Ask yourself these 7 questions first...
With the many changes this year, many members are considering a geographic move. For some it will be their first purchase while others want to know if they should swap an apartment for a house or maybe a more extreme relocation to another State.
With emotions high, it's worth remembering that owning a property is to be an investor in Real Estate. These transactions come with time, costs and risk. As always, there is no right answer but there are good questions to keep you focused on what is right for you.
Here are our top 7 questions to ask yourself now before moving:
Why do you want to move? What are you looking to get out of this move and what are you willing to give up for it? What are you not looking to give up for it?
What stage of life are you in? Hint: it's not an age thing. Sometimes life requires a full shake out and other times you need quieting down and simplifying. What will pets, kids and parents need from your time and money over the next five years?
How much “home” can you afford? The general rule of thumb is to spend no more than 30%-40% of gross income on all housing-related costs including maintenance. This feeds back into the 50/30/20 rule.
Can you afford the maintenance? Often it isn't the initial costs that cause stress but the unanticipated maintenance. One rule of thumb is to ensure you can afford 1% of the purchase price of a home to conduct maintenance each year. I double that to 2% to allow for design, technology and purpose to keep up with my home's changing life cycles.
Do the prices in the area make sense to you? Does the average salary of residents versus the average cost of housing make sense to you? Will the existing community be able to afford to stay? What do you think is feeding interest in the area? What are the property taxes and how do you feel about the local government, their history and the outlook?
How do rental prices stack up against purchase prices? Could you rent in a new area before buying to get to know it better?
The Future: Exit Strategies. Markets are collections of thoughts, outlooks, opinions and cash flow of countless people. Investments need to consider the question: If you wanted or needed to sell, could you? Real Estate could take two weeks or two years to sell. If you were not able to sell, is there a selection of reputable management to handle renters and repairs for you? Who would be your renters?
Real estate markets carry the same traits as other markets. There are buyers and sellers coming together at a price point where both are willing to trade. Smart grounded decisions will play out to less stress. Like all investments, invest only in what you understand and enjoy.