I wrote a recent post addressing the identification of a future financial catastrophe. I wanted to put a post here and link to this other post because of how it can affect our real estate portfolio.

What? How does this affect our real estate portfolio? Well, there are several ways it can. Follow along…

1. Present Foreclosure Crisis. This one does not need explanation. There are TONS of people who are in the mess they are in for several reasons. One may have been that they were honest with themselves about their financial position in life. Plenty of discipline issues are at the core of today’s crisis.
2. Parents/Children Moving Back In. Don’t laugh. This is becoming very common in our society and has been common in other countries where people have FAR less means. For example, it is very common to have 3-4 generations living under the same roof in Spain. This is largely due to the fact they have more land and development constraints than we do here and they have less means than we do. But not for long the way we are going.
3. Identifying Future Trends. This is very important to an investment analysis. When you see massive amounts of people moving in one direction, you witness a sea change of epic proportions. This type of thing moves markets, such as number 1 in this list.

It is very important to understand this concept of potential future financial issues. Here in the Las Vegas real estate market, history is peppered with examples of where poor financial management skills (even very large developers and builders) have ruined people’s lives. Adhere to the advice and pay attention to the signs to make sure your portfolio and your life stays on track!