You’re Probably Ignoring the Biggest Investment of your Life
If you’re an investor, you probably meet with your financial advisor at least annually. You talk about your portfolio and get his or her thoughts on its current state; look back over its performance in the 12 months prior; look ahead to the next year and plan for adjustments and course corrections; and discuss strategies for various expenditures. Considering how much money most people have tied up in their investment portfolios, failing to consult with an investing expert would be nothing less than irresponsible.
So shouldn’t you treat your home the same way? After all, a home is the largest single investment of most people’s lives. And just as you consult with a financial expert in your portfolio of stocks and bonds, shouldn’t you consult annually with your real estate agent about the investment that is your home?
The most fundamental question you should have for your agent when you check in each year is: How has the value of my property changed? Many factors should go into the answer. The fluctuations of market you’re in will play a large part, obviously, but the agent should also take into account how changes to the physical space might impact both innate value and overall marketability. That new kitchen should improve resale value, but then again, the furnace is a year older. Your agent should be able to provide you with a comprehensive assessment of your property’s value, just as he or she would if you were listing your home.
Using this snapshot as a starting point, you should then look ahead to the coming year. Think about your home as an investment that should be monitored and maintained, just like any other investment. Is it finally time to replace that furnace? Does the house need to be painted? If you’re in a condo, are there any major special assessments coming up, like a new roof or repointing on a brick building?
From there, look further out still. Do you still plan to own the home in five years? How about 10? Some investments in the property will only make sense if you plan to own it for a good amount of time—for example, springing for that kitchen renovation will mean a major short-term expenditure that might not be immediately reflected in the resale cost if you plan to sell two years from now.
Remember, too, that any good agent will have his or her finger on the pulse of your market and the current trends that help drive it, so he or she can steer you toward the best choices for maximum salability of your home. For instance, maybe you’re thinking about building a roof deck. Your agent might have a perspective on what sort of spaces are most sought after. Tastes change, and your agent can help you stay up-to-date.
Involving your financial advisor
Lastly, while your real estate agent should be your primary go-to expert for managing the investment of your home, it makes sense to bring your financial advisor into the picture as well. There’s a great deal of overlap in how you manage your long-term finances and how you manage your property, and having both advisors involved will help ensure everything is working in sync so that the most important, valuable, and long-term investment of your life can grow.