Must You Purchase a Home for Yourself or as an Investment?
If you are thinking of purchasing a home, then it is worth thinking over whether you need it for yourself or you prefer to rent it out to other people. Here are some of the things you need to keep in mind in order to make the best decision.
Overrating the value of real estate as a form of investment
Definitely, real estate is known to be one of the safest type of investment that exists. 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 it really doubtfulness that you are going to earn? Is purchasing a home enough to ensure your earnings as long as you are patient enough? I want to believe that you have guessed it right; the answer is a ”No”.
If you are going to invest in a real estate, your earnings from that property must be able to fill-in 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.
Accounting the mortgage
Mortgage repayments will usually lead us to the subject as to how mortgages have a role in this. Truth be told, most people who will purchase a home whether for themselves or for investment purposes 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 actually both. But since you need the rent payment to pay for the monthly mortgage fee, you cannot freely decide how much you will price the rent. We advise that you use a mortgage affordability calculator during the planning phase.
Life you desire to have
It is undeniable that the financial aspect plays a major role. Yet there are others who consider purchasing a home for themselves or for renting out purposes just because of the lifestyle they want to live. Obviously, those who need a house for themselves will go for 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!
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 those who are willing to rent a place as of now.