Right now, we’re going to talk about the fundamental benefits of real estate.
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Marcia Edwards: We’ve been talking about the opportunity of real estate. We can sit in a room and talk about that all day. Bob and I were just saying there’s so many directions to look at the benefits for yourself, but just fundamentally there’s risk in the purchase because you’re in debt now and that seems onerous, but let’s look at the possibilities.
Bob Nelson: The possibilities certainly include increase in value over time and as that value grows, your equity grows. That’s value minus debt equals equity. Yes, the mortgage pays off over a long, long period of time. However, value changes on a daily basis, on an annual basis, so even though you may seem to think my equity isn’t changing because the loan balance isn’t going down very fast, don’t ignore the concept of value increase, which can cause your equities and maybe potentially even double in one year.
Marcia Edwards: It’s beautiful. It’s amazing if you just watch value. I wouldn’t say Zillow is a great source, but annually to have your realtor take a look at your valuation of your property if you had to sell it right now to understand what your investments really, truly doing in the marketplace. If we saw 7% appreciation on the values in residential real estate in Lane County as we did last year, that bodes really well for your numbers if you took a look at it at this time.
Bob Nelson: That’s huge. In fact, at the beginning of the year, you should really create a financial statement, an accurate financial statement. What do I own and what’s the value of those things that I own? How much do I owe, and of course that’s fairly easily done because you can call the lender what’s the balance on my loan? The value of asset owned minus the depth that you owe equals your equity and your equity is your score sheet.
Unfortunately, it’s not easy. Much like some or certain other investment opportunity for you can look at a big board. There’s the value of Fletch offered and there’s the value of what sold for that particular thing, and you can calculate value quickly. In our case, it’s a long, slow process, but you would be absolutely amazed if you do an accurate job on a financial statement of how your net worth increases rather substantially over time.
Marcia Edwards: It’s time to look at it now. You’ve probably got some good 1099s or W-2s from the last couple of years, so to readjust your portfolio and right size for longterm gain, now is a great time to do that for most of us.
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.