Is Buying A Home Good For Your Finances?
Is buying a home good for your finances? A simple question, but is there a simple answer? I’d love to tell you that there is, so you could carry on with your day. However, answering this question is certainly more complex than most people think.
For me, I notice that a lot of people are brought up believing that buying a house is the ultimate financial step in life. It’s seen as the end goal, the moment where you’ve truly made it as a successful adult. In the past, everyone would own a house as early as they could, it was just seen as the right, and smart, thing to do.
Nowadays, perceptions have changed almost to the point where people believe it’s not smart for their finances! Buying a home costs too much money and you’ll be repaying a mortgage for years – this is what many people are saying right now. As such, there’s a trend where more people are renting rather than buying.
But, going back to the original question, the answer depends on what you’re buying your home for. Typically, there are two main reasons to buy a home; to live in or to invest in. To see the true effect of buying a house on your finances, we have to explore both of these reasons.
Investing In A Home
Is buying a home – purely for investment purposes – good for your finances? The majority of the time, yes, it is a good idea. Real estate investments have a proven success rate, whether you’re buying to let or property flipping. Having said that, you can easily lose lots of money if you make a bad property investment. Ultimately, it boils down to whether or not your investment can make money. Keeping that in mind, here are a few pieces of advice to help you buy a home that will bring a good ROI.
Be Diverse And Buy Foreign Homes
Buying a home in a foreign country is a smart way to guarantee you get a good investment. Mainly, this is because a lot of foreign houses can be much cheaper. It’s well-known that countries in Europe like Spain and Italy offer great value properties to invest in. Plus, as seen here https://rumahdijual.com/cibubur/apartemen-cibubur-village, there are countries in Southeast Asia with thriving property markets too. By purchasing a foreign home, you open yourself up to more benefits too. There are certain tax laws in place here that aren’t in place elsewhere. While you can easily flip a foreign property, they’re usually best invested in as rentals. Become a landlord and earn money from overseas tenants, making your investment good for your finances.
Don’t Buy New When Property Flipping
Property flipping is the age-old method of buying a home, improving it, and selling it for a profit. It’s a tried and tested technique, and there are plenty of examples where it goes well and proves buying a home is great for your finances. However, there are examples of the opposite too. Mainly, this happens when people buy new homes to try and flip. The older a home is, the better it is for flipping. It means there’s more room for improvements, meaning you’ve got more room to boost the value and gain a good profit. But, if you buy a new home for property flipping purposes, you’ve got almost nothing to improve and hardly any ways of boosting the value, meaning you can’t gain a decent profit.
Wait Until The Market Is Stable
Investing in a home is all about waiting for the Goldilocks moment. This is what I like to call the time when the market is just right. Buy a home when the market is booming, and you can overpay quite considerably. Invest when it’s low, and you could snag a bargain but will struggle to sell it on or find tenants because the economic market is poor. You have to wait until the right time, where everything is stable, and you get good value for money and still have chances to make money.
The bottom line is that if you find the right investment, and don’t make any mistakes, you can earn a lot of money from buying a home. In which case, it will undoubtedly be good for your finances! If investment is your choice of approach, check out this article here https://www.investopedia.com/articles/mortgages-real-estate/11/make-money-in-real-estate.asp. It’ll show you how to make money in real estate, and improve your finances.
Buying A Home To Live In
Now, buying a home with the sole intention to live in it is a different proposition entirely. The aim is not to make any money, so, how can it be good for your finances? Some people argue it’s a positive financial move as you no longer have to pay rent and you’ve gained a physical asset. In this respect, you’ve got something of financial value to pass down to your children and their children too. Also, you can potentially make a profit if you move house in the future, depending on whether your home has increased in value or not.
Then, you have the arguments that buying a home is too much of a financial burden. A mortgage costs a lot, and you may not have rent, but you’ll have those repayments every month instead. You’re also in charge of everything about your house, meaning you pay for all the repairs and maintenance that a landlord would in a rental property.
It certainly divides opinion, but let’s take a look at some points that should be considered when buying a home.
Job Stability
Buying a home is not good for your finances if you don’t have a stable job. This means you might be unable to pay your mortgage and end up in loads of debt. Only consider it if you have a stable, well-paid, job.
Housing Market
Much like investments, buying a home to live in depends on the housing market. This time, you should aim to buy when the market is at its lowest point. This provides you with the best value properties, making it more affordable to buy.
Bill Payments
When you rent a home, you might get your bills included in the monthly rent. I know some landlords like to include the energy bills in here. Or, more to the point, you pay them separately but don’t have much choice. The home you live in could be supplied by one energy company, and you don’t get to change it. If you own your home, you can do this, change to a cheaper supplier, and save money.
Buying a home to live in is good for your finances when you’re fully prepared for it. If you’ve got the money to outright buy a home, then go for it. You’ll never have any rent payments to worry about again. However, if you’re not prepared and can only just afford a mortgage, put a pin in it, as buying a home at this stage can harm your finances.
The Conclusion
So, is buying a home good for your finances? The truth is, there’s not an answer that applies to everyone. If you invest in a home, there’s every possibility it’s good for your finances as you can earn a lot of money. But, this only happens if you make a smart investment. Likewise, as we’ve just discussed, buying a home to live in can be beneficial for your finances, depending on your current situation.
That’s the key here, you have to look at yourself and decide if buying a home is right for you. But, don’t be forced into thinking you should invest in property or you need to own your home. There are other investments out there and renting is just as good at times!