By Barbara Lehrer
Real Talk
Barbara Lehrer
Now that the value of your property has substantially increased through the recent buying frenzy, why not invest the equity?
We all know that there are many ways to put your funds to good use. Real estate investments can include retirement, home improvements or a line of credit to buy whatever it is that you may need.
Ever thought of buying a second home – a second location not used as a rental property but solely as a seasonal family house? Do you know that you can buy it with as little as five percent down?
This discount in down payment has sparked the purchase of many beach homes and more and is indeed possible. An additional investment is, of course, rehabbing your present home to increase its value and make it more enjoyable.
You can also purchase a rental property. It doesn’t have to be a multifamily home. Maybe instead you buy a condominium. With a condo, you don’t have to worry about the maintenance of snow removal, landscaping or roof repairs. Of course, if you purchase income-producing properties, the down payment is minimally between 25-30 percent.
The rental industry has low inventory, similar to residential sales. What that means is that rentals are more expensive now and therefore will give you a greater rate of return. Keep in mind that becoming a landlord does have its pros and cons, so make sure to look over your finances, talent for minor fix-up projects and consult with an agent as to the best locations for income-producing properties.
Finally, the most popular use of equity is as a down payment on your next home. Here you may have the ability to purchase without having to first sell your current house. That’s ideal, as many bids are lost to buyers who do not have this contingency. If you qualify for the present expenses on your home and the new expenses to come, then you can get a loan and own two properties at the same time. Taxes and insurance are combined with monthly loan payments. If you can carry two homes, it is only for a few months. The market is so competitive this has become a differentiating factor when deciding which buyer may be best. Discuss it with your real estate agent and you may be pleasantly surprised.
If you need more information on these issues, email Barbara.Lehrer@cbmoves.com.