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Using Real Estate To Achieve Your Goals

Written By: Miller and Associates Realty On: 1st April 2019 Under: Real Estate Tips

Using Real Estate To ACHIEVE YOUR GOALS

Achieve Your Goals Using Real Estate

Property buying and selling can seem overwhelming. Unlike stocks and bonds, which can be purchased for relatively little money, properties start off with either massive cash infusions or financing with its accompanying payment schedule and interest.

It’s understandable that many will want to go it alone in order to minimize cost and time, but it is usually best to talk to a Realtor when getting serious about buying properties.

The Buyer’s Goals

It helps to have some guidance when buying property. Uninformed property investments can hurt, but on the flip side, the rewards of proper research can be very generous.

It is wise to seek the help of a Realtor or similar professional versed in the finer points of real estate dynamics and laws. When going over property buying/selling, the first task at hand is to determine what will be the primary use of a property. Three options come up:

  • live-in, when one will buy a home for themselves and their family
  • property appreciation for profitable resale
  • establishing cash flow from rents

Of course, more than one goal can be achieved with a purchase. Buying a single-family home to live in is certainly a plus if, upon resale years later, the home and associated property fetch a significantly higher price. Likewise, renting out a room for a friendly tenant is another way to hit two birds with one stone when it comes to buying property.

However, these combined benefits are not promised. Prospective buyers should be made aware that focusing on one primary goal for their property purchase is the best course for them.

For instance, a Realtor may make the point that home improvement projects may very well enhance a home’s resale value, but if external factors like disappearing employers or bad local/state governance are severe enough, property values will sink for an entire community, regardless of the investment a homeowner may put into their property. Trying to sell a home, even at a loss, becomes difficult.

Focus On Property Investment

Buying a property only for investment eliminates the personal comfort and safety concerns since a buyer doesn’t have to live in or near his purchase. However, it should be made clear that buying property to rent out to residential or commercial renters has its own responsibilities; mainly maintenance and repairs, as well as advertising to attract and retain prospective tenants.

If buying property purely in hopes of appreciation, beware. This is the riskiest type of venture, since the buyer doesn’t get the comfort of living in the residence, nor the cash flow that comes from collected rents.

In fact, property bought for appreciation and resale, often called “flipping a property”, is cash flow negative for the duration of ownership. A Realtor can more comprehensively inform a prospective buyer of the risks involved, but simply put:

  • Buyers have to pay property taxes for the duration of ownership
  • Repairs and renovation costs can exceed expectations
  • Complying with building codes further adds time and possibly additional carrying cost
  • Selling a property takes additional time and expense, sometimes far more than expected

Real estate is a vast subject. Here, some topics were covered, but there are of course other interesting subjects to consider. The difference between residential and commercial properties, investing in vacant land as opposed to built properties, surface and mineral rights, equity vs. mortgage REITs, what factors most affect home prices, and more.

The foundation of property purchase goals covered here will give the reader a reliable foundation on which to build further knowledge of property investing and management.

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