This narrative below is fictitious and is presented for illustrative purposes only. The information provided here should not be construed as Financial Advice. Please schedule an appointment with us so that we may assess your personal financial situation and present a customized solution for your specific situation.
M. and S. are a younger couple who were looking to take a big financial step and purchase their first property together. The couple both worked full time they also wanted to enjoy their lifestyle. They are renting a small apartment together that does not use up much of their available income. They have accumulated a significant amount of cash for the down payment on a single family home but they are unsure whether they should purchase a property as an investment to provide some income and appreciation or whether they should purchase it to live in it. We would offer to help with the analysis to assist them with their decision.
How we Help
The couple is fairly diligent at budgeting which had allowed them to accumulate their savings. We would weigh the pros and cons of having an investment property vs. a principle residence, and the effect this would have on a mortgage need to purchase the property.
We would analyze the implications of Financing, Taxation, Cash Flow, Long Term Capital Growth and the risk of holding an investment property that would be difficult to sell quickly if they were to find themselves in financial difficulties. We would also identify the need for personal insurance once their property was purchased, to protect them against the possibility of not being able to meet their monthly mortgage payments due to an unexpected loss of income.
We would present the couple with some scenarios on what each strategy may look like, so they would be able to make a decision on what would be best suited for their lifestyle. We would then refer them to a mortgage broker who would assist them in obtaining a loan and an insurance broker to obtain property and liability insurance on the home.
Finally, we would assist them in developing a Cash Flow plan to maintain their desired lifestyle and to prepare for future Real Estate investment purchases.
The Moral of the Story: Proper Financial Planning Can Reap Rewards.