Sometimes, you should "move an asset from one pot to another where it can produce more income. Monetize something that's not monetized," said certified financial planner Mari Adam.
She cites a case of a couple in their 70s who were house rich but cash poor, down to their last few thousand dollars. They chose to sell their house, bank the money and let it produce income while they rented. That saved them money in the long run since they otherwise would have needed to take equity out of the house to make ends meet. "Net worth is one thing, but cash flow is another," Adam said. "That's where people go wrong with real estate."
Likewise, a second home may be worth a lot on paper, but how much money (to say nothing of time and effort) does it take to maintain? "Something may have value, but if you don't have the cash to pay for it, you'll lose it," Adam said.
| Housing forecast: 100 biggest markets | ||||||
| These are the 100 largest markets according to the 2000 Census. Growth forecast is for April 2007 – April 2008 from Fiserv Lending Solutions. | ||||||
| McAllen, Texas | $130,000 | 25 | 26.5 | -12.3 | 88-'89 | 9.8% |
| Tulsa | $135,000 | 14 | 17.6 | -7.5 | 86-'87 | 4.3% |
| El Paso | $130,000 | 19 | 48.2 | -5.4 | 87-'88 | 4.2% |
| Scranton | $118,000 | 13 | 41.2 | -7.2 | 94-'95 | 3.9% |
| Rochester, N.Y. | $122,000 | 11 | 22.3 | -4.1 | 94-'95 | 3.7% |
| Buffalo/Niagra Falls | $106,000 | 11 | 28.6 | -5.2 | 81-'82 | 3.7% |
| Fort Worth/Arlington | $150,000 | 14 | 18.4 | -6.9 | 87-'88 | 3.6% |
| Baton Rouge | $178,000 | 19 | 34.2 | -8.3 | 87-'88 | 3.6% |
| Dallas | $151,000 | 13 | 17.8 | -7.7 | 86-'87 | 3.6% |
| Birmingham | $165,000 | 17 | 31.7 | -3.2 | 80-'81 | 3.6% |
| For full table click here. | ||||||
