Is it important that your house is an investment?
Sometimes people buy property as investments, and not as a homestead. For those of you who fall into that category, it can be a great decision based on your current employment situation, money in the bank and whether those are your primary forms of revenue. Of course real estate is a great way to generate money for the buyer, but if it is your only form of investment, make sure you enter into the transactions knowing the costs versus profit margins. If your purchase is your sole form of income, you may be depleting your savings with repairs, tenant disputes, and other maintenance fees you may not have thought about.
Have you crunched all the numbers?
Make sure you have crunched the numbers and go over them with a certified accountant, then add a lot more. Unexpected expenses always come up if you’re a buyer. For renters, in many cities, you have to may be expected to pay out a third of your salary to rent every month. Make sure you’re able to do so.
Can you handle the stress?
As a renter, the money you pay every month for rent is gone, never to be seen again. In that way, the buyer wins out. However, if there are problems with the properties like faulty plumbing, roofing problems, or tenancy issues; the win goes to the renter. If you don’t own the property, you don’t have any stack to keep it beautiful. This is not to say that there aren’t tenants and landlords who enter a mutually beneficial relationships. As a renter, there is a lot less stress involved. You can call the owner to deal with property problems. As an owner, you don’t have that luxury. The costs of plumbers, contractors, etc can add up and cause major strain on your wallet and stress on your peace of mind.
How long do you expect to be in the home?
I’ve known people who fell into the rent-to-buy category because they have plan to live on the property long term, so it behooved them to buy the place insteading of throwing away money. For buyers who are looking to pay a mortgage instead of rent, the same applies. But if you don’t plan on staying too long and expect a temporary living situation or a flip and sell arrangement, be sure to research the neighborhood. If you end up staying for a short while, you may be shortchanging yourself if the resale market isn’t’ sustainable.
In recent years, people have been opting to rent inside of buy due to rising rates, though multifamily seem to fare well when thinking of buying. Regardless of what you decide, do the research and talk to a reputable advisor.