Retirement Planning Homes and Property
Mar 26, 2012 Planning for Retirement
As mentioned in the article on savings accounts, if you want to invest in a home, you’re going to need to get your credit rating as high as you possibly can. Resolve any delinquencies or credit disputes you might have, pay for your groceries, gasoline, toilet paper and other essentials with your card, and pay the bill on time each month. If you get an early start on this, you should have outstanding credit by the time you’re ready to buy your first home.
Golden opportunities to fix up property
When it comes to buying a home simply to live in, you can afford to be choosy, but the golden opportunity buying and selling homes allows is the chance to fix up an old home, make improvements, and sell it for quite possibly several times as much as you invested into the building.
If you’re not too picky, it’s actually quite easy to strike a deal where your monthly payments will be about as much as a month’s rent on a modest apartment, and you can simply live in the home while making repairs. This is an excellent investment for anyone with a background in construction, as you can make improvements on your own without the expense of hiring a crew. Once the home is paid off and you’ve turned what was once a fixer-upper into a shining example of craftsmanship, you can resell the home and then, if you like, reinvest that money into another project. Even if the home isn’t in the best neighborhood, many have found this method to be a sure thing for anyone willing to put in the time and effort.
Supposing you haven’t much finesse with a hammer and a power drill, just make sure to shop around when hiring contractors. Don’t just go for whoever’s listed first in the yellow pages, talk to anyone you know who’s worked with the local contractors, get recommendations, look for the lowest estimates. If you personally know any contractors, they might even be willing to cut you a good deal or go in with you as a fellow investor. Be patient and be rational. Oftentimes, home improvement projects simply fall apart when the home owner asks simply too much from their contractors. If you’re hiring contractors, try to include this in your initial plans when you first sit down to figure out how much you’re going to need to borrow to get started.
You’re probably going to have to start by taking out a loan for the down payment. Most mortgages are based on the buyer putting down at least ten to twenty percent on the total purchase price of the home. It may be possible to put down a bit less, perhaps even substantially less, although, this will require buying private mortgage insurance, which will increase the monthly cost. Luckily, PMI is tax deductible starting in 2007, but if your credit is good enough and if you’re ready to make the commitment, it shouldn’t be hard to get a loan for the full ten or twenty percent.
Do your research
Before buying any home, though, you should do some research. A lot more goes into determining a home’s cost than its physical condition (although, needless to say, the condition of the home does tend to go a long way). Ideally, you can find a home up for sale in an area with a lot of development going on.
Buying a home in a perfect neighborhood might cost you an arm and a leg, but buying a home in a neighborhood that is improving pretty much guarantees that the home’s value is only going to go up. Factors to consider include distance to schools, shopping centers, etcetera. There’s a reason housing costs significantly less in rural areas and significantly more in densely populated parts of urban and suburban areas. Accessibility to the amenities of the city is a major factor in determining the value of a home.
Dealing with real estate agents
A word of advice on dealing with real estate agents in the purchasing process; don’t go gaga over any of the homes they show you. If the agent knows you love the house, they’re a lot less likely to budge when it comes to the negotiation stage. If you want the best price you can get on a home, you’re going to have to play hard to get.
Another option is simply buying land or a home as a way of turning your money into tangible property, guarding yourself against inflation, recession, and every other risk involved in having your money only exist as a form of credit (which is, after all, what paper money is, having been invented as a stand in for gold). We may one day look back nostalgically on the time when a tomato cost less than twenty bucks, but tangible property generally retains some form of value throughout the years, no matter the state of the economy.
Time to sell
When it comes time to sell, make sure you know just how much your home is worth. You can quickly find out about real estate values in your area by putting your postcde code into an online database.
You may want to go through a real estate agent, as their expertise might come in handy, or you might just not really want to spend the time giving people tours. Just remember that Real Estate Appraisers tend to value homes under market value, and, to be frank, everything a realtor knows, you can learn in a weekend.
Start trying to sell your home when the demand for homes in your area is high. The housing market moves up and down, and it goes without saying, you’ll want to sell when the tide is high, and be patient when the tide is low.
The main thing in getting as high a price as you can is to make sure your house looks really good when giving tours. Scrub down the walls, as well as the outside, mow the lawn, you know the drill. It might be a good idea to put some things in storage for awhile, as even a well organized home can look cluttered if every wall is lined with bookshelves, art, and furniture, at least, that is, from the buyer’s perspective. Remember that buyers are looking for a home to make their own.
Your house may have its own charming personality thanks to a drum kit in the center of the living room, first edition Star Wars posters lining the wall, or antique erotic artwork from several foreign countries, but your goal should be to simply make your house look neat, uncluttered, and well lit. Remember, the buyers want to buy their own home, not your own home.