Making your first home purchase is the single best financial investment you make during your lifetime. The purchase of a more expensive replacement residence may be a loser in the short term.
If you make the upgrade stand on its own, as if a second residence, it would take an annual increase that exceeds 9% to achieve a 4.5% annual yield after tax (proposed safe rate). If the safe rate is 4.5% you would be better off putting your money in a safe investment rather than betting on an increase of 9% anually in housing prices today (presently negative in a lot of markets).
Your house is your home, not always an investment vehicle. Make changes as life dictates not on investment criteria.
The employment of a REALTOR most often insures competent information advice as to your personal real estate needs. Buying a more expensive replacement residence is strictly a personal decision without investment merit.
David Spencer, Broker, Licensed Instructo
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