WALL STREET vs. WATERFRONT

A conversation with a colleague recently led to the topic of investments. Where’s a good place to put money to work in this economy that will achieve a decent return? We talked about various instruments- T Bills (security), equities (growth, income), and I of course brought up Real Estate. As with any situation, each person’s circumstances dictate their own strategy, but I came up with the following as basically an exercise in outside the box thinking. (I’m usually WAY outside the box).

            OK, so you have money to invest. Where to invest it? If you don’t manage a hedge fund or aren’t a Wall Street insider, you have a difficult and not particularly attractive set of alternatives. Ten year T Bills are a safe place to park money, but as of November 8, 2012 they were returning a whopping 1.67% that is .0167. How about the Stock Market? As of November 8, 2012 ETF’s for the Dow Jones Industrial Average (DIAMONDS- DIA) were yielding 6.05%. Not bad, but not great. With inflation at 2% as of September 2012, that leaves you 4.05% on the Dow and -.33% on the ten year T bill. These returns are usually taxed as capital gains at a rate of 15%, so that needs to be deducted to get your true returns not counting inflation. On a $1,000,000 investment in ten year T Bills, you’ll net $14,196 at a 15% tax rate and $51,425 on your DIA EFT.

            How about a different idea? If you have a million dollars to invest, it’s probable that vacations are important to you, and are part of you annual budget. You have a choice when you go on vacation- rent or buy. Lake Winnipesaukee is one of the most popular resort areas in the world. Let’s say you want to vacation here and want to do so for the summer with your family. Rents for houses in the one million dollar range on the lake range up to $5000 per week. Renting a lake house like this for ten weeks will run you $50,000. OK, so you now send your two kids to summer camp. These camps cost anywhere from $1000 to $1750 a week. The usual summer camp season is eight weeks long. Now with just two kids at camp, that’s $22,400 a summer. The math leads us to total of $72,400 in expenses.

            Now say you take your $1,000,000 and buy a lakefront home on Lake Winnipesaukee (this is entirely possible- we have many great waterfronts priced in this range). There is a tax cost to this- property taxes. If you buy in Meredith, the Tax rate is $12.53 per thousand or $12,530. If you buy in Center Harbor, or Moultonborough, its less; but lets pick Meredith because I live here and it’s not the extreme – I don’t want to stretch my credibility too far. So, we have a cost to own (tax consequence) of $12,530 per year.

            Here’s the fun part. Assuming you are still with me, if you buy the Lakefront home, you save $50,000 by not renting and you don’t need to send your kids to camp because you own your own camp, saving another $22,400- a total saving of $72,400. Deducting the cost of real estate taxes, you net a total saving of $59,920.

            Here’s how the three investments stack up:

Investment amount     $1,000,000

            10 year T Bill               Returns $14,196

            Dow Jones EFT           Returns $51,425

            Winni Lakefront          Returns $59,920

            This monetizes the use of the property for only the summer season. All the rest of the year is a bonus. Also, remember that the returns on the Real Estate do not rely on appreciation as the Dow Jones EFT does.

            Now, I know this is a different approach to real estate investment. It truly is a stretching of the usual thinking, but I think its fun to change the paradigm. Blending investment real estate insights with the residential real estate market (especially in the second home market) can open new ways of thinking about what your money can do for you. The investment in a Lakefront home also pays dividends in other than dollars and cents. Is your family’s happiness increased by spending time at the lake? Do the clean air they breathe and the clear water they swim in improve their health and well being? What is the value of the memories of family time spent on the lake? Putting a monetary value on these benefits is impossible, but the worth of these intangibles will stay with your family forever.

            I’d love to hear your thoughts on this. Please contact me: Kim Cedarstom at 603-520-6609 or email me at kcedarstrom@roche.g.corvida.com.

South Down Shores Barn Complex Transformation

South Down Shores Barn Complex Transformation

In 1981, the transformation of Laconia’s scenic South Down Farm began, converting the former 126-acre ...
Read More →
Massachusetts and New Hampshire - a Tale of Two States

Massachusetts and New Hampshire – a Tale of Two States

Most of my articles talk about housing, trends, home values, and the desirable lifestyle we ...
Read More →
Spring flowers at the Belknap Mill in Laconia, New Hampshire

Spring Trends in Lakes Region Properties

It’s been one of those winters, or should I say lack of winters, that we ...
Read More →
Sales Snapshot: The Current Highest Prices Property For Sale in The Lakes Region Is on Governor's Island for $12,998,000

Sales Snapshot: New Hampshire’s Affordability Challenge

As we spring into March and approach our busy spring selling season, I thought I’d ...
Read More →
Gunstock Mountain in Gilford, NH

Gunstock: Gem of the Lakes Region

Nestled among the stoic peaks of the Belknap Mountain range in the heart of New ...
Read More →
Roche Realty Group Announces Top Producers for 2023

Roche Realty Group Announces Top Producers for 2023

Meredith — Frank Roche, president of Roche Realty Group, announced the top five producers for the ...
Read More →
AI and the Future of Real Estate

AI and the Future of Real Estate

Imagine, if you will, looking at a mysterious picture box filled with a whole world ...
Read More →
Prices rise Broadview Condominiums originally sold to the developer for $500,000

Prices Rise Ahead of Super Bowl Sunday

We’ve got a great match coming up for this year’s Super Bowl…The 49ers vs. the ...
Read More →
Smart Moves in Condominium Ownership Samoset

Smart Moves in Condominium Ownership

Here in the Lakes Region, a good part of our residential housing inventory is in ...
Read More →
Land Sales Unveiled: New Hampshire's 2023 Market

Land Sales Unveiled: New Hampshire’s 2023 Market

New Hampshire The Granite State… true to its motto, “Live Free or Die”, which encapsulates ...
Read More →
Exploring Cash Sales Dynamics in Lakes Region Real Estate

Exploring Cash Sales Dynamics in Lakes Region Real Estate

I was at a sales meeting at Roche Realty Group the other day, and we ...
Read More →
Roche Realty Meredith

Roche Realty Group Reports Over $150 Million in Sales

               Meredith- Frank Roche, President of Roche Realty Group, Inc., ...
Read More →
Lincoln, New Hampshire Riverwalk Resort

Lincoln, New Hampshire: From Mill Town to Ski Destination

Tucked in the heart of New Hampshire, sprawling across 131 square miles of varied terrain, ...
Read More →
Lakes Region Towns Stand Out For Their Spirit of Giving

Celebrating the Spirit of “Giving” in the Lakes Region

Nestled in the picturesque landscapes of New Hampshire, the Lakes Region stands out not only ...
Read More →
AI's Impact on the future of real estate

Real Estate’s Future: The Impact of AI

The other day, I was talking with my son Chris about the changes in the ...
Read More →
NH Lake Sales Activity - picture of lake with mountains and homes

Lakes Region Waterfront Sales 2022 vs. 2023

We’re getting near the end of the year, and I thought I would pull up ...
Read More →
Winter Snowmobile

Real Estate in a Winter Wonderland

As I drove around the other day with my kids, I was looking at some ...
Read More →
Toys for Tots Drive

Roche Realty Host Annual Toys for Tots Drive

As the holiday season approaches, Roche Realty Group is excited to announce the kickoff of ...
Read More →
Small Business Saturday New Hampshire

Small Business Saturday Living Gratefully in New Hampshire

We have so many things to be thankful for here in New Hampshire: plenty of ...
Read More →
Annie Brown Joins Roche Realty Group

Annie Brown Joins Roche Realty Group

Meredith — Frank Roche, President of Roche Realty Group, Inc., with offices in Meredith and ...
Read More →
Gunstock Mountain in Gilford, NH

Gunstock Upgrades for Winter as Real Estate Shows Resilient Growth

As the leaves of New Hampshire’s forests transition from the vibrant hues of fall to ...
Read More →
Preserving New Hampshire's Lakes

Preserving New Hampshire’s Lakes: A Community Effort

With over 250 lakes and ponds throughout New Hampshire’s Lakes Region, there are unlimited outdoor ...
Read More →
Home Inspections — The Uninspected Abode: A Spine-chilling Tale of Regret and Terror!

The Uninspected Home: A Spine-chilling Tale of Regret and Terror!

One night, not many years ago, in a quaint, somber town nestled amidst the haunting ...
Read More →
Interest Rates

Interest Rates Impacted by Treasury Yields

It looks like the national picture for housing stats has not improved in recent months; ...
Read More →
Local Housing Crisis: Challenges and Solutions

Local Housing Crisis: Challenges and Solutions

Our communities are facing a shortage of both residential and commercial properties, a scenario that’s ...
Read More →
Fall Splendor In New Hampshire

Fall Splendor in New Hampshire

New Hampshire in the fall is akin to stepping into a live canvas painting — ...
Read More →
Samoset Condominiums on Lake Winnipesaukee

Condominium Sales Surge in New Hampshire’s Lakes Region!

As we start entering October’s bright fall colors, I thought I’d take a look at ...
Read More →
Empowering your offer

Empower Your Offer in a Sizzling Real Estate Market!

As a seasoned real estate professional, I often consider the market conditions to keep myself, ...
Read More →
Reviews of New Hampshire's Lakes Region

Reviews of New Hampshire’s Lakes Region

We’ve had a great summer in New Hampshire’s Lakes Region, and we’re approaching the brilliant ...
Read More →
Waterfont Sales Activity Wolfeboro, New Hampshire

Waterfront Sales Activity in the Lakes Region

As we head into September, I have compiled data and insight into what is happening ...
Read More →
Labor Day Weekend

Labor Day Weekend in The Lakes Region

Labor Day Weekend has arrived, and the weather forecast for the Lakes Region looks fantastic, ...
Read More →
Interest Rates

The Mortgage Interest Rate Dilemma

This past week, we saw an increase in mortgage rates following a rise in bond ...
Read More →
Best State To Live In — New Hampshire at #3

New Hampshire 3rd Best State To Live In!

WalletHub just released its rankings of the best state to live in for 2023. It’s ...
Read More →
City/Town Comparison can make the research process easier

City/Town Comparison For Your Move

Some studies place moving to a new location as one of the top ten most ...
Read More →
New Hampshire Real Estate Lacks Inventory

New Hampshire Real Estate Inventory Crisis

A Multifaceted Analysis of Rising Interest Rates and Beyond New Hampshire is currently facing a ...
Read More →
Peaks of New England

Exploring the Peaks of New England

In my younger years in school, I always loved geography. Living in New Hampshire, there ...
Read More →
Climate Exodus: Insurance Companies Seeking Refuge from High-Risk Sates

Climate Exodus: Insurers’ Fleeing High-Risk States

Flooding, Forest Fires, Heat Waves, Tornados, oh my! The recent stretch of weather has certainly ...
Read More →
Real Estate News Headlines - Lakes Region NH

Real Estate Tidbits to Consider

Here are a few real estate tidbits I’ve pulled to keep you up to speed ...
Read More →
Roche Realty Group Sells out Lakeside at Paugus Bay

Roche Realty Group — 6 Months in Review

Closed sales for the first 6 months of 2023 have been impressive at Roche Realty ...
Read More →
Newfound Lake

Lakes Region Waterfront Sales Activity 6 Month Comparison

Below you will find data and insight into what is happening in sales activity on ...
Read More →
Buying Land

Buying Land in New Hampshire — Comprehensive Guide

New Hampshire, also known as the Granite State, offers a diverse landscape that includes picturesque ...
Read More →
Weirs Beach: A Tale of History, Community, and Natural Beauty

Weirs Beach: A Tale of History, Community, and Natural Beauty

As we celebrate the 100th anniversary of the oldest bike week in the country, let’s ...
Read More →
First Five Months of Lakes Region Real Estate

Five Months of Lakes Region Real Estate Activity

The month of May’s real estate statistics just came out for New Hampshire, and it ...
Read More →
A bird's eye view of Long Bay on Lake Winnipesaukee

South Down Shores and Long Bay on Lake Winnipesaukee — Its History

When construction started in 1981, Laconia’s South Down Farm offered a picturesque setting for condominium ...
Read More →
Memorial Day — rows of gravestones with flags in military cemetery

Memorial Day Weekend Arrives in the Lakes Region!

The long-anticipated Memorial Day weekend has arrived after a long winter, and the Lakes Region ...
Read More →
Unlike the dandelions new listings aren't popping up in the Lakes Region

Will Listings Start Bloom Like Dandelions?

Will Real Estate Listings Bloom Like Dandelions? During my rides around the Lakes Region, I’ve ...
Read More →
boat launch

Public Boat Launches in the Lakes Region

New Hampshire’s Lakes Region is a paradise for boating enthusiasts and we are now entering ...
Read More →
Real Estate Scams

Real Estate Scams to Be Aware of

One of my Realtors® received a call today from a gentleman purporting to be the ...
Read More →
Brant Point Lighthouse, Nantucket overlooking the ocean

From the Lakes Region to Nantucket

I spent a few days on Nantucket Island this past week for a quick getaway. ...
Read More →
Lakes Region Real Estate Is Still Hot

Lakes Region Real Estate Market is Sizzling

The real estate market in the Lakes Region and the state of New Hampshire is ...
Read More →

1 thought on “WALL STREET vs. WATERFRONT”

  1. Kim nice article. I agree the wife and I just bought a lakefront home in Maine and the return in investment does not always mean money. We have owned it a couple of months now and it has already started to pay us back with the fun time we are having there. People have no idea that this too is a beautiful time of the year. I do not regret buying this place.

    Reply

Leave a Comment