Purchasing a Home: For Yourself or as an Investment
If you are currently in a situation wherein you are confused if you should buy a house for yourself or rent it out to other people, then you must decide wisely. Here are some tips that can help you make the best decision.
Overrating the value of real estate as a form of investment
Definitely, real estate is known to be one of the safest type of investment that exists. However, there are also other investments that are consistent and stable in terms of earning money even with the edges and downsides of the housing market. But is there really certainty that you are going to earn? Is purchasing a home enough to make money as long as you have patience? I know you know for yourself that the definite answer to this is a ”No”.
If you are going to invest in a real estate, you have to make sure that your earnings from that property is able to cover for the expenses you have spent on it. You will have to consider the utilities, mortgage payments, insurance, maintenance and the taxes just to name some. It is unavoidable that some people may think that the home value will increase at one point and will pay for everything. But a future home value and an enough earnings will not ensure payments for those expenses. It is a much higher risk than some assumptions.
Accounting the mortgage
Mortgage repayments will most likely lead us to the issue of how mortgages have a role in this. In fact, most people who plan on buying a home whether for themselves or for investment will do so with the help of mortgages. And so we will end up with the question whether you can use a mortgage for renting out the property to others or if it must only be used for purchasing a home for oneself.
The answer to that is both. But since you need the rent payment to cover for the monthly mortgage fee, you cannot freely put a tag on your rent. We suggest that you make use of a mortgage affordability calculator during your planning stage.
Life you ought to have
Undoubtedly, the financial aspect has a huge role on this. Yet some think of purchasing a home for themselves or for renting out purposes mainly because of the lifestyle they ought to live. Undoubtedly, those in dire need of a home for themselves will pick the first choice. Those people who buys a home as an investment must not entertain the thought of buying another one for themselves, unless they are too well-off!
A real estate investment wherein you buy a home to rent out for others will not necessarily mean a passive income. Though it is ideal for the people who does not find a problem with renting a place as of now.
Quotes: additional hints