Posts Tagged ‘real estate agent’

Protecting Yourself from Inflation: Financial Planning

Posted on: April 28th, 2010 by

Financial Planning - Rockville, MDIn addition to death and taxes, inflation is another certainty in life.  Because of this, it is important to plan your financial future and investments in a way that will maintain your assets purchasing power.  One investment, despite the public’s fear, are stocks.  Some of the best companies to own during inflation would be those companies that can increase their prices naturally during inflationary periods.  Commodity resource companies  can be a fairly safe investment as the company’s pricing power will usually only increase during such periods.  Look for companies with the largest profit margins.

Real estate is also a great investment when done for the right reason.  A lot of people find themselves in a dilemma when their goal is to “flip” a home rather than buying it to live in.  Although many real estate investors are able to find hidden value in properties, most individuals do not have this knack and should focus on owning to live in the home for at least a couple of years.  Real estate investments do not usually come to fruition over several weeks or months.  If you live in your house and pay off your mortgage in the 15-30 yr. period your loan was for, you will then have a debt free asset that will continue to appreciate in value.  So, rather than holding on to money in a savings account, which will cause a major loss in purchasing power by retirement, a real estate investment will have the opposite effect.

One of the easiest and best investments to make to secure your future is in yourself.  Further your education and learn new skills.  This will increase your job security and increase your future earnings potential.  This will help to make your future assets/earnings recession proof.

Buying stocks, becoming a homeowner, and enriching yourself with education are all good ways to combat inflation.  You should sit down with a financial planner to assess the best plan of action, as well as where to put those funds and when.  A reputable real estate agent can help you find the ideal home in the ideal area that will best suit your needs, rather than picking a house that you think is “flippable”.  Just remember that as inflation increases at 7%, and your bank account only at 4%, you may feel richer, but you are actually 3% poorer without really knowing it.

Retirement Living: Buy or Rent?

Posted on: April 20th, 2010 by

Financial Plan - Real Estate - Rockville, MDPeople who think about moving to a new home in retirement invariably plan on buying that home.  In some cases, though, renting may be the smarter option.  Real estate markets are still fairly volatile even though home prices in some areas are beginning to stabilize.  One of the easiest ways to approach the buy versus rent question is to use the “price to rent ratio”.  Just take 2 houses of similar size and quality, one for sale and one for rent, in the same neighborhood or comparable neighborhoods; then take the price of the home for sale and divide it by the total cost of renting the other house for a year.  If the resulting number is higher than 20, it’s likely the price of the home for sale could fall further.  Thus, renting would be the better option.  However, the price is most likely near its low if the figure is 15 or below.  15 is the number at which rental and ownership costs are close to even.

There are other factors to consider when deciding whether to buy or rent.  If you have reason to believe that you are building equity, its okay to pay more to own.  A low price to rent ratio on a property that you plan on being in for more than a decade should signal an attractive buy even if the monthly payment is a bit higher.  But, if you are paying more in context and are unlikely to build equity due to a falling housing market or you won’t be in the home long enough to build equity, you should definitely not buy.

Sitting down with a reputable real estate agent and financial planner can help you decide which options might be best for you.  Whether you are trying to decide whether to live in the city or suburbs or whether to rent or buy, having professionals help you is always the smartest move.