Applying Real Estate into Your Financial Plans

Applying Real Estate into Your Financial Plans

 Gordon van Eeden

Applying Real Estate into Your Financial Plans

For most nonwealthy people, purchasing investment real estate has a major impact on their overall personal financial situation. So, before you go out to buy property, you should inventory your money life and be sure your fiscal
house is in order.

Ensure your best personal financial health

If you’re trying to improve your physical fitness by exercising, you may find that eating lots of junk food and smoking are barriers to your goal. Likewise, investing in real estate or other growth investments such as stocks while you’re carrying high-cost consumer debt (credit cards, auto loans, and so on) and spending more than you earn impedes your financial goals.
Before you set out to invest in real estate, pay off all your consumer debt. Not only will you be financially healthier for doing so, but you’ll also enhance your future mortgage applications.

Eliminate wasteful and unnecessary spending; analyze your monthly spending to identify target areas for reduction. This practice enables you to save more and better afford to make investments including real estate. Live below
your means. As Charles Dickens said, “Annual income twenty pounds; annual expenditures nineteen pounds; the result, happiness. Annual income twenty pounds; annual expenditure twenty pounds; result, misery.”

Protect yourself with insurance

Regardless of your real estate investment desires and decisions, you absolutely must have comprehensive insurance for yourself and you’re major assets, including:

Health insurance:

Major medical coverage protects you from financial ruin if you have a big accident or illness that requires significant hospital and other medical care.

Disability insurance:

For most working people, their biggest asset is their future income-earning ability. Disability insurance replaces a
portion of your employment earnings if you’re unable to work for an extended period of time due to an incapacitating illness or injury.

Life insurance:

If loved ones are financially dependent upon you, term life insurance, which provides a lump sum death benefit, can help to replace your employment earnings if you pass away.

Homeowner’s insurance:

Applying Real Estate into Your Financial Plans

Not only do you want homeowner’s insurance to protect you against the financial cost due to a fire or other
home-damaging catastrophe, but such coverage also provides you with liability protection. (After you buy and operate a rental property with tenants, you should obtain rental owner’s insurance.

Auto insurance:

This coverage is similar to homeowner’s coverage in that it ensures a valuable asset and also provides liability insurance should you be involved in an accident.

Excess liability (umbrella) insurance:

This relatively inexpensive coverage, available in million-dollar increments, adds on to the modest liability protection offered on your home and autos, which is inadequate for more-affluent people.
Nobody enjoys spending hard-earned money on insurance. However, having proper protection gives you peace of mind and financial security, so don’t put off reviewing and securing needed policies.