Whether you got burned in the last bubble or are living in fear of a repeat, it is no surprise you are questioning the wisdom of real estate. Many investors have been hesitant to jump back on the real estate bandwagon without concrete evidence that is it wise to do so. While lending practices may not have been the best during that season, many banks have created favorable conditions for investing in today’s market. Included here are a few reasons why real estate remains one of the best investments.
Modern studies have shown stress to be one of the biggest killers in our modern lifestyles. Many people have concern about finances and where they will be able to live. Owning your home can provide a security in your life that will reduce stress. Knowing that your children have a safe place to come home to, and that you have a property to call your own will increase your personal security and overall happiness.
Rental Income Power
You may have never imagined yourself as a landlord, but many property owners find themselves benefiting from renting out their additional properties. It is possible to purchase one home while living in another and rent it out, using the monthly rent income to pay off the mortgage and put money in your pocket. It is not uncommon to make more than double in rent over what you are paying to the mortgage on a home.
For homeowners who find their purchase to be a mix of business and personal investment, appreciation is a reality. Appreciation occurs when you invest in your home by making improvements and fixing damages. This can increase the home’s value and result in excess cash in your pocket. This is likely to happen to homeowners who enjoy making their home as livable as possible but are also aware of potential future resale value.
The obvious result of appreciation is equity. In simple terms, equity is the money you receive over what you paid for the house. For example, if your home goes up in value while you live there, you would receive the balance in equity when the home is resold. Be cautious of lenders wanting to take advantage of your equity by giving you a loan for that balance, that money is not yours unless you have sold the house; additional loans just equate to more debt and interest payments.
Save Money on Housing
In nearly every market, owning a home is cheaper than renting. Even with your down payment and yearly maintenance costs aside, you will likely be spending less on a monthly basis than you would be on a rental of a similar size. Keep in mind, these costs are only lower if you plan to stay in the home for a minimum of 5 years.