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.
Overvaluing real estate as an investment
Truly, real estate is one of the most non controversial type of investment at present. Still, there are other forms of investment that are consistent and stable in terms of earning cash even with the downsides and edges of the housing market. But is there really certainty that you are going to earn? Is purchasing enough to guarantee your earnings as long as you are patient? 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 have to look upon the utilities, mortgage payments, insurance, maintenance, taxes, and many more. Some will also think that the home value will be at its highest at one point and will pay for everything. But none of the future home value and an enough earnings will be able to assure the 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. As a matter of fact, most people who will purchase a home for themselves or as a form of investment will do so with the use of mortgages. And so it leads us to the question if a mortgage could only be used to buy a home for oneself or if it is allowed for renting out purposes.
The answer is honestly both. But since you need the rent payment to pay for the monthly mortgage fee, you cannot freely decide how much you will price the rent. We advise that you use a mortgage affordability calculator during the planning phase.
Life you desire to live
Undoubtedly, the financial aspect is the most common reason for majority. However, some consider buying a home for themselves or for renting out purposes solely because of the lifestyle they have. Undoubtedly, those in dire need of a home for themselves will pick the first choice. Those others who prefer the second option must avoid the thought of having the first choice too, unless they have that much money!
A real estate investment wherein you buy a home to rent out for others will not necessarily mean a passive income. Though it is actually great for those willing to rent a place as of now.