Is a single family home a bad investment? Some buyers luck out and receive great appreciation on their property over time. They also make a few improvements that improved the value and sell it for more then they paid a few years prior.
If not bought strategically, it may be difficult to sell for a profit. The goal should not be to break even when looking to sell, but to profit.
You can’t control the market, but you can follow a few simple steps to avoid a bad purchase.
1. Is this a house you can live in for 5 or more years?
Make sure this is a long term buy. Will you be comfortable living there for an extended time. Don’t bank on appreciation giving you a profit when you are ready to sell. Consider closing costs as well, they can add up when selling a property. If it is a older home, make sure you are prepared to have a “capex” fund. It should not be a surprise when a water heater or boiler needs to be replaced. These big ticket items don’t last forever and note the date listed in your inspection report.
2. Am I buying below median value for the area?
If you buy a property that is in the upper echelon.. it might be more difficult to sell since not everyone can afford the property. It can be too expensive for the average homebuyer.
3. Is this an area I want to be in?
Do you plan on raising a family here? How are the schools? If you are buying and looking at the future as well, is this a location you see on the rise with a chance of appreciation? Know the crime rates, median home costs, school ratings, etc when reviewing you target towns.
4. Are there value add opportunities?
If the house is completely move in ready, it may be difficult to find value ads. Cosmetic updates can be fixed and possibly add value when you plan on selling. It may see challenging to buy a home in need of a little work, but the headaches and learning, will benefit you long term when reselling.
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