Top 5 essential financial steps to consider the prior Real estate Investment
Once you are firm with your decision of investing in the real estate world, it is the right time for you to get good returns on your financial investment in the future. Provided, it is mandatory that you should practice tackling few tasks in prior putting your money in the real estate world that makes money for you.
The following five steps that you can consider before investing your money not only in real estate, but also for any kind of investment plan like the stock market, tax liens and so on.
5 Financial steps to consider
- Maintain sufficient Emergency Fund
It is quite natural that every one of us may meet with some unexpected expenses at times. So, it is always advisable to set aside a portion of your savings as Emergency fund, which act as a self-insurance for those expenses which you may not able to insure.
- An unexpected medical expense or due to some instance you may lose your bread winning job, or a major car repair or it can be in any unpredictable manner. During such scenario, to bridge such financial gap, instead of applying for high interest payable credit cards, you can rely upon your pool of savings turned emergency fund.
- So, in prior to your idea of investing in real estate, it becomes necessary that you should own such account set up with sufficient funding in that. Also, such funding must be kept aside, apart from your other assets and it acts as your moat. Such funding will safeguard you against unknown bad happenings. So, holding an account especially for emergency fund will save your day in the future.
- It is recommended to hold your emergency account in the form of liquid account such as certificate of deposit, savings account that makes it easy for you to access.
Financial experts say that it is likely to save nearly six to twelve months of your expected expenses as your emergency fund. If you are employed in a tenuous situation, you may set aside 12 months of your savings.
If you own an old car or any other appliances in home that are expected to fetch you with major expenses shortly, then increase your fund in emergency account until you mitigate such risks.
2. Give priority to settle High Interest Debt
Next or along with the emergency fund, it is advisable to pay off all your high interest debts. If you are paying high interests for your debit or credit card debt, you should prior invest in yourself and resolve such debts at the earliest before your real estate investment plan.
You can get assured returns on every dollar you pay off towards resolving your debts. With more the expensive the debt being, you are guaranteed with better return. It’s just not only a great return, but helps you to stay in a risk — free zone.
You may feel happy for earning 10% returns on your investment, unless you are paying off 18% higher interest for your credit card debts.
3. Ask your Employer for “Free Money’
If you are working in a company, where they offer a retirement package, it is good to ask for such full advantage of financial benefit they provide you. Most of the employers that provide 401(K) plans will offer their employees in respect to their contributions. So, the higher you contribute the higher advantage of free money you can gain. It’s an immediate investment doubling option for you.
4. Structure a Financial Roadmap
You have to structure a financial road map which will assist you to better understand your potential. Based upon your financial picture, you can fit in real estate investment.
- Sketch your financial road map that includes your goal during your age of 20 and perhaps plan your financial milestones every 5 years. Also, find where your real estate investment plan fits in that overall investment portfolio?
Also, you can make smarter decision based upon understanding your plan regarding your returns that you prefer to fetch out of specific investments. Whether you need a liquid cash flow or equity appreciation? Are you planning to get immediate returns on investment or wish to hold it for the long term? You will be able to come up with a better answer if you hold a good plan.
5. Be cautious with Investment Scams
Lastly, research and understand about the regular real estate investment scams that happened during the last twenty or thirty years.