buying - Blog

Renting: The First Step Towards Home Ownership

Buying a home is a goal that many people have. In the USA alone, over 5 million homes are bought and sold annually. These homes come in all different shapes, sizes and price ranges. However, before you rush and buy a home, it is good to rent first. Renting offers a lot of flexibility and is a logical first choice for someone.

Not only is buying a home very expensive, but there are numerous things you need to think about and consider beforehand. Instead of rushing into it and making a mistake, it’s a good idea to rent first and take your time with the purchasing decision. With that in mind, this blog post is going to look at a few reasons why renting is the first step towards home ownership.

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Let’s You Try Before You Buy

Renting is the perfect opportunity to essentially try living on your own before you tie yourself down to a home. In addition to making sure you actually are ready to live on your own and buy a home, renting allows you to find out if the city, town or neighborhood is really right for you. If you buy a home in a city you think you like, only to find out there is nothing there for you, you can’t just wait until your lease is up and leave.

You will be stuck there for decades unless you sell or rent out the home. Both of which can take a lot of time, work and money. Finding places to rent in your area is incredibly simple, especially if you use a site like https://theurbanavenue.com/ to find available rentals in your city. As a result, trying out any area you want by renting is simple and will save you from buying in the wrong place.

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Train Yourself to be a Homeowner

If you have only lived with your family, there is a good chance you haven’t always been as responsible as you should. Your costs were likely low and if you screwed up, the consequences weren’t likely that dire. If you have your own place and are responsible for it, there are major consequences if you can’t pay your bills or mortgage.
Renting gives you a chance to essentially find out what it’s like to have more responsibility, without quite being fully exposed to it. For example, when you rent a place, you will have bills to pay, but likely won’t be responsible for things like repairs. It gives you a taste of what it’s like to own a home, without exposing you to the same costs and risks.
By renting first, you give yourself time to work on your budgeting, get your credit score right, and even learn how much you can afford to spend. Essentially, renting can train you on what it’s like to be a homeowner.

Allows You to Take Time to Find the Right Home

If you are moving out of your families home and immediately want to buy a home, there can be a lot of pressure to do it quickly. However, a home search isn’t something that you want to rush. You need to take time and make an informed decision.
By renting, you will have a couple of months to really put time into what you want out of a home, and what things you don’t. Sure, it will cost you money to rent. But a few months of rent is nothing compared to what you might lose if you end up buying the wrong home and being stuck there for decades. Big decisions should have a lot of time put into them, and buying a home is one of the biggest decisions you will ever make.

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In conclusion, renting is a great first step towards home ownership. We hope this article has been able to show you why.

Easy Ways to Invest In Real Estate

As an investor, real estate is one of the many options you can consider to expand your portfolio. It comes with many benefits including securing your future, buying a home and making money from renting out the real estate property you buy. If you are starting out, it is imperative to keep in mind the advantages and risks that come with real estate investment so that you make the best decision for your money. Once you have decided to invest, here are a few easy ways you can start out with:

Buy to rent

With buy-to-rent properties, you will be able to pay the mortgage on your property through the income generated from the tenant. If you select this option, you will be responsible for the expenses that come with renting out, including maintenance costs and taxes Ensure that you do your due diligence to make sure that the investment is worth it. Remember, the rent will depend on the market rates without affecting your mortgage. You should also make sure that you choose a property in an area where people would like to live so that you can get tenants easier. Consider the kind of tenant you want on your property before making a decision.

Consider investment groups

If you do not want a rental property, consider joining an investment group. With these groups, a company buys or builds property and lets a group of investors buy them through the company. Although you can own one or multiple units, all management responsibilities fall on the company. The company will also take a percentage of the monthly rent to cater for the maintenance, mortgage insurance, advertisement of vacant units and others. It is important to note that mortgage insurance is different than homeowners insurance, also known as home insurance, and it is wise to have both. Keep in mind that some investment groups require a percentage of the rent for vacant units. Ensure that you find out more about the agreements before signing up for such an investment.

Buy to Sell

If you are not interested in the two options above, consider flipping properties as a way of investing in real estate. This is the process of buying property, holding it for a few months with the intention of selling for a profit. It comes with a number of pros including the potential to make quick money and you will be able to learn a thing or two about construction, real estate and market demand. However, you need to be careful not to make mistakes that might cost you. Keep in mind that you will need adequate time, as renovation is important to boost the value of your home when reselling. From finding the right house, buying the property and fixing it up, you will need quiet time and patience so that the investment can be worth it.

Real Estate Investment Trust

A real estate investment trust (RIET) will invest your money to buy and operate income property. It is a good plan as it allows both small and large investors to own real estate and commercial property as well. REITs come with a number of regulations, including having at least 100 shareholders; at least 75 percent of the assets must be in real estate, cash and government securities and 75 percent of the gross income come from rent, mortgage, and real estate investments. With REIT, you will benefit from high yields, simple tax improvement, and diversification.

Leverage

You can also consider leverage as an investment strategy to increase your potential of earning returns on your investment. This means that you use borrowed money to pay a significant percentage of the cost that enables you to buy a more expensive property that you could have bought using the available funds. If you are not comfortable with using leverage directly, you can invest in companies that use leverage to finance their operations. Depending on the decision that you take, make sure that you weigh your options, do your research on the benefits and costs of each before making your investment.

5 Things to Look for When Buying Your First Home

Congratulations! You’re about to become a homeowner! It’s both an exciting and terrifying time, as you navigate the real estate marketing looking for an affordable home that you also love. There are a lot of factors you may know with buying a home and it’s important that you know them before making the big decision. As you take a big step towards home ownership, below are five important things to consider when buying your first home.

1. The Roof

A roof in need of repair should be among the first features to check before settling on a property. Take a look at the roof before even entering the home. What material is it? Some roofing materials last longer than others. Consider the stability of the roof in relation to the environment the house is in. For instance, if the place is windy, then you will need a very sturdy roof. Look at the roofline for deflections. Watch out for damaged or detached shingles that can cause leaks. 2. A House Is An Investment Keep this in mind when you are buying your new home because there could come a time when you may need to sell it. This is where all that maintenance will come in handy. By keeping everything in tip-top shape, the value of your home will also stay in good shape. In addition, when looking at homes, take note of what DIY projects you can do to help increase the value of your home. From installing glass doors in your home to replacing the carpet with wood flooring, you’re options are endless when you treat your house as an investment.

3. Property Taxes

Owners of real property must pay property taxes. In many cases, your mortgage lender will collect this as part of the monthly mortgage payment, otherwise, the homeowner must pay on their own. Also, find out how often the county you are moving to reassesses tax valuations and determine the last time your property was assessed in order to prepare for potential changes.

4. Is Everything Up To Code?

The ASHI Standards of Practice states that home inspectors are required to report on unsafe conditions, but you may also want to have a code inspector look at the property. If anything is out of code, then it’s your responsibility as the new homeowner to fix it. In addition, always do a home inspection. A home inspector has a checklist covering the roof to the basement and everything in between. Having an experienced home inspector can save you headaches in the future, especially if they uncover major structural issues that could make or break the sale. If you don’t mind a “fixer upper”, then this would also give you an idea of the potential work that you have ahead of you. However, if there is more work than either you or the seller can reasonably fix, then you might need to consider another option.

5. Land/Neighborhood

Don’t spend too much time evaluating the house that you disregard the land it is on. Learn the characteristic of that piece of land. Does it have a tendency to flood? If you are planning to get an in-ground pool, a rocky ground will present some limitations. Analyze the fencing and landscaping options that the land offers. Consider the parking space that you will have as well. At the same time, drive around the neighborhood to get a feel for your potential neighbors. Are there more retired couples, families or singles in the area? This is key if you have family—finding out if you live near families with kids around the same age as your own. Do some research online as well to see crime rates, registered sex offenders, etc in the neighborhood. All in all, keep these five tips in mind when on journey towards homeownership.

3 Big Expenses New Home Buyers Are Often Unprepared For

There is no doubt that buying a home is an expensive venture, but like so many other purchases, there are also a number of “hidden” costs that home buyers may not be prepared for. While they may have saved up 20% of the projected cost of the home they want to purchase, the additional costs may quickly eat up their savings or increase their loan amount to well beyond 80% of the cost of the home. They may also be unprepared for the much higher costs of maintaining a home in relationship to an apartment or townhouse. Here is a list of 3 expenses new home buyers regularly do not expect.

Fees

There are a wide range of fees associated with buying a house that range from inspection fees to closing costs. In many cases, it’s important to get a survey so you know exactly where your property ends and your neighbor’s begins. If your lender wants a credit report, you have to cover the costs. You may have figured taxes into the monthly amount you will need to pay, but may be unaware that you actually have to pay those costs at closing. Probably the heftiest fee, however is the loan origination fee, which can run in the thousands of dollars, particularly if you are buying points on the loan. There are also a wide range of smaller fees you will have to pay, but can cumulatively add up to several hundred dollars. Some of these smaller fees include recording fees for deed, loan and mortgage documents, tax service fees to ensure previous taxed are up to date, title services and title insurance.

Insurance

While renters may have had renter’s insurance and be used to paying that insurance, they may not be prepared for the significantly higher coverage they will need to carry as home owners, at a significantly higher price. Renter’s insurance only needs to cover your personal belongings, since the property owner carries the coverage on the building itself. Home owner’s insurance, however, covers not only your possessions, but the building itself and even the lot it sits on. Your rate will be determined by a number of factors such as the age of the home and the quality of the materials that were used to build it with. In addition, if you are putting less than 20% down on a mortgage, you will most likely also be required by your lender to carry mortgage insurance. You can of course shop for the cheapest insurance rates, but ultimately insurance will eat a much larger chunk of your monthly budget.

Bills and maintenance expenses

When you rent a home or apartment, there are generally a number of expenses folded into your rent, which you will now be responsible for paying. These include water, sewage and trash collection, but can also include homeowner’s fees and even expenses related to the care, upkeep and maintenance of your home that you hadn’t counted on. In an apartment or rental, if the toilet breaks, you call your landlord. Now, if the toilet breaks, you call a plumber and you get to pay for it. And it might surprise you just how much a single service call will run you. You now also get to keep your own lawn watered and mow it once a week in the summer, or more often depending on where you live. Of course you can always pay someone to mow it, but that’s also one more expensive fee new homeowners actually factor into the cost of owning a home.

While few, if any, of the costs of owning a home are actually hidden, they are also not generally factored in by many new home buyers. This is why it’s important to be sure when buying a home that you don’t overextend yourself just on the house payment itself. Make sure you work out a mortgage payment you can comfortably afford and don’t blow your entire savings on your down payment. With a little careful research, planning and budgeting, you can have the house of your dreams and not a financial nightmare.