Real Estate and Financial Planning – The Best, When Used Together!
Many often articulate some of the essentials of financial planning, but do so, without paying full attention to what this should include and mean. There are many needs, including the need to include all possible components, that could enhance a person’s ability to be as successful as possible from a financial perspective. However, many only look at this, in terms of stocks, bonds, and other investments, without fully considering where real estate should fit into the overall equation. It takes smart financial planning, both from a general perspective and a specific perspective, to determine how to create the right balance and direction for each of us. There is no one-size-fits-all approach, rather this article will attempt to consider, examine, review, and discuss why, in most cases, real estate should be a vital part of one’s personal financial plan.
1. Starting the process: One should begin this process by giving oneself a check-up, from the neck up, and determining what their personal and financial goals are, and why. Real estate should be divided into two categories: personal housing; and invest. For most people, the value of their home represents their largest investment, as well as their home and property – a part of the American Dream! In many cases, from a historical perspective, investing in real estate has been a quality decision, because not only does the property itself help keep up with inflation, but there are also tax benefits (including depreciation, etc. ) and, when done correctly, positive cash flow. Before this can be done effectively and efficiently, it is important to be prepared for financial needs. These include: funds for down payment and closing costs; financial reserves for repairs, renovations, maintenance and improvements; and; a reserve for contingencies. When investing, consider cash flow, rates of return, and both the possibilities and the ramifications.
2. Do you want to be a landlord ?: Are you ready, willing and able to own and the responsibilities, stresses, strains, annoyances and potential stresses associated with it?
3. Balanced portfolios: Wise investors seek to diversify, and in doing so it means, appropriately, balancing investments in stocks, bonds, savings, real estate, etc. The value of real estate traditionally increases at the rate of inflation, or slightly, more than the rate of inflation, while bonds often do not, and stocks are often selective and challenging to balance and choose, properly and effectively.
Four. Personal home: How important is it to you to achieve a part of the American Dream by owning a home of your own? It makes sense, to weigh, if you should buy or rent, where to do it, advantages and disadvantages, and the ways to be, financially prepared, for contingencies, and enjoy it!
5. Invest in real estate: Some people use Real Estate Investment Trusts, or REITs, to participate in real estate investing. They hope to take advantage of professionally managed portfolios, but should recognize that some are more conservative and income-oriented, while others may be less secure and more speculative. Others start their involvement by buying a two-family home, and it’s wise to weigh the costs against the potential and the risks.
Smart investors balance their portfolios and therefore their risk / exposure. Are you willing to commit, to proceed, wisely and with your, eyes wide open?