Where to Start When Planning Your Finances?

The question of identifying the initial move when it comes to planning your finances can be quite complex and may not have a one-size-fits-all answer. In fact, a group of financial experts were asked this very question by Forbes' Finance Council and they provided a variety of responses. Some of their suggestions include:

●     Having a clear understanding of what your final objective is.

●     Keeping a detailed record of your financial inflow and outflow.

●     Gaining insight into your overall financial income and expenses.

●     Adopting a diverse approach when it comes to managing your banking accounts.

●     Starting to invest in various options as soon as possible.

●     Keeping a close watch on your credit score.

Get yourself paid.

One of the age-old principles of financial management that has been advocated by many experts, is the idea of paying yourself first. While it may not be the initial step when it comes to financial planning, (there are arguments to be made for both understanding your current financial position and also having a clear vision of where you want to end up) paying yourself first is seen as an essential step towards achieving financial stability and reaching your financial goals.

This method involves prioritizing saving and investing by putting some money aside from your income before allocating the rest for expenses. It helps in creating a buffer and ensuring you have enough resources to save and invest, which are necessary for reaching your financial goals.

Start with the fundamentals.

A critical initial step in financial planning is identifying and defining your goals. We all have short-term and long-term aspirations, and your objectives may vary depending on

your current financial situation. Elaborating on your goals, therefore, should include an assessment of your present financial position.

For instance, consider a 35-year-old, recently married person with a combined income of $200,000, $50,000 in student loans, a car loan balance of $25,000, and no mortgage. This snapshot puts your present financial situation into perspective and enables you to evaluate how much you can currently allocate towards savings and investments.

Once you have established your current position, you can then begin to identify and prioritize your financial goals. Whether it be saving for retirement, paying off debt, saving for a down payment on a home, or building an emergency fund, setting specific and measurable financial objectives will help you focus on the steps you need to take to achieve them.


More than one adviser suggests simply cutting back on everyday expenses to increase the amount of money you can divert to your goals. For example, we are all aware of how much it costs to buy coffee at a fancy café compared to making it at home. But, we don't often consider the cumulative effect of that daily expense over the course of a month or year, especially when compounded with investment.

In fact, small changes such as this, when implemented consistently over time, can make a significant difference in the long run. Additionally, it's a good idea to review your expenses on a regular basis to ensure that you're not overspending on non-essential items, and that you're allocating your resources in a way that aligns with your financial objectives.

Once you have set your goals and identified areas where you can cut back on expenses, you can then begin to explore different saving and investing options that align with your goals and risk tolerance. This may include traditional savings accounts, mutual funds, stocks, bonds or real estate investments. It is important to remember that building wealth takes time and consistency, and your plan should be reviewed and adjusted as needed.

Ultimately, by taking the time to identify your goals and start with the basics, you will be well on your way to creating a solid financial plan that will serve you well in the years to come.

Be adaptable.

As you progress in your financial journey, your circumstances may change, for better or for worse. To stay on track, you need to be able to adjust your budget and your plan accordingly. This can include responding to external changes, such as changes in your income or expenses, as well as re-evaluating and updating your goals as they evolve over time.

For example, consider a young couple with a good income but limited investments, their immediate goals likely included buying their first home, saving for retirement, and other milestones, as well as establishing an investment portfolio.

However, as time goes by, their situation and goals may change. They may have children and want to assist with their future educational plans. They may need a larger home and decide to turn their primary residence into a rental property, and buy a new home. They might have received an inheritance that they want to invest.

All these life changes will influence their goals and their ability to invest towards them. Therefore, it's essential to stay flexible and ready to make changes as needed.

Seek assistance.

Obtaining professional guidance for your finances can be beneficial for many individuals. There are a variety of experts available to help, such as financial advisors, financial planners, investment advisors, lawyers, CPAs, and more. It is worth considering seeking their help during significant life events, or if you don't already have someone you regularly consult. Some of these instances include:

●     Getting married

●     Going through a divorce

●     Becoming a parent

●     Inheriting money

●     Starting or selling a business

Another indication that you need professional direction is if you feel uncertain or uncomfortable making investment decisions or if you and your partner disagree on strategy. In this case, a neutral third party, especially one with a fiduciary responsibility, can help resolve any disagreements and develop a plan that works for both of you.

General Disclosure

Not an offer to buy, nor a solicitation to sell securities. Information herein is provided for information purposes only and should not be relied upon to make an investment decision. All investing involves risk of loss of some, or all principal invested. Past performance is not indicative of future results. Speak to your finance and/or tax professional prior to investing.

Securities offered through Emerson Equity LLC Member: FINRA/SIPC. Only available in states where Emerson Equity LLC is registered. Emerson Equity LLC is not affiliated with any other entities identified in this communication.

1031 Risk Disclosure:

Retail Property Investing

Retail real estate is a subsector of the commercial real estate industry. While the commercial sector comprises properties such as land and buildings, the retail property is more specialized. Commercial real estate comprises of shopping, entertainment, and dining establishments. Historically, these properties have been favored by investors because they offer higher chances for big profits than multifamily properties. A well-connected or inventive investor may be able to uncover hidden value in retail assets that others cannot, so presenting investors with the possibility of outsized returns.

Consider the Existing Commercial Rent Roll

When first considering the purchase of a retail property, an investor must assess the quality of the current tenants. Exist any quality tenants with an institutional-grade corporate guarantee on the lease, or is the property occupied with little "mom-and-pop" shops? A corporate tenant is always more valued since future income is assured if the corporation continues to operate. If the property does not have institutional- or corporate-grade tenants, it is the responsibility of the prospective purchaser to do additional due diligence on the current tenants.

Investors should consider the current financial health of the operating businesses, the future viability of the business, and their confidence in the business's owner/manager. If an investor purchases a property only to discover that their new tenants cannot pay their lease rents, the investor faces a major problem. A comprehensive analysis of the historical rental payments and the financials of the tenants is essential for ensuring the stability of the asset. In addition to forcing their tenants to sign a personal guarantee on the lease, commercial retail property owners can reduce their investment risk by requiring renters to sign a personal guarantee committing them to timely rent payments.

An investor must also consider the effect of an anchor tenant. An anchor tenant, also known as a prime tenant, a draw tenant, or a major tenant, is a prominent, well-known business that leases a significant amount of retail space in a specific retail complex. Anchor tenants are intended to attract customers to your retail space, hence increasing sales for your other tenants. Occasionally, the anchor tenant will receive a significantly reduced lease rent to increase the overall success of the retail mall. Properties with a high-attraction anchor tenant, such as a Whole Foods Supermarket or Apple Store, are typically more valuable since the anchor attracts tenants to the spaces surrounding it, hence raising the asset's total value.

Analyze the Retail Property's Future Potential

A retail property investor must evaluate the current in-place rent for all in-place leases, prospective lease escalations, CAM reimbursements, unoccupied space, current market rent, and market projections. Valuing the existing rent roll is crucial since it determines how much debt may be obtained against a property. Typically, while utilizing conventional finance, a lender will only lend based on the existing cash flow. Experts in real estate recommend that investors acquire properties with a Debt-Service Coverage Ratio (DSCR) of at least 1.2. If the business goal is to increase rents on existing tenants, lease unoccupied space, or construct new space, the investor should wait until this income is realized before obtaining more debt financing for the property.

When determining the projected return on a property, future lease increases must be accounted for. For instance, if a property's leases do not expand and remain steady, an investor could lose money as running expenses and property taxes rise over time. Therefore, the investor should pay a lower initial price for the property to compensate for the loss of future income.

Leasing unoccupied space is one of the primary ways to create significant profits on retail property. An investor must conduct market research and determine the market rent per square foot for their property based on comparable signed leases in surrounding buildings. The future development surrounding a retail area can also significantly boost the property's value, and timing might be crucial. If an investor learns that a highly desirable tenant is moving into a space adjacent to a property they own, it may be advantageous to delay leasing until the neighboring tenant is in place. As a new tenant often increases the desirability of an area, more retailers may be interested in your site.


Plan Appropriately for Future Leasing Expenses

Depending on the business strategy, some items, such as deferred maintenance, tenant improvement budgets, broker fees, free rent periods, and interest reserve, must be budgeted in advance for successful execution. Depending on the condition of the property, various transactions will have varying capital expenditure requirements. Some homes may require roof replacement, HVAC system improvements, elevator renovations, façade repairs, etc. This is work that must be performed regardless of the building's occupancy status and is designated as an immediate requirement.

Costs associated with tenant leasing will vary from market to market and depend on whether the market favors landlords or tenants. If a new buyer is funding a transaction that entails leasing unoccupied retail property to a new tenant, they will negotiate the appropriate scope of work for the new tenant. This may consist of as little as a "white box," which is simply a blank canvas for the tenant's own improvements. Tenant enhancement funds can also be negotiated such that the landlord pays for any new construction for the use of the future tenant.

Additionally, the new tenant may negotiate an initial rent-free period to help them get their firm off the ground. The landlord must account for the downtime and have sufficient funds budgeted to cover the tenant's new expenses and debt payment obligations. In addition to these costs, landlords typically employ a leasing agent to find a tenant. Leasing costs range from 2% to 5% of the entire lease value and are negotiated prior to the broker commencing work. Before purchasing the property, the astute investor will know just how much each of these items will cost in order to collect sufficient funds to cover the Capex, operational expenditures, and debt payment.

Optimize Profits with the Best Lease Option

As an investor signs new leases with new tenants, he or she must critically consider how the terms will be written. The lease arrangement can be significant in deciding the viability of an investment. There are numerous methods for preparing an egg, and establishing a retail lease is no different. There are three primary types of retail leases, including gross, net, and modified gross leases.

In a gross lease, all property operating expenditures are covered by the tenant's rent. These costs may include property taxes, electricity, upkeep, etc. These expenditures are covered by the tenant's rent, which is paid by the landlord. As a result, the tenant's only outlay is typically the high base rent. Tenants tend to favor this sort of lease because they are not required to participate in the day-to-day operations of the building and the rent is fixed even if expenses fluctuate. For instance, throughout the summer, rent will remain unchanged despite the increased energy expenditures associated with air conditioner use.

The net lease is a commercial real estate lease that is extremely adjustable. A net lease has a lower base rent than a gross lease, but the tenant is responsible for fixed operating expenses such as property taxes, insurance, and common area maintenance. In a single net lease, tenants pay a fixed rent in addition to a portion of the property tax that would normally be negotiated with the landlord. The landlord pays for construction expenses, but the renter pays directly for utilities and other services. A double net lease is similar to a single net lease, except that the tenant also pays a portion of the property tax and property insurance. The landlord is responsible for maintaining the common areas, but tenants are responsible for their own utilities and trash removal. The renter pays for some or all of the costs of property taxes, insurance, and common area maintenance in addition to their base rent under a triple net lease. It is one of the most prevalent types of leases.

The modified gross lease (or modified net lease) is the third major type of commercial real estate lease and provides a fantastic compromise for both renters and landlords. The modified gross allows for greater flexibility in operating expenditure discussions. As with the gross lease, the base rent will be subject to the terms agreed upon by both parties. The distinctive characteristic is that the lease payment is fixed, regardless of whether expenses rise or reduce.

Want to learn how Perch Wealth can assist you in evaluating your 1031 exchange real estate options? Call us right away.

General Disclosure

Not an offer to buy, nor a solicitation to sell securities. Information herein is provided for information purposes only and should not be relied upon to make an investment decision. All investing involves risk of loss of some, or all principal invested. Past performance is not indicative of future results. Speak to your finance and/or tax professional prior to investing.

Securities offered through Emerson Equity LLC Member: FINRA/SIPC. Only available in states where Emerson Equity LLC is registered. Emerson Equity LLC is not affiliated with any other entities identified in this communication.

1031 Risk Disclosure:

How Real Estate Investing May Shield You From Inflation

The term "inflation," which refers to the slow increase in the cost of products and services over time, has recently appeared in the headlines of all of the main business news outlets. Everyone was only interested in discussing how dramatically and finally the U.S.'s historically low inflation rate was coming to an end. Used car prices were breaking records, timber costs were skyrocketing, petrol prices appeared to be moving up, and food prices were higher than they had ever been.

Although the precise reason for price increases is still up for debate, it is no longer a secret that the cost of necessities like food and shelter is growing. Inflation is presently influencing the life and job of the typical American, and, while it stays genuine that we have encountered a lucky and broadened time of low inflation, it seems like all beneficial things do, as a matter of fact, reach a conclusion - - and presently is essentially the finish of inflation 's record lows.

The ramifications of high, or rising, inflation costs for financial backers is that high inflation can influence the worth of a future stream of income. Consequently, financial backers need to accomplish returns that are higher than the pace of price inflation. This implies that now, like never before, financial backers ought to get ready to change their venture techniques pushing ahead and carefully plan to support against inflation.

In this article, we'll define inflation, examine how it tends to be a headwind for financial backers, and foster one center thought: that land money management is possibly the support expected to safeguard yourself from inflation, as well as the deficiency of buying influence that outcomes from it.

What is inflation?


inflation is the slow inflation in the cost of labor and products after some time. It is estimated by observing changes in the Consumer Price Index, which is based on a record of normally bought goods and services. The U.S. Central bank is liable for setting financial approach, and inflation is quite often one of its essential worries.

The Federal Reserve for the most part attempts to oversee inflation to a specific objective (around 2-3% every year), however it saves the capacity to go to activity when price inflation lengths above or underneath this reach.

The most recent report from the U.S. Department of Labor Statistics shows that the Consumer Price Index (CPI), which is one proportion of inflation, has increased 5% throughout the last year alone. That is the most noteworthy increment beginning around 2008, which was, uncoincidentally, the last time the nation was in a monetary emergency.

How could inflation be a headwind for financial backers?

Inflation can be harming to financial backers' capital since they need to accomplish returns that are higher than the pace of economic inflation.

A model can be utilized to all the more powerfully come to this meaningful conclusion.

On the off chance that inflation is running at a pace of 3% yearly, and a financial backer keeps her capital in a currency market account that pays a proper pace of revenue at 2% yearly, she is really losing 1% of her buying power every year - - comparative with inflation. Over the long haul, the financial backer's capital can buy less on the grounds that the expense of labor and products has risen quicker than her speculation returns.

To stay away from a circumstance like this, financial backers ought to consider searching out inflation fences or resource classes that are exceptionally situated with the possibility to perform well in times of high economic inflation.

Real estate-centered financial planning may be the hedge you really want to shield yourself from inflation.

For what reason is real estate viewed as a decent hedge against inflation?

There are various reasons. As far as one might be concerned, one could analyze the impact of inflation on obligation. As a home's cost ascends after some time, it brings the credit down to worth of any home loan obligation, going about as a sort of regular markdown. Thus, the value on the property increments, yet your fixed-rate contract installments continue as before.

Inflation can likewise possibly help land financial backers who procure pay from investment properties, explicitly property areas with momentary rent structures, as multifamily lodging networks, on the grounds that higher home costs frequently compare to higher lease structures. In the event that a land financial backer can change her/his lease up while keeping the home loan something similar, this sets out the freedom for expanded cash in the financial backer's pocket.

At last, land might possibly be a decent support against inflation since property estimations after some time will generally stay on a consistent vertical bend. The vast majority of the homes that hit absolute bottom when the land bubble burst in 2008 returned to their pre-crash costs in under a solitary 10 years. Land speculations can likewise turn out expected repeating revenue for financial backers and can keep speed or even surpass inflation with regards to appreciation.

Since the proof gives off an impression of being supportive of land, and it being a resource class that has generally held its own when confronted with increasing inflation rates, we should now direct our concentration toward a couple of procedures commonly used to endeavor to fence land ventures against inflation.

How might you possibly involve real estate as a hedge?

Potentially one of the most mind-blowing ways of utilizing land to support against inflation is to put resources into a multifamily property. Different kinds of properties, like business structures (like retail locations), have their inhabitants sign long term business leases. Multifamily lodging for the most part recharge rents exclusively with each occupant one time per year. The more units a structure has, the more regularly you're given sufficient chances to change the lease. The equivalent is valid for self-capacity.

What's more, multifamily properties, for example, apartment buildings are a one of a kind resource class in that they are commonly consistently popular, particularly while lodging costs take off. Furthermore, because of late inflations in labor and material expenses, there is a restricted stock of structures or new improvement projects, which can make an ascent in rental rates and property estimations. Together, these two elements equivalent a property that can possibly not be empty for significant stretches of time and various openings to restore or begin leases at market-changed rates.

Another thing to consider is that cost repayments, another rent part, is an extra way land money management can possibly pace inflation. Leases pass some type of a property's ongoing working costs down to their occupants, no matter what the kind of building structure. As utility and support costs ascend because of inflation, landowners or building proprietors can be undoubtedly somewhat protected from the impacts on the property's income.

It is clear, then, at that point, that real estate investing - - especially putting resources into multifamily lodging properties - - might possibly be a decent fence against inflation that our ongoing business sector brings to the table. Land effective money management is in many cases thought about a way towards reserve funds safeguarding in an inflationary and capricious economy.

It's very simple to see the reason why financial backers have rushed to real estate in the midst of monetary vulnerability. No matter what, lodging will continuously be required, and hence, probable sought after. A speculation property that is bought and clutched for the long haul can possibly be a safe method for developing the first interest into something more significant not too far off.


On the other hand, in the event that financial backers can't - - or just don't have any desire to - own and deal with the venture property themselves, they can consider land trusts (REITs), intuitional land assets, and Delaware Statutory Trusts (DSTs). How one chooses to go about land money management is completely dependent upon them; it is, and ought to be, an individual monetary choice. In any case, it very well may merit your time and energy to educate yourself pretty much all regarding your choices and survey from that point - - or talk with a learning experience master like the group at Perch Wealth.

Why putting resources into a DST can be an alluring choice

In the event that your main concern is to look for abundance safeguarding during an inflationary financial period, then, at that point, putting resources into a Delaware Statutory Trust, or DST, is possibly a very appealing land venture choice. A DST is an ordinarily involved structure for those looking to partially put resources into land.

A DST is a way for financial backers to possess land with the chance of procuring recurring, automated revenue and zero administration obligation. Most financial backers don't commonly consider whether they are keen on dynamic versus aloof responsibility for domain property, and thusly, get into circumstances that they believe they aren't equipped for, intrigued by, or profiting from in the ways that they might want to be. For a first-time frame or moderately new financial backer, putting resources into a DST is an incredible prologue to a possibly recurring source of income and collection of uninvolved riches.

There are two essential ways that an individual can put resources into a DST. The first is through an immediate money speculation. For instance, perhaps you're new to land effective money management and just need to secure your opportunity; you could hope to put $50,000 in a DST to acquire a traction in the land business. The second is by using a 1031 Exchange.

Numerous financial backers are really ignorant that they can use a 1031 Exchange to put resources into a DST, however there are numerous potential advantages to doing as such. By doing a 1031 Exchange, you can probably expand the ongoing level of the housing market and differentiate your assets into various DSTs that are geologically shifted and in particular resource classes, assisting with moderating and conceivably limit the general gamble to your capital. Assuming that you're keen on finding out about 1031 Exchanges, DSTs, or more elective land speculation systems, you can talk with one of Perch Wealth's financial experts today.

General Disclosure

Not an offer to buy, nor a solicitation to sell securities. Information herein is provided for information purposes only and should not be relied upon to make an investment decision. All investing involves risk of loss of some, or all principal invested. Past performance is not indicative of future results. Speak to your finance and/or tax professional prior to investing.

Securities offered through Emerson Equity LLC Member: FINRA/SIPC. Only available in states where Emerson Equity LLC is registered. Emerson Equity LLC is not affiliated with any other entities identified in this communication.

1031 Risk Disclosure: