Save for emergencies.
Make sure to set aside money for repairs and other emergencies, such as a vacancy. “I have money set aside for a handyman to work on properties that need repairs,†says Umphery. “When renovating, I hire licensed electricians, plumbers, and roofers.â€
Consider an exit strategy.
“An exit strategy is the approach used to terminate one’s involvement with an investment, such as real estate,†says Ridley Dorsey. “Examples of real estate exit strategies include outright sale of the property. In this economy, you have a lower capital gains tax rate, if there is a profit. Another example is a 1031 Exchange–in other words, exchanging your real estate property for a like-kind. It generally allows you to avoid or reduce your capital gains tax rate. This approach should be used if you wish to remain in real estate, but not with that investment.â€
The Saver: Tiffany “The Budgetnista†Aliche
As a child growing up in Westfield, New Jersey, Tiffany Aliche learned the value of saving from her parents, Irondi and Sylvia Aliche. Her dad, who was the chief financial officer for a nonprofit, presided over weekly family meetings in which they discussed how to use the phone less and reduce electricity and water consumption. Her mother and other women in the neighborhood swapped gently worn children’s clothing; they rarely bought new clothes. Her mother also clipped coupons, bargain shopped, bought bread from factory stores, and purchased food in bulk and placed it in the family’s deep freezer.
(Continued on next page)