Today we’re going to talk about real estate risk reduction.
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Marcia Edwards: As there’s uncertainty ahead… We’re just going to be comfortable with that at some point because it seems permanent uncertainty, a lot of levels, that will affect our economy. Let’s talk a little bit about risk reduction and how to prepare for anything.
Bob Nelson: Well, that’s a… Boy, for anything. Right now, we’re having hundreds of earthquakes a day in Yellowstone. The word that I understand if that thing blows, civilization ends. I’m not sure how to prepare for that one, but as far as normal issues concerning risk that would unsettle your investment or ownership position, anything that jeopardizes your financial position is certainly an issue of risk.
Marcia Edwards: I would talk, first, to your experts on the scene, your financial planner, your CPA, your realtor of choice. Don’t hesitate to reach out to these people. Check and see if they’re on the clock, but us, we’re paid often by a contingency-fee basis. So the conversation is just really valuable for you, and not expensive, and accessible, especially to me and Bob.
Bob Nelson: Well, one thing that would be really important for your own understanding, prepare a good, strong, up-to-date financial statement. What do you own? What’s the value of those things that you own and don’t get exuberant. Be reasonable. What would they sell for? That’s the asset side. Deduct from the asset side all of the debts that you have.
Certainly mortgage debt is long-term debt and predictable, dependable long-term debt, all the way down to shorter-term debt, student loans, credit card interest and so forth. Credit card interest of course is brutal, brutal, brutal stuff. Identify how safe am I based on what the bankers would call a quick ratio, how much cash do you have available to cover short-term debt. Go ahead.
Marcia Edwards: In addition, I was going to say, while we still have a moment, look at your cashflow as well. See whether you’re putting more out or less than what you are bringing in. Take a good look at your monthly budget and your reality of what you’re actually spending as well. That analysis will show you what threshold you have and what margins you have given your expenses every month.
Bob Nelson: It’s really comfortable to have three months of living expenses setting aside in cash.
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.