What Experts say:
Experts always try to tell us when this is the right time to take action. There is always a good time to train. A good time to eat your food all day. There is always a good time to look for certain things. And of course, there is always a good time to invest in real estate and to buy a house. Let’s take a step back to the latter. Is there really a “right time” to buy the property?
In the end, it is not only on the real estate market but also on your personal situation and where you are in life. Before you purchase your own real estate, below are six things that you should consider before making the decision to invest in real estate:
stability How stable is your income? When your company or business is doing well and you are making a lot of money, it is very easy to get excited and feel the desire to buy a piece of your property. The question that you should seriously address here is: “How stable is this income?” What is the chance that your income will stay the same or increase over the next six months? What about the next year? If you are unsure of your future income situation, picking up a mortgage is not the smartest idea at the moment. You will want to wait a few months until you have a clearer picture of your future income or at least you have built up your savings a little more.
This will determine what interest you will receive on your mortgage if you are approved. A few points up or down on your interest rate can be the difference between thousands of dollars over the lifetime of your mortgage. Make sure your credit score is where you want before you even apply for a mortgage. If that is not the case, you should start thinking about ways to increase your credit score.
3. Life situation
Are you single at the moment? Do you have a long-term relationship? Your living situation can change within a few months or at night. Your company can offer to transfer you to a warmer part of the country. You may immediately get the urge to quit your job and travel to Europe for a year. We all have different life situations. That is why there is no clear advice when it comes to buying real estate. Make sure that buying a property matches your situation.
4. Goals with ownership
We all have different goals when it comes to real estate. Some of us simply want a hiding place. Some of us want to live in the thriving part of the city. Some of us just want to be able to walk to work. Make sure you think about these goals in advance and decide if buying real estate is necessary to achieve those goals. Also, make sure that the price matches your budget; if you transcend yourself, your financial life will become a lot more stressful.
Perhaps the most important thing: it is almost always a bad idea to buy real estate purely as an investment decision. Of course, it’s great when the property you buy seems like a great deal, but this shouldn’t be your only criterion. If your goal with your property is to earn some money from it or to change it quickly, then you have to reconsider. There are just too many risks involved. Look at everyone who invested in real estate during the recent housing bubble and now no one can get anyone to even consider buying his house.
5. The real estate market Do
you follow the house prices in your region? Have the prices of real estate risen or fallen? Once you know where you want to live, it’s important to see for yourself how house prices in that area have changed. If property prices have fallen dramatically and your finances are where you want them to be, you could be in a great position to become a homeowner. On the other hand, if house prices are at a historically high level, you may want to be patient so that you can avoid buying a bubble that can burst quickly.
6. Future goals
There are many situations in which you do not want to put your money in a physical asset. For example, if you want to travel on a long-term basis in the near future, you don’t want your savings to be stuck in a home. If you want to end your job, start your own business or take a break, it becomes very difficult when you have to make mortgage payments.
The point of this piece is to emphasize that no “expert” can predict the right time for you to invest in real estate. You and only you will know when the time is right to take that next leap in life to buy a house. Don’t let supposed expert advice become the deciding factor in your purchasing decision.
Now it’s time for me to confess a bit. I bought a piece of real estate as an investment a few years ago and was planning to rent it out. The first bad decision here was that I broke my “not buy property as an investment” rule. I think you can guess what happened to the value of this property during the recent home crash. To make matters worse, after completing all the papers when closing the apartment, I was informed that the developer had included a clause in the documents stating that the owner had to enter the unit a year before leasing the device live. I had no idea that this was part of the contract, but it was already too late. Two more lessons are learned here: get a quality lawyer and read the paperwork thoroughly.
If you are considering buying property, you must consider these six factors before making a decision. Learn from some of the mistakes I made.
Have you recently invested in real estate? How did the decision work out? Do you have extra tips for people to keep in mind when evaluating whether the leap needs to be made?