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 of the things you need to keep in mind in order to make the best decision.
Overrating real estate as investment
Definitely, real estate is known to be one of the safest type of investment that exists. Yet, there are still other investments that are consistent and stable in terms of earning cash even with the advantages and disadvantages of the housing market. But is it really doubtfulness that you are going to earn? Is purchasing a home enough to make money as long as you have patience? I want to believe that you have guessed it right; the answer 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 both a future home value and enough profit will not guarantee payments for those expenses. It is a much higher risk than most times thought of.
Regarding 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 the question will arise if a mortgage must be used to buy a home for oneself or if it could also be used to rent the property out.
The answer is honestly both. But because you need the rent payment to cover for the monthly mortgage fee, how much tag you post for the rent will be quite challenging. We advise that you use a mortgage affordability calculator during the planning phase.
Life you desire to have
It is undeniable that the financial aspect plays a major role. Yet there are others who consider purchasing a home for themselves or for renting out purposes just because of the lifestyle they want to live. Undoubtedly, those who needs a home for themselves will go for the first pick. Those others who prefer the second option must avoid the thought of having the first choice too, unless they have that much money!
Real estate investments designed to be buy-to-rent does not necessarily mean s passive income. Though it is actually great for those willing to rent a place as of now.