Many often articulate some of the essential elements 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 every possible component that could enhance one’s ability to be as successful, from a financial perspective, as possible. However, many only view 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 and a specific perspective, to determine how to create the right balance and direction for each of us. There is no such thing as a 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 must begin this process by giving yourself a checkup, from the neck up, and determining what your personal financial goals are and why. Real estate should be divided into two categories: personal housing; and investing For most people, home equity represents their largest single investment, as well as housing and owning a piece 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, a 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 upgrades; and; a reserve for contingencies. When investing, consider cash flow, rates of return, and both possibilities and ramifications.
2. Do you want to be a landlord?: Are you ready, willing, and able to own it and the associated responsibilities, stresses, strains, hassles, and potential strains?
3. Balanced Portfolios: Wise investors seek to diversify, and doing so means properly balancing investments in stocks, bonds, savings, real estate, etc. Real estate traditionally rises in value at or slightly more than the rate of inflation, while bonds often do not, and stocks are often selective and challenging to balance and choose from. appropriate and effective way.
4. private house: How important is it for you to achieve, in part, the American Dream by owning your own home? It makes sense to consider whether to buy or rent, where to do it, advantages and disadvantages, and ways to be financially prepared for the unexpected, and enjoy it!
5. Invest in real estate: Some people use real estate investment trusts, or REITs, to participate in real estate investments. They hope to take advantage of professionally managed portfolios, but must recognize that some are more conservative and income-oriented, while others may be less secure and more speculative. Others begin their involvement by purchasing a two-family home, and it is prudent to weigh the costs, potential, and 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?