Today we’re going to talk about planning for the future.
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Marcia Edwards: Well, it’s been a long haul of good times, I think, in residential real estate. How about your corner, Bob?
Bob Nelson: It’s been an exceptional time, a long period of asset growth, a stable economy, interest rates that are extremely low, including mortgage interest rates fixed for various periods of time when you’re after an income producing property, is fantastic.
Marcia Edwards: I think it’s time to take a really good look because all good things can come to an end, and we’ve got some transitions coming up, so let’s prepare ourselves for come what may. Maybe continuing to be robust for a long period of time, but let’s look at how you’re spending your assets, your cash availability, and doing it smart, we hope.
Bob Nelson: Stand back. Take a look at yourself. What are your income sources? Evaluate how stable is that source? Is there a way that that income source could either be diminished or it could be completely eliminated? If that’s the case, you need to build a safety fund, a fund that’s available for emergency purposes. It’s not going to be used for buying a new car. It’s not going to be used for a number of different things. It’s going to be used to support you in the event that there is an urgent need for cash on a short term basis.
Marcia Edwards: Reserves also are in your ability to borrow, if need be. So first you’ve got to make sure you have a cash reserve. I’d say four to six months is really, all your household needs should be met within, for about four to six months in your reserve account. That’s purely liquid.
Bob Nelson: Now look at your expenses. What are your monthly expenses? Add them up, multiply them by four. That’s what Marcia’s stating.
Marcia Edwards: And then I would suggest you continue to look a little bit deeper. If you were in dire straits and things still hadn’t turned around, do you have equity in your home? Do you have your home in good condition to refinance or to sell if you needed to prepare your home for anything that you need it for in the future as well.
Bob Nelson: So we’re looking at a situation that if things turn poorly for you, you will continue to survive and you won’t have to sell long-term investment assets in order to support your current lifestyle.
Marcia Edwards: So infill those assets. Now get your investment properties in good condition so they can endure tenant transitions and things, if something comes up.
Bob Nelson: Exactly. These are great ideas and great to do during good times.
Join Eugene, Oregon, real estate experts: Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments, and Marcia Edwards, Residential Real Estate Broker with Windermere Real Estate, daily at 5:30pm on KPNW for the “Real Estate Today” radio show.