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Real Estate and Risk

Real estate can have a confusing place in our financial pictures: we live in it, we invest in it, we own it jointly with other people, sometimes for personal reasons, sometimes for business reasons. 

On one hand, real estate is an asset class like any other:  it has cycles that include ups and downs; it has costs associated with owning it; the Tax Act has rules on tax consequences when we sell it.

On the other hand, real estate is very different: we can live in it, we join finances with people through real estate when we wouldn’t share an investment portfolio with them, we borrow heavily to invest in it.

We increase our risk, financial and personal, for real estate in ways that we wouldn’t for another asset class.  Perhaps because of it’s physical presence, clients consistently under-estimate the tax, estate, relationship breakdown impacts on their finances and plans. 

Real estate now has it’s own place on my list of documents to collect to start your plan.