Every investor requires financial planning before investing in any sector. Not just investors, anybody who is planning to invest has the same question in their mind- do they require financial planning? The answer is yes. Every individual requires financial planning and will benefit from it. But what is financial planning? What is its importance? What are some financial tips for property investors?
Today’s blog will discuss each of these questions in detail.
What is financial planning?
Let’s say you want to invest in a plot for sale in Mannivakkam. To accomplish that, you need a method or a long-term strategy of money management so you can not only reach this goal but also effectively navigate any roadblocks that always pop up in the course of life.
What are some financial tips for property investors?
When you are planning to invest in TVH plots in Mannivakkam, as an investor, you can benefit immensely from these tips-
Credit cards
Credit cards are extremely instrumental in many situations such as when someone applies for a home loan to buy a plot for sale in Mannivakkam. But here is the tricky thing- by reducing your credit card limit, you can increase your borrowing capacity to a huge extent. If you have unused credit cards lying around, cancel them as lenders take account of the number of credit cards you have, their limits, and whether you use them or not.
Personal debts
According to the golden rule of investing, you must clear all personal debts before investing. When you buy any property or consult with builders to calculate Mannivakkam square feet rate, you need to consolidate any personal loans that you might have taken as they have an impact on your borrowing capacity. Remember that personal debts also include interests you pay on store cards from various departmental stores.
Check out different lenders
Loyalty, trust, and convenience are three components that tie people down to one lender and discourage them from using different lenders. But in reality, you are simply reducing the borrowing amount and also putting your investment portfolio at risk by letting one lender finance all of your assets. To avoid this, check out different lenders and the interest rates they offer. You will find the best deal that works for you.
Don’t cross-collateralize your securities
Cross- collateralizing your securities will let your lender have security over multiple properties and it can lead to huge problems when the value of a property increases. If the value of your property increases, you would want to let go of some of the new equity. But your current lender may not be ready to discharge the mortgage and let you refinance your property. Investors may also run into a financial crisis and want to sell a part of their portfolio. Your lender has the chance of calling in their loans or selling the property. This will be an immense setback for you and you would want to avoid it at all costs.
Strategize and review your security
Planning and strategizing is a part of the investment, just like reviewing your securities. Have your securities revalued annually every time there is an increase of 7%. Although lenders will always want more security, this will restrict your investment potential as an investor.
Line of credit or redraw facility
Smart investors are always prepared for the worst-case scenarios. Set up a cash reserve from the beginning with the help of a redraw facility or a line of credit. This will act as a buffer in tough times.
What is the importance of financial planning?
There are several important aspects of financial planning namely
Income management
Whenever you decide to invest in the real estate sector or any sector, you need to learn how to manage your money wisely. With income management, you will figure out the amount of money you must pay in the form of taxes and how much you can save. With a clear picture of your income, you can also look for ways to increase the flow of money.
Improvement of cash flow
Investors must ensure that their cash flow is at an optimal state at all times. This is specifically important to check before an investment. Improved cash flow is also instrumental in assisting you to keep a track of your working capital, reduction of overhead costs, and boosting your overall capital.
Better scope of investment
It is not enough to put your money in investing, smart investment involves consideration of risk tolerance and long-term goals. You can achieve this goal by chalking out a financial plan.
Enhancement of ROI on portfolio
When you want to make an investment in real estate in the form of a plot for sale in Mannivakkam or maybe even apartments. You need to create a concrete investment program. By doing so you can take an account of your goals, understand your risk appetite, and, avail yourself liquidity. Enhancement of your ROI can be easily done by following this process.
Security against inflation
Investors are well aware of inflation killing their purchase power. In the last few decades, we have seen a sharp fall in the value of money. According to expert advice, it is only going to worsen in the future. Hence, organizing your finances is critical if you want to effectively deal with inflation and still have a promising portfolio.
To conclude,
The real estate sector in India has recently shown a lot of growth potential and is teeming with an investor who is making the best use of this opportunity. We hope this blog has provided you with useful financial tips for your next property investment.
