Must You Purchase 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 a few of the things to be remembered before you make a decision.
Overvaluing real estate as an investment
Truly, real estate is one of the most non controversial type of investment at present. However, there are also other investments that are consistent and stable in terms of earning money even with the edges and downsides of the housing market. But is there really certainty that you are going to earn? Is purchasing a home enough to make money as long as you have patience? You might have kept it to yourself but I know that you know the exact answer to this: 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 take into account the utilities, mortgage payments, insurance, maintenance, and the 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.
Accounting the mortgage
Mortgage repayments will most likely lead us to the issue of how mortgages have a role in this. Truth be told, most people who will purchase a home whether for themselves or for investment purposes will do so with the use 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 since you need the rent payment to cover for the monthly mortgage fee, you cannot freely put a tag on your rent. We suggest using a mortgage affordability calculator when you are still planning in the first place.
Life you desire to live
Undoubtedly, the financial aspect has a huge role on this. Yet some think of purchasing a home for themselves or for renting out purposes mainly because of the lifestyle they ought to live. Undoubtedly, those who needs a home for themselves will go for the first pick. Those people who will buy a home as an investment must not entertain the thought of doing both options, unless they are that rich!
There is a misconception that a real estate property designed to be buy-to-rent indicates a passive income. Though it is ideal for those who are willing to rent a place as of now.