I am sure most of you have seen the Rent vs Buy Analysis on Zillow. It is basically the years it will take before the cost of buying a home equals the cost of renting – also known as the break even horizon. After that break even horizon then owning a home is considered a great investment. Or is it?
Owning a home comes with new expenses that surprise many buyers. Even experienced home owners can forget how much it costs to upgrade a home, improve outdated features, and fix hidden problems. It’s wise to take these costs into consideration before signing on the dotted line. Before purchasing, calculate realistically what you’ll need to spend to get the home up to your standard. In some cases, you may be better off paying more for a home that’s already been upgraded than paying for a cheaper home that needs more work.
On the other hand, if you are struggling to make a down payment on a more expensive home, then buying cheaper and putting money into it over time and using your own sweat (“sweat equity”) might offset the higher down payment you would have had to make on the more expensive home. A 20% down payment on a $300,000 is $60,000. If you can’t afford that, consider buying a nearby fixer-upper. That home might only cost $225,000, with a down payment of $45,000. The extra $15,000 might be enough for you to do many upgrades that would bring it close to the standard of the more expensive home, but you won’t need to come up with that extra $15,000 up front. This might be a good investment option—as long as you go into it with eyes wide open…along with a really good home inspection.
Most people only think about their monthly mortgage payments or PITI: Principal, Interest, Taxes and Insurance. However, you will need to have a budget for maintenance on your home’s systems, appliances, roof and other areas to keep your investment sound.
Owning a home can be an excellent investment and garner a great rate of return, but it depends on the ability of the potential buyer to assess risk.
Author:DJ Jenkins Phone: 703-625-1347 Dated: May 16th 2017 Views: 507 About DJ: If You're in the Market for buying or selling your home, You Need a Great Real Estate Agent. With th...
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Our Real Estate Services has a distinct sense of cosmopolitan awareness that is perfectly suited to the needs of her broad range of clientèle. With over 18 offices in the Northern Virginia, Maryland, and DC markets combined, DJ has consistently been one step ahead of the vast changes that have taken place in Metropolitan real estate market. A commitment to exceptional service is pivotal in DJ Jenkins, RE/MAX Allegiance, and her team's approach towards clients. Buyers and Sellers demand a higher level of service and expertise which has earned us a reputation of being the best when representing our clients. As an expert sales or relocation specialist DJ Jenkins provides excellent customer service to each client along with strong interpersonal communication and negotiation skills demonstrated by her proven track record. RE/MAX Allegiance is the number one selling RE/MAX Company in the world and one of the top 30 residential real estate brokerages in the United States. With nearly 500 Sales Associates and employees, DJ Jenkins has partnered with a network of outstanding agents with a pulse of an every changing Northern Virginia, DC and Maryland Real Estate Markets. Home ownership is on the rise, we would gladly assist in unlocking your buying and selling potential
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