A financial plan that is solid should leave no room for family members left behind to feel unprotected or stranded. In this case, careful management of income without the presence of investor has to be flawless, to be able to provide the family with all incomes necessary for a comfortable life. However when it comes to financial planning many rarely think of real estate investing. In this regard here are solid reasons as why one should use real estate investing as a financial plan.
The reality is that in the past rent was considerably lower and all real estate owners seemed not to reap as much. However as time passed, rent fee increased and thus the benefits started pouring in. With the fact that inflation in land and buildings tend to take the dive upwards, investing it as an asset and actually getting income from it is advisable. The best part is that in case normal income flow stops or declines, moving into the property is always an option.
Owning a home is usually one of the biggest investments one can make and often considered a dream come true. However to make this dream come true for many, most governments often aid in the process when it comes to mortgages. This comes about as there is usually an interest deduction percentage given. When considering a set of financial planning possibilities, real estate is one of the few that does not require a lot of input but brings about a lot of profits.
Investing in stock is often the most common type of financial plan that people go to first before considering other ventures. However with a poor understanding of what really works, the end result is usually significant loss and abandonment of the whole venture. With real estate, there is not much to understand as it is all straight forward. With good tenants and a good location with the best amenities, the rent income is sure to flow at a steady rate.
Long and short term investment
With many forms of financial planning ventures, the temptation to usually sell as quickly as the investment is gotten is usually very high. Looking at real estate, it guarantees a stable income which has the likelihood of increasing in future days. On the other hand, it happens to be the only sure financial plan that is secure. Still considering that the marketing process of selling is both hectic, time-consuming and expensive, it is usually best to sit on the property.
In the current economy, it is extremely hard for the younger generations to actually afford to have a financial plan that will be sufficient. Worse is this is just the start of things to come, as it will be difficult for future offspring’s to be able to even afford to do financial planning. Although real estate being an asset that appreciates, no doubt they will not only have a home to live in in tough times but also additional incomes to make them comfortable. Satisfying the definition of a financial plan completely.
With rental contracts available to safeguard a home owner, having a passive income as the best retirement financial plan seems like the best option. Even with the needed maintenance costs that may arise, there is usually the profit that comes in on a monthly basis. However with a good tenant, one can be able to comfortable in having a secure stream of passive income for at least a year or more before the need to look for another tenant arises.
Fixed recurring costs
With the fact that real estate is an active investment, some may need to have a manager to work on the asset. Of course, this would bring an additional fee to pay a salary of the manager. This is already in addition to the quick fixes and ways of improving the property. However although this may seem like it’s cutting into profits earned, in the long run, it becomes expected and one no longer concerns themselves with it especially as asset appreciates. Still if one has a fixed mortgage rate payment system, one gets to enjoy to pay the same amount. In this case, the amount of debt compared to one’s net worth is usually not worth as much. This is extremely different from other forms of financial plans that often come with varied costs, some extremely large bringing about huge irreparable loss.
With many financial planning methods not offering as much as real estate investing does, it is clear that many are missing from a good investment.