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 some of the things you need to keep in mind in order to make the best decision.
Overvaluing real estate as an investment
Definitely, real estate is known to be one of the safest type of investment that exists. Yet, there are still other investments that are consistent and stable in terms of earning cash even with the advantages and disadvantages 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 see to it that the earnings from that property is able to replace 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. It is unavoidable that some people may think that the home value will increase 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.
Regarding the mortgage
Mortgage repayments will usually lead us to the subject as to 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 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 that you make use of a mortgage affordability calculator during your planning stage.
Life you desire to live
It is undeniable that the financial aspect plays a major role. However, some consider buying a home for themselves or for renting out purposes solely because of the lifestyle they have. Undoubtedly, those in dire need of a home for themselves will pick the first choice. Those people who buys a home as an investment must not entertain the thought of buying another one for themselves, unless they are too well-off!
Real estate investments designed to be buy-to-rent does not necessarily mean s passive income. Though it is ideal for those who are willing to rent a place as of now.