Tuesday, April 12, 2011
Know Why You're Buying
If you are thinking of buying a home, be sure that you know what your goals are. If you are expecting property values to grow over the next ten years the way that they have in the past ten years and you are looking for a big payday when you sell, you may want to reconsider. When considering the purchase of real estate in today's economy, consider the average return on investment of real estate over time compared with other investment vehicles. If your goal is only to realize a huge gain on future appreciated value, and you don't intend to live in the property long-term or rent it, you might be better off putting your money into the equity markets where gains have outstripped real estate consistently over time. But, if you are looking to move in and live in the home that you purchase, or if you want to rent a property, your goals are different, and you would do well to look to buy now. Interest rates are low, and although they are not at an all-time low, they remain very good and will likely not decrease for a long time. The Fed is rumored to be considering a rate-hike and mortgage rates are going to be going up as well. Home prices are at record lows and inventory remains high with many short-sales and foreclosures holding prices down. Long-term home-ownership has many benefits that make it worthwhile, even if the long-term gain on the investment may be lower than other investment options. And if you are seeking to establish long-term rental investments, and you are saavy in your selection of properties and what you pay for them, you are certainly in the right market to be buying properties to hold and lease.