs, insurance and taxes,’ says Papazian, whose firm manages about $630 million. For local ‘retirees downsizing and moving closer to the city, a smaller place could cost as much as what they had or more.’”
“In this context, Papazian’s advice to some clients is pretty succinct. ‘If they can wait’ to downsize in Denver, ‘it may make sense to wait,’ he says.
“And for those new to the area — even if they’re from go-go markets like San Francisco and New York that make Denver real estate look cheap — the best option ‘might be renting until they decide on an exact place,’ says Papazian. ‘They may come focused on one area, and find they get better value in the suburbs.’”
For the full report, click here.