August 6th, 2012
With the economy at the forefront at nearly every discussion, homes are treated as investments, not just dwellings. Every homeowner hopes that his or her home will someday bring in more money than he or she put into it.
Since mortgage rates and home costs are so low, many people are becoming homeowners twice over, and purchasing a second home to vacation to or rent out.
In his Zillow blog post “5 Ways to Improve Your Real Estate Wealth,” Leonard Baron offers some tips for ensuring that your real estate will make you wealthier than before you purchased it.
Plan to own long term. Real estate doesn’t carry instant appreciation. It takes time for the value to increase, so don’t expect a home to be a quick-yielding investment.
Buy assets, not liabilities. Since it will take some time for your real estate to bring in the cash, make sure that you can afford it now.
Be insured. Make sure to have the right homeowners insurance, which we discussed in a previous blog post.
Skip fixer-uppers. Unless you’re a builder by trade, fixer-uppers don’t usually bring in as much extra cash as they are rumored to. Your best bet is to find a home that you don’t have to put much more money into, other than a few repairs and a paint job.
Long-term financing. With rates so low, there’s no reason to rush in paying off your loan. Go for the 30-year fixed-rate to begin with, and you can always refinance down the road.