Are you looking for a new investment? If so, then buying a new house may be the answer to your prayers.
Properties are always in demand, but as the housing market continues to grow and shrink, it can be hard to know where is best to invest. Buying a new home will have less risk than investing in stocks or bonds because if things take a turn for the worse with your finances, you still have an asset that has intrinsic value.
The post will go on to discuss whether buying a new house is considered an investment, what criteria one should use when deciding on what property they wish to invest their money into, how much of an investment one should allocate towards purchasing real estate properties versus other types of investments. So let’s get started!
- House prices have been climbing steadily over the past few years: in December of 2015, the average price for a home in America was $311,900, and as we enter 2017, that number has climbed to over 300,000. Is this trend going to continue? Well, there are many factors that influence the housing market which might impact whether or not property values continue to rise. It depends on what criteria you utilize for determining if something is an investment or not. You can check for sale new homes to know how the prices are trending.
- They can produce income when rented out to tenants: rental properties can generate a steady cash flow, which is not something you get from other types of investments. These properties serve to be the perfect investment when bought in areas where the price point is right, and there are a lot of people looking for housing. In fact, investors can expect to make between two and twelve percent on their investments if they purchase real estate below market value in high-demand locations.
- It helps you build equity: your house is an asset that will gain value over time. Not only are you paying down a mortgage, but you’re building equity in your property as well. Equity can be used to borrow money for other investments or future expenses like college tuition. Plus, the value of your house will determine the amount you owe in real estate taxes.
- Allows you to save for retirement: some older people are more financially secure than they realized. One of the main reasons is that their home gained enough value to make it easier for them to enjoy a comfortable retirement. For instance, you could rent out a room if you want to stay in your house but need some extra cash.
Or, there’s always the option of downsizing and moving into an apartment or smaller home that costs less than what you’re currently paying for property taxes and mortgage payments each month. This will allow people who may not have had enough money saved up earlier on in life to live comfortably during retirement without constantly worrying about how they’ll pay their bills when they stop working full-time jobs at age 65+.
- You can use your home as collateral when applying for loans: if you have a home, then it’s likely that its value is easily calculable. Like stocks and bonds, you can use your home as collateral when applying for loans such as a mortgage. If the value of your house goes up over time, then this could be beneficial to you because it increases its worth in terms of what others may potentially pay for it if you ever want to sell it or pursue another investment opportunity. Most importantly, unlike stocks and bonds, your home will always retain some intrinsic value, i.e., if the housing market crashes or becomes unstable, then you can still live in your house as a form of shelter.
- Provides stability and security: buying a new house is considered an investment because it provides stability and security. If the housing market goes up, then you can sell your home for more than what you bought it, but even if the opposite happens and things go badly with your finances or investments, then at least you still have a roof over your head. Besides, you will be able to pay off the rest of your mortgage since you are gaining equity on that property. In addition to this, it is important to consider the shelter factor; whether you can still live in your house as a form of shelter if things go wrong with your investments.
- Tax advantages of owning a home vs. renting one: Homeowners get to take advantage of tax deductions for interest, mortgage insurance premiums, and property taxes. Furthermore, homeowners can write off the cost of maintaining their home since it is considered a business expense. This includes expenses like landscaping, painting, and repairs. Eventually, homeowners are able to sell their homes for a profit.
Things to consider when buying a new house:
A house is considered an investment when you buy it with the intention of reselling in a short time frame for profit. If you are considering getting a new house this year and you plan to sell it next year to make a profit, then it is considered an investment. There are several things you should consider when thinking of purchasing a new home:
- Do I have the money for an initial down payment? It is essential to have the money for a down payment before you even start looking at houses. Is my credit score high enough to get a home loan? Your credit score will be checked by your lender, and if it is not up to par, then you may have difficulty getting a mortgage on the property of your dreams. Hence, it is necessary to have a high credit score when you are in the process of buying a new home.
- Is there enough room for me to grow my family? You do not necessarily need an extra bedroom, but it is important that your home has adequate space if you plan on having children or otherwise expanding your family in the near future. You may not need the big area now, but in the future, the requirement for a larger home will make itself known.
- Is the neighborhood in decline? If you are thinking about moving to a new town, it is important that you check on crime rates and other factors in your target area. All these things may seem trivial to take into consideration when buying a house, but they can have major effects down the line if you move into an area that is rife with crime.
Conclusion: A house is a long-term investment. A house on its own will not make you rich, but buying a place to live can be an extremely smart move if done right and with the proper foresight in mind.