See what changes when real estate is truly part of the financial advice.

What they thought

This was a highly educated, financially sophisticated couple who had done considerable research before investing in real estate. The wife had spent years building and managing a five-property rental portfolio, and the household also had an existing investment advisor at Fidelity.

The properties generated substantial gross rental income, and years of work had gone into building and managing the portfolio. Like many thoughtful real estate owners, they had good reasons for the decisions they made along the way.

What they hadn't done was step back and evaluate what all of those decisions were producing for the household as a whole.

What the analysis revealed

Despite the gross income, the five properties were producing an approximately $51,000 annual cash-flow loss. Two of the properties had also lost value over the prior six years.

With approximately $860,000 of equity tied up in the properties, the analysis raised a much bigger question:

What else could that equity be doing for the household?

What changed

The couple could now compare keeping the properties with other uses of the equity.

As one illustration, redirecting approximately $860,000 to an alternative producing a hypothetical 5% annual cash yield would generate approximately $43,000 of annual income instead of a $51,000 annual loss, a potential $94,000 annual cash-flow difference.

And real estate turned out to be only part of the opportunity. The broader planning work identified additional recommendations with potential financial impacts that exceeded even the issue that initially brought them in.

They came in with one problem. Looking at their entire financial life uncovered opportunities they weren't looking for.

What they thought

The husband feared retirement might never be financially possible. One of the few solutions he could see was to turn their longtime family home into a rental, move to a lower-cost community and potentially rent there during retirement.

It was an emotionally difficult possibility. This was the home where they had raised their children and cared for a parent through the end of life.

What the analysis revealed

The proposed rental wasn't particularly attractive financially.

With approximately $370,000 of current equity, the property was projected to produce roughly $5,000 of negative annual cash flow while the mortgage remained outstanding.

Even looking at the property without debt, approximately $800,000 of equity was expected to generate about $20,000 of net operating income, an operating return on equity of only about 2.5%.

What changed

The more important discovery came from elsewhere in the financial analysis.

A series of changes across retirement, investments, cash flow and other areas strengthened the household's outlook enough that they didn't need to rely on renting the family home to make retirement work.

The real estate analysis helped answer the property question. Comprehensive advice helped reveal that it wasn't the solution they needed in the first place.

What they thought

They had accumulated approximately $1.8 million in real estate, along with other financial resources. On paper, they were doing well.

But that wasn't how it felt.

Despite their assets and income, they didn't feel as though they were making the financial progress their resources suggested they should be making.

What the analysis revealed

Looking at their real estate, or any other asset, by itself wouldn't answer the bigger question.

The analysis incorporated all sources of rental-property net income into household cash flow and brought the real estate together with retirement, investments, taxes, risk and the other pieces of their financial life.

That changed the conversation from "How much do we own?" to "What is everything we own actually doing for us?"

What changed

Once the pieces were evaluated together, the household could see where resources were working well, where there were gaps and where changes could improve their financial direction.

The approximately $1.8 million in real estate was important, but the value of the properties alone couldn't tell them whether they were getting ahead.

The broader financial picture could.