How to Choose Your New House
You have a family and you want to be part of a positive living situation. Usually, you start to nurture your career and all the other qualities that will impact your other life. If you have decided that your current world does not accommodate a safe and sound environment for your children, then perhaps now is a good time to scout neighborhoods for a new home. Choosing to own a house gets you emotionally attached to the space you might live in, but there is much more to consider before you make your decision.
One of the most important factors to consider when scouting for your dream house is its neighborhood. The neighborhood is very important to the safety of your families. Even if you love the house if the neighborhood is unsafe no amount of love can make up for it.
The quality of the neighborhood Or the crime rate in the neighborhood are two very important factors that you need to consider when scouting for one. Of course, you can speed up your hunt if you know where to find them. What you need is information. You can ask your real estate agent to provide you with data on both crime rates and neighborhoods. This way, you do not have to spend a lot of time and effort.
One of the ways where you can get a clear picture when scouting for the neighborhood is to ask for recommendations from your friends and relatives. You can ask your close friends if they live in a neighborhood that you are interested in living in and then try to find them a house that is close to the places you have visited. It is easier to select a neighborhood if you have few contacts with people living there. In fact, it is ideal if you can personally talk to them in order to ask them their opinion on the place.
In finding a house, it is also important to consider the status of the neighborhood. Is it developing or is it on the decline? You can check this by going home at certain hours to neighbors to know if they see anything good in the place. Whether they would like it to go back. Or, is it a truly Sending neighborhood where they can enjoy themselves and live happily ever after.
Buying a house just to find it a lot easier, or you want a place faster, you can hire a private home inspector to do the task for you. However, most of the time the strategy of getting a house in the quickest time possible is not the right one.
Inspecting the house for long will take too much of your time. In fact, it is better to be there in person to decide on things than to let your real estate agent do it for you. Assess the items on your list one at a time. Look for the things that will give you the impression of the neighborhood.
Use your instinct about the neighborhood to aid you in finding one. If you feel unsafe then drive around the neighborhood. Drive at different hours, different days. See how it is as you drive. Is it noisy or quiet? See if there are strange people whom you feel are out to get you or compliment your neighborhood. If you feel like it is close to your house then it is not. Keep in mind that most and all buyers and home buyers will be focusing on the house they will buy, not on the neighborhood or the environment.
Make sure that you will do a home inspection to make sure that there are no hidden defects in the house. You can hire another person to do this as your real estate agent, but you need to pay him its fee. You can do all the home inspections by yourself by hiring a home inspector. Inspecting the house can save you a lot of money, and you do not have to be troubled and involve yourself in a home-buying nightmare. It will cost you time, effort, and sure, money. But for sure it will be worth it. Think about the money you can save in the future, on maintenance and repairs, on having to hire a lawyer to answer some legal problems in the house if ever, and other expenses.
Why Is Commercial Real Estate A Much Better Investment Than Residential Real Estate?
You could read a newspaper or a magazine and wind up with claims that commercial real estate is a better investment than residential real estate.
This is true in some situations but not for most property owners. In most real estate investing situations, residential real estate is often the better investment vehicle and equity investment when the alternative is to expect a return on investment in the bank. Banks are more conservative in lending on residential real estate and are often conservative in the amount of leverage they will accept; as a result, residential income-producing properties usually will not go as far as they might on a commercial real estate investment.
Sometimes A Residential Real Estate Investment Is Better Than A Commercial Real Estate Investment
Fortunately, since 1980, residential real estate has soared at an amazing rate while commercial real estate has stalled and in some places has actually begun to decline in value because of the poor management of the property. Much of this increase in value can be attributed to people who had the foresight twenty years ago to purchase homes in areas that would become their most desired locations.
Using an example from a small suburban city, I would like to claim that both the better investment in property in the past and the better return on investment in the present makes the purchase of either residential real estate or investment property in either a form of residential real estate a much better long term strategy than the purchase of commercial property or income-producing properties.
While residential housing has appreciated at a rate of 10% to 20% over the past three decades, commercial real estate, on the other hand, has declined and in some locations is completely gone.
The appreciation on the sale of commercial property is commonly much better than residential real estate when you consider the depreciation factor. You will generally break even on the sale of commercial real estate after 10 years on a moderate to strong appreciation.
When you consider the minimal amount of mortgage you will need to buy residential real estate and the long-term liability on a commercial property is virtually always greater, I would hesitate to commit to the purchase of a commercial real estate in most locations.
In the past when you had a sufficient amount of equity in your primary residence, real estate values could rise at a much greater rate than the increase in housing values. I am not referring to an increase in appreciation provided by the fact that some areas of the country continue to experience a stable or even decline in values.
I am referring to a situation in which you had the equity in your home increasing, thereby dividing the cost in housing by the increase in value of your home, without taxation of the increment in value as income in your pocket.
This situation is to be found in many areas where property values have appreciated at a steady 3 to 5% rate per year. At this rate, it is not uncommon to have investment properties have appraised values equal to or greater than the rental income resulting from those properties.
This 10% to 25% increase in value almost always occurs over a number of years and the heavier-handed influences that leading to this increase are mostly outside of your control.
Let’s look at an example. You own a duplex that is worth $200,000. At the time of this writing, you owe about $150,000 against the property. Then the property goes up 10% in value (5% of the original value) on its own within a few years.
At this same meeting, the boards of pages of your local newspaper are running an article about how the local median price for a home has increased by 20%. You, self-employed, make a living, have excellent credit and plenty of equity on your family home, so why isn’t this a good thing?
Let’s take the increase in the value of your home and divide it by the amount of equity you have in your home. You can’t divide the increase in value by 1.5 since that results in a negative number, so instead, leave it off the aforementioned equation altogether.
$150,000/$200,000 = $4,500
Divide by $200,000Key: It’s $4,500, and if you were to sell this piece of property at current market value you would be paying taxes on that $4,500!
That makes a significant difference in what it costs you annually.
There are some situations in which you might want to sell this piece of property if you want to meet certain specific goals, such as: