Using Real Estate Term (Rt) To Guide Conversations

Factors to Consider when Assessing Real Estate Term

Generally, a client with a heavier allocation toward Real Estate assets as part of their total net worth will have less flexibility in their retirement strategies.

Additionally, age is the only clear factor that correlates directly with a client’s Real Estate Term because as clients age, their equity will grow as they pay down their real estate debts.

Be sure you know the composition of their real estate holdings. Sometimes clients have real estate they call their vacation home, but it is really more of an investment property (i.e. they are happy to part ways with it). Other times, they would not sell it for any reason.  These details will help you better detail the amount of true liquidity behind their Total Term score.

Questions to guide conversations

Understanding the objective of each real estate property is essential to making improvements. Consider the following questions for each type of property

  • For personal use real estate:
    • How much of the client’s Real Estate Term is composed of their primary residence?
    • When considering a client’s retirement readiness, and if Rt is primarily composed of the primary residence, you should exclude the client’s Rt score from Total Term. This gives you a more accurate representation of where they stand.
  • For Investment real estate:
    • Should the client invest in real estate?
      • What are their real estate goals?
      • What type of property should the client invest in?
      • Does the client understand the implications of investing in real estate?
    • Considering the client’s total asset mix, do they need to focus on increasing liquidity before investing in additional real estate?

Book a Demo

Schedule a time to see how Elements can help grow, scale, and modernize your planning business.

[formfuse id="1009"]