Even after the bailout, the economy still has a long way to go and quite a struggle head. Out of this down spiral, however, there have been some moderately positive outcomes. For one thing, the housing market has definitely become a buyer’s market.
As a result of either foreclosures or people desperate to sell, real estate is at an all-time low across the nation. For those who have the additional funds, investing in new property now would be a wise decision. As the market will, eventually, go skyrocketing back up, investors will make one phenomenal profit when they sell.
Many of us, however, are not into the dangerous life of house flipping, and in fact are just looking for a different property to fit our means. Unfortunately, with the market as it is, some homeowners cannot buy new homes unless they sell their current home — the old catch-22.
There are some homeowners who, when the market was up and booming, felt that they would never be able to afford a new home, and instead put money away for remodeling. Although their money is safe and secure in a bank, it is difficult to say if remodeling now is the best way to invest.
Sure, there are some definite bonuses to remodeling over purchasing a new home:
· Eliminates all the hassles of moving to a new location.
· You can design exactly what you want.
· You add substantial value to your present home.
As wonderful as those bonuses are, don’t assume that remodeling comes without hassles:
· Researching and interviewing contractors to find a legitimate person/company.
· Having your house in disarray for months during construction.
· Constantly stressing over your budget.
As homeowners have different remodeling needs, it really does come down to a case-by-case decision of whether the bonuses of remodeling outweigh the hassles.
Ultimately, the properties you own are investments, and thus the money you spend should be used to increase the value of your investments as much as possible. With the present state of the market, however, perhaps there is a third option for homeowners who have put aside some extra money.
With real estate at such a low price, passing up these great deals may be considered rather foolish. However, you as a homeowner know that you couldn’t possibly sell your house in today’s market. You have set aside a good amount of money that would more than cover the down payment on a new home, but the idea of two mortgages puts you into a financial frenzy. What should you do? Simple — rent out your old home.
While your old home may be too small for you and your family, renters would find it to be more than adequate space. They could be covering the cost of the mortgage, or at least the majority of the mortgage. Plus, renting gives you the option of holding on to your older property until the market improves.
Before anyone goes for this option, however, a slight reality check may be in order.
First of all, you will need to assess your current home and decide whether any improvements need to be made before you rent. Keep in mind that if you make this home into a rental property that you need not have every single improvement made to attract renters. Also, your budget is most likely low, so a streamlined list of budget friendly basic improvements is the best way to go.
Also, finding responsible renters is no walk in the park. If you take on the responsibility yourself, it involves a lot of interviews and phone calls that take up a lot of time. Remember, time spent with no renter is money out of your pocket to cover the mortgage. Always having additional funds sitting in a savings account to cover the mortgage of your rental property for at least six months is a smart idea to accommodate for the times your rental property is not occupied. There are companies that manage rental properties, but their fees may be too costly if you only own one additional property.
Understanding how investments work in the big picture will help you protect your finances. Rental properties have always been considered a good investment, but they do come with some headaches. Purchasing new real estate can satisfy the needs of your situation, and buying when the market is low is always the best time to buy. Today’s homeowner has a lot of choices to make, and investing in the current buyer’s market could be the first step towards a more financially secure future.