Purchasing a house is an important and very significant investment that requires a lot of research, understanding of the market, and a consideration of different factors. Whether you are looking to purchase the property for yourself to live in, or use it as a rental property, the amount of investment required is significant enough that you need to focus on mitigating your risk as much as possible by going through the due diligence process. You will need to be sure that the property you buy is located in a good neighborhood as it will appeal to more buyers and provide more stability in case you decide to sell it or rent it in the future. Below we’ve outlined some additional factors you’ll need to take into consideration when making your purchase:
Know Your Financing Options
Before you go on a mission to find your property and start attending open houses, you need to get your finances in order. This means, talking to multiple mortgage lenders and performing a thorough pre-approval process to make sure you can qualify for a loan while also understanding how much of a home you can afford. If you do not have a real pre-approval letter in place, sellers will not take you seriously and will most likely entertain other buyers’ offers that already have a solid pre-approval with the bank. Additionally, you need to determine whether you will have enough money towards your down-payment. For example, consider an option such as private money from family or friends in case you do not have enough saved up. If your close family members can help you during this phase, it would make the process a lot smoother.
Consider Different Types of Investment Properties
When shopping for a house, consider different types of properties such as single-family homes, multifamily dwellings, condos or townhomes. Each has its pros and cons. For instance, investing in a 2-family property can be a great way to accumulate wealth and help offset your mortgage by renting out one of the units, while you live in the other. Alternatively, a condo eliminates a lot of the maintenance work associated with a single-family home or a two-family property. Which one would be the right choice for you? These are things you need to think about.
Don’t Overpay for Your Property
The market today is strong in most areas; therefore, prices are high but interest rates are fortunately still low and have been declining. There are people out there that may be overbidding for a home and paying more than they should. You should think carefully when making your decisions on submitting an offer by talking to your real estate agent and getting guidance along the way. You want to make sure you purchase your property right, so that if the market does turn, you will be in a safer position. In case there is a downturn in real estate and you need to sell your property quickly, you can consider getting in touch with a Realtor or professional home buyer to discuss options that may be available to you, depending on your current situation.
Perform Market Research
Work with a Realtor and be sure to understand your market. Look at trends in your neighborhood and take a look at how long homes tend to stay on the market, and which neighborhoods are more desirable. This will help you understand different parts of the city as you continue doing your research so that you can focus on the best areas, as neighborhoods can vary drastically.
Don’t Let Emotions Get in the Way
A lot of the times, homebuyers will let their emotions take over when making a decision to purchase a home. It’s quite normal actually, but you should not let your emotions impact your decision. If you land on a property your highly interested in, it’s best to reflect and think through it with a clear head by giving it a couple of days to make sure you feel completely comfortable. This will avoid indecisiveness and potentially backing out of the offer and losing your deposit in case you changed your mind.