Monday, April 29, 2019 / by Laurie Zuccaro
BUYING REAL ESTATE
People tend to invest their money in real estate and the stock market, both of which have their peaks and valleys. Of these two popular investments, real estate tends to dip for less time than it peaks; there are long periods of sustained growth, shorter valleys, and over time, the trend is always upward.
Here are some things you should know about investing in real estate:
If you plan to live on your property for more than five years, you are in a great position. You will have the benefit of being able to ‘time the market’ and sell when it is to your advantage. In this case, your home is also a lot more than a tangible investment in your future, also it is a place for you and your family to put down stable roots in the community while enjoying and personalizing your living space.
If you have bought your property mainly to generate rental income and do not “have” to sell it at any specified time you are similarly in a great position to gauge when housing prices have hit their peak so that you can sell at the height of the seller’s market. In the meantime, all that rental income is paying for the mortgage, repairs, and upkeep on the property.
The best time to buy a house is always five years ago.
The majority of homes are purchased with the intention of being owner-occupied. However, some buyers do purchase an investment property, often pre-completion condos, vacant land or homes in disrepair with the intention of making improvements and then selling. “Flipping” properties require a skill an experienced business acumen and a great deal of planning because the intention is usually to re-sell the property within a short period of time, you have to time it right.
Remember, there are other serious financial benefits to owning property that a realtor can assist you with:
- Tax benefits for improvements made to the property
- Government rebate programs for eco-friendly renovations
- Homeowners can use the equity in their homes as security for other loans
- Building equity in your first home puts you in a good position to upgrade to bigger and better houses as your circumstances allow
- Mortgages on investment properties are tax-deductible
Of course, before you begin your search it is crucial to examine your own personal and financial circumstances to determine whether now is the right time for you.
Here are some key points to consider:
- How much can I afford for a down payment?
- Do I have additional funds allocated for closing costs?
- Is my current job stable?
- Is my situation (job change, starting family, etc.) likely to change in the next 12-24 months?
- Do I have the time and energy for this process? (looking for homes, notice given to the landlord, baby on board etc…)
- Do I have a home that I want and need to sell first?
Ideally, find out about your mortgage options before you start looking. Pre-qualifying for a mortgage is the best way to discover how much you can afford. Your personal banker or financial planner will look at your current income, expenses, and debt to determine how much a lender will lend. All of this information should be given to you from any of the local real estate agents you choose from.