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Understanding How Home Equity Works and Why Buying a Home Can Be Your Best Investment

February 2, 2016 by Rhonda Costa

Understanding How Home Equity Works and Why Buying a Home Can Be Your Best InvestmentWhen delving into the world of real estate and investment property, there are many terms that will come up that require further explanation. Whether you’ve never heard the phrase ‘home equity’ before or you have a little familiarity, here are the ins and out of what it means and how this asset can help your financial outlook.

All About Home Equity

Essentially, home equity refers to your portion of the value of your home, and the amount of this figure is important because it is included among your assets when determining your net worth. If this sounds confusing, think of it this way: if you have completely paid off the cost of your home, the value of your home equity is this total amount. Of course, because most people seek a lender to borrow money from when they purchase a home, their home equity would consist of their down payment and whatever amount they’ve paid down on the mortgage since purchase.

An Example Of Home Equity

To provide further clarification, let’s use the example of a house that has been purchased for $300,000. In the case that a down payment of 20% has been provided at the time of purchase, the equity in the home would be $60,000. Since this amount is the percentage and cost of the house that’s been paid down, this is the amount of the house that is actually owned and this will be figured among an individual’s assets.

How Home Equity Works

As you pay the amount that you owe on your home each month, you are paying off your total debt and thereby increasing your equity. Since this amount of money is considered an asset that belongs to you, it can be used down the road to buy another home or invest in other important things like education or retirement. While paying off the amount owed on a home is a considerable investment, if the value of your home increases, this means that you’ll still owe the same on it but your home equity will have automatically increased.

As an asset that is part of your financial net worth and can be used down the road to fund other investments, home equity is a very useful term to know when it comes to purchasing a home. If you’re on the market for a home and are considering your options, you may want to contact one of our local real estate professionals for more information.

Filed Under: Real Estate Tips Tagged With: Buying A Home, Home Buyer Tips, Real Estate Investing

Did You Know: Here’s Why Buying a New Home Grows Your Wealth Faster Than Renting

January 21, 2016 by Rhonda Costa

Did You Know: Here's Why Buying a New Home Grows Your Wealth Faster Than RentingThere can be many downsides to both renting and buying, depending on what side of the coin you are on, but if you’re leaning towards purchasing a home it can have added benefits for your bank account that renting does not. While renting can certainly alleviate many of the costs that go along with property ownership, here’s why purchasing a home can have positive monetary affects in the long run.

The Good Impacts of Inflation

While inflation is often seen as a dirty word, a real estate purchase can see the positive side of inflation with how your home purchase investment will grow over the years. Putting money into rent will mean that money is gone and out the window once you’ve paid for the month, but investing into a property will come back to you in future gains that are made in the real estate market. While buying a home will be more expensive in the short term, it can also provide you with greater financial flexibility and equity in the future.

Renovations Will Increase Home Value

While changing up the bathroom or the paint on the wall in your apartment isn’t going to add any extra lining to your wallet when you move out, making upgrades to a home that you own will have the very opposite effect! Renovations can certainly be unpopular while they’re taking place, but no matter how small or large, they can mean an easier sell and a higher profit when the home finally goes on the market.

The Opportunity For Rental Property

An apartment you rent won’t offer opportunity for investment if you’re away from your home for an extended period of time, but a home you own may serve as an ideal investment property at some point in the future. With the success of Airbnb and unique modern housing needs that may only require a home rental for a short period of time, being able to use your house as a rental property can be a significant boon for earning money you would have otherwise been without.

Buying a home can require a lot of number crunching in the beginning that rent does not, but it can also provide significant financial benefits down the road that might not exist without such a purchase. If you’re considering purchasing a home in the near future, you may want to contact your local real estate professional for more information.

Filed Under: Home Buyer Tips Tagged With: Buying A Home, Home Buyer Tips, Real Estate Investing

Real Estate Investing: 3 Secrets of Successful Home Buyers That You Can Use Today

December 3, 2015 by Rhonda Costa

Real Estate Investing: 3 Secrets of Successful Home Buyers That You Can Use TodayWhile making a real estate purchase can be a matter rife with many questions, buying to invest in a long-term property can be even more confusing. If you’re looking into investing in real estate and wondering what variables to consider, here are a few tips that you’ll want to keep in mind before deciding on a fruitful investment property.

Be Aware Of The Market You’re Buying Into

Since you’ll need to be aware of what other people are looking for in a property if you’re diving into real estate to invest, you’ll want to carefully consider the neighborhood and city that you’re buying in and think about what the future holds. While becoming knowledgeable about home prices in the area you’re thinking of buying is a must, you’ll also want to think about market projections, trendy new neighborhoods and what the appeal will be to renters or buyers of the home you’re contemplating.

Consider A Diamond In The Rough

It might seem like a home that is a little rough around the edges is going to be a high-maintenance endeavor that doesn’t balance out in the end, but a fixer upper of a place may be end up being the best option. While you may need to renovate a little here and there to unearth some of its natural features, improvements to a home with a good structure in a good neighborhood can be more economical than spending more on a home that instantly appeals. It can also provide a better return on your investment in the long-term.

Stay Within Your Spending Means

When considering an investment property, it can be quite easy to get derailed and think about what you’ll be making instead of the expenditure of the initial investment. However, it’s important to determine beforehand that what you’re choosing to afford is going to be manageable in case you have to swing it on your own. By determining whether or not it’s an affordable expense, you can have a successful investment that will balance out in your favor at the end of the day without having to worry about sinking beneath the cost.

There are many questions that can come along with choosing to invest in real estate, but by carefully considering the market and keeping your purchase at a reasonable price point, you may have a long-term moneymaker on your hands. If you’re interested in other tips for real estate purchasing success, you may want to contact your local real estate expert for more information.

Filed Under: Home Buyer Tips Tagged With: Buying A Home, Home Buyer Tips, Real Estate Investing

Real Estate Investing: Why Buying a Condo in a Ski Resort Area Can Be a Great Investment

October 7, 2015 by Rhonda Costa

Real Estate Investing: Why Buying a Condo in a Ski Resort Area Can Be a Great InvestmentThe decision to invest in real estate can be one rife with risk, but if you’re ready to take this type of step into the investment market, you might be wondering where to begin. While upcoming neighborhoods and university areas may always be a place where investment is a viable idea, here are some reasons it can be a boon to consider a resort condo.

A Reliable Influx of Visitors

The great thing about having a condo close to a resort is that, no matter the weather, people will be getting away in the summer and the winter for some vacation relaxation. While you’ll certainly notice a more significant influx of visitors to a ski resort when winter rolls around, there will still be heavy crowds for the summer months when people want to escape from the city. Renting a condo in a resort can seem like a risk in the off-season, but there are many months out of the year that you can garner a cash flow that will make up the difference.

Maximizing Your Rental Earnings

An investment property in a trendy neighborhood or next to an educational institution will probably always be a popular renter]s area, but being a landlord for a resort property can have its own special perks. With the high season comes the push and pull of supply and demand, and this means you’ll be in a position to offer your property at a significantly higher rate. By keeping your rent reasonable but respectable, you should be able to quickly make up for the cost of initial investment.

It’s An Extra Vacation Property

While this might not work for the investment angle, having a condo at a popular resort may help with the cost savings that can come from not spending money at vacation time. Instead of going to far flung places and splurging on expensive hotel rooms, a resort condo property will mean that you can save on accommodation and still enjoy a relaxing holiday with your family and friends. If your vacation happens to occur during the resort’s downtime, it’s even better since you won’t miss out on improved rental earnings.

While investing in real estate is not risk-proof, buying into a resort condo can be a great way to enjoy a vacation pad and still make money in the high season at the same time. If you would like to learn more about the ins and outs of investment properties, you may want to contact your local real estate agent for more information.

Filed Under: Home Buyer Tips Tagged With: Buying A Home, Home Buyer Tips, Real Estate Investing

Buying an Investment Property? 3 Key Home Features That Will Help Ensure You Turn a Profit

August 21, 2015 by Rhonda Costa

Buying an Investment Property? 3 Key Home Features That Will Help Ensure You Turn a ProfitIf you’re entering the real estate investment market for the first time, you’re embarking on a great adventure – and with a solid plan, you can turn a tidy profit on your investment.

The key to a successful real estate investment is choosing the right property. A great property will reap dividends for years to come. Look for these three features in your next investment property and you’ll have no trouble finding one that turns a profit.

Location: More Important Than You Think

The location of your investment property will be critical in determining how much you earn on it and how long you’re able to keep tenants. And as the saying goes, you can change the color of the walls, you can change the type of flooring, and you can change the layout of the home, but you can’t change the location. So before you do anything else, make sure your new investment property is in a good location.

High cash flow investment properties tend to share certain location characteristics. They tend to be in neighborhoods with great schools and great amenities like pools, parks, movie theaters, and public transit. They also tend to be in an area with quiet, low-traffic, well-kept streets. Great neighborhoods have a low crime rate and don’t mix housing types.

Average Rent Price & Vacancy Rate: Look For Marketability

Aside from local amenities, you’ll also want to consider the average vacancy rate and rent price in your neighborhood. If you can’t cover your costs by charging the neighborhood’s average rent, then the home is a poor investment.

Keep an eye on vacancies in the neighborhood. If there are a high number of vacancies in the area, it could mean that the area’s rental market is seasonal or that renters are no longer interested in it. A low-vacancy area will allow you to charge more rent, and you’ll be more likely to find renters.

Floor Plan: Know The Trends And Buy Accordingly

There are a lot of things you can change if you don’t like your home, but the floor plan is a challenge to rearrange. That means in order to make your property competitive on the market, you’ll want to choose a property with a modern floor plan. Watch the trends and buy a home with a floor plan that’s in demand – you’ll have an easier time finding tenants.

Buying an investment property is a great choice for smart investors, but it’s important that you choose a property that will turn a profit. An experienced real estate agent can help you find a great new investment property that tenants will love. Contact your local real estate professional to learn more about qualifying investment properties.

Filed Under: Home Buyer Tips Tagged With: Buying A Home, Home Buyer Tips, Real Estate Investing

First-time Home Buyers: Why Splurging for a Larger Home Beats Condo Living

August 4, 2015 by Rhonda Costa

First-time Home Buyers: Why Splurging for a Larger Home Beats Condo Living Some first-time home buyers are on a tight budget when making their real estate purchase, and there may be an inclination by many to purchase a smaller property, such as a condo, rather than the home they truly want. While there may be some initial financial benefit associated with buying a smaller property, there are a few benefits associated with splurging and buying a larger home as a first purchase. By analyzing these benefits, first-time home buyers can make a more informed decision about how to proceed.

Costs Associated With Upgrading In The Future

Some people will purchase a smaller property initially with the goal of later upgrading to a larger property. This can provide the home buyer with the initial benefits of building equity, taking advantage of tax benefits associated with real estate ownership and more. However, there are costs associated with selling property, including closing costs, real estate fees, make-ready and improvement costs and more that should be considered.

Benefits Of Long-Term Ownership

For many, there will be a need to have a larger property over the years, such as when starting a family or when young children grow into teenagers who need more space. When the first property purchased is large enough for the family to grow into, the homeowner can enjoy long-term appreciation and equity growth. More than that, the higher value of the property may mean that there is more upside for property appreciation over the years.

Getting Established In A Community

In addition to the financial benefits associated with investing in a larger property initially, there are intangible benefits. Moving into a new home in a few years means that there is a need to get re-established in a community. When a home buyer settles down into a larger home that he or she plans to stay in for many long years or even decades, getting established and settled in the community can begin right away.

These are considerable benefits that can be enjoyed when a first-time home buyer makes a purchase that he or she plans to enjoy for many years to come, but there are other factors to consider. Each person needs to make a decision regarding a real estate purchase that is best for their needs, goals and financial situation, so there is not a best-fit solution that is right for everyone. Those who are thinking about buying their first piece of real estate may consider contacting a real estate professional for assistance with their home hunting efforts soon.

Filed Under: Home Buyer Tips Tagged With: Buying A Home, Home Buyer Tips, Real Estate Investing

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