Property ownership can be a very lucrative business. As investment experts will tell you, the rise in property value and collection of rent are only two of many ways that property owners can make money.
However, it’s not impossible to lose money owning property, too. There are certain precautionary steps that property owners can and should take to protect their assets.
What can you do to start planning for the future? What steps can you take to ensure more control over your assets?
Read on for three tips all property owners should consider when planning for the future.
1. Protect Your Assets
There are a number of financial issues that can arise when you’re a land owner. For example, you can end up in a tenant dispute that results in legal action. You may accidentally violate city codes that could result in fines.
The important thing is to ensure that if you end up owing money in these situations, debt collectors can’t seize your other assets. One way to protect your other assets is to place your property in a trust, LLC, or corporation. This removes your name from the deed, funneling that debt in a different direction.
2. Set Up a Contingency Plan
When you own property, even a small amount, it’s important to establish a contingency plan. What will you do if you are unavailable to collect rent and oversee your property? What if you lose your property to a natural disaster or bankruptcy?
The first part of your contingency plan involves establishing a power of attorney. This will establish who will take over if you become incapacitated. The other part of your contingency plans should address what you will do if you’re losing money on the property and when you will decide to sell it.
By establishing a contingency plan when the waters are calm, you protect yourself from having to make last-minute decisions in a storm.
3. Establish Beneficiaries
If you own property, it’s time to consider estate planning. Chances are, your property management is only one leg of your many investments and you may have a larger estate. When you become incapacitated or pass away, your estate plan will ensure that your assets end up where you want them to.
Now is the time to think about who you’d like to pass on property management to. Select your beneficiaries based on things like who will manage the property best, who you’d like to protect financially, and so forth.
Property Owners Need Protection
Investing in property is a great way to grow your wealth. What some property owners don’t realize is that they also must take measures to protect that wealth. Follow these three tips to make sure that your assets are protected in all scenarios.
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