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.
Overrating the value of real estate as a form of investment
Certainly, real estate is one of the most secure type of existing investment. 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 know you know for yourself that the definite answer to this 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 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 both a future home value and enough profit will not guarantee payments for those expenses. It is a much higher risk than it is often perceived.
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 to that is 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 have
Undoubtedly, the financial aspect has a huge role on this. However, some consider buying a home for themselves or for renting out purposes solely because of the lifestyle they have. Obviously, those who need a house for themselves will go for 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 ideal for the people who does not find a problem with renting a place as of now.
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