Home ownership. Being a landowner. A distant dream for many and yet, is it as unattainable as it is assumed to be?
Real estate or property investment is considered to be the safest choice when the economy is volatile and you need to ensure your hard-earned cash is not going to be the victim of a devaluing currency. It is also a wise choice when the economy is performing well. So why does conventional wisdom and the experts vote in favor of real estate? It is simple really: real estate is an appreciating asset – its value will only continue to grow over time.
Notes for a Beginner
Available Financial Assistance
If you want to become a home-owner but are not sure whether you can afford it, you may actually be more qualified than you think.
- If you live in the USA, and can be classified are a first-time home owner as per the requirements set out by the US Department of Housing and Urban Development, you may be able to apply for down payment assistance or closing cost assistance programs through the state government or Not-For-Profit Organizations. You may also qualify for tax breaks and federally backed loans.
- In the UK, you may qualify for the first-time home owner scheme, where you can buy a home for 30% – 50% less than its market value.
- In Australia, several regional programmes offer help for first-time home owners. In New South Wales for example, if you are buying or building your first home, you may be eligible for a 10,000 AUD grant.
Things to Consider Before You Take the Plunge
- Financial Health
An emergency fund, and living expenses for at least 3-6 months should ideally be at your disposal. This does not mean that you need to give up hope if you don’t. You still have options but be aware mortgage payments will be tough and you need to be prepared well.
- Home to suit your needs, with features you need
Are you keen to buy a traditional house, an apartment, or a condo? Among the decisions you need to consider include; the type of kitchen you want, the layout of your new home and additions such as garages or storerooms.
- How much mortgage do you qualify for and how much can you actually afford?
Calculate your expenses, and decide which items you need to limit or even reconsider, and/or eliminate. Also, just because a bank is willing to offer you the maximum amount, you should consider whether you need or want to take that amount on. Repaying a mortgage is a great responsibility and you need to be well prepared.
Other things you need to consider include who will help you find the best property to suit your requirements, go through the offer with you, assist with home inspection and finally, close the purchase.
You’ve also got to keep in mind that once you move in, you need to maintain the home and keep saving your money too.
Beyond Home Ownership
You could continue to dabble your toes in the real estate waters beyond homeownership, by looking into ways to generate an income.
- Invest in REITs
Real Estate Investment Trusts. REITs allow anyone to invest in a portfolio of real estate assets through the purchase of company stock. A REIT is offered by a company that owns and operates income-producing real estate or related assets, such as office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses and so on.
- Flipping Real Estate
Flipping houses usually involves buying a property that is run down, revamping it and selling it at profit.
- Rental properties
Buying or using a property you own and generating income by renting it out completely or units or parts of it.
Real estate investment is not only for the super-rich or the well-seasoned investor. If you do proper research, organize your finances and are willing to learn on the move, you are already halfway there. Bonne chance!
(AK)