Real estate is booming again. Huh?
Home prices are still falling and there are growing concerns about the potential for a commercial real estate bust. So real estate stocks are naturally soaring.
Having A Smart Nest Egg!
What’s the one thing that stops most people from investing? (I’ll count to three before I answer, in case you already know and it has ever stopped you…)
1. 2.. 3…
Okay, here it is – it’s the concern, maybe even fear, that you’ll lose what you have, or if that doesn’t happen, that what you invest will be TIED UP FOREVER, or at least until you get to age 59 1/2, which for many people is the same thing as FOREVER.
On the other hand, if you take the time to do the math, it won’t be much of a stretch for you to realize that not saving and investing won’t get you to where you want to be, so it only makes sense for you to do it. You only need to go back to a previous blog on this page to read about the Rule of 72 and how that will answer this question.
Should I Buy A House Now?
Lots of people are asking this question lately. I thought it would be a good time to clarify what I said a few weeks ago about not looking at your primary residence as an investment. Some people thought I meant they should just continue to rent their living space instead of buying it. That couldn’t be further from the truth, so let me explain in more detail.
When you buy a house, you are admittedly taking on a huge responsibility, but one which can pay off handsomely down the road. My parents bought a house in 1964 and took out a 30-year fixed mortgage. The monthly cost of that mortgage was pretty tough for them to swallow in 1964, but in 1984, when they were still paying $296.00 per month, it was a pretty sweet deal!
The logical conclusion from that is to buy as much house as possible, but don’t overbuy. Doing that is part of what got us into the huge mess we’re seeing right now, with record foreclosures. Don’t be afraid of that happening, but also don’t forget that “huge responsibility” part. Buy what you can afford – you can always trade up later when the time is right.
Now, what was I saying about that not being an investment? Just remember, even though it is likely to go up in value over time, that money is tied up unless and until you sell the house, but if you do that, you have to buy something else or rent, because you still need a place to live. The other important consideration is that if you live there for five, ten or more years, you will probably have to replace carpet, paint, perhaps some appliances, maybe even the roof! That’s not money being paid TO you, which is what an investment is supposed to do.
Contrast that with a rental house, where, for example, you might pay $1000 per month for the mortgage, taxes and insurance, and rent it out for $1200. That’s $200 per month INTO your pocket, which is what a good investment is all about.
So, bottom line, buy a house if you can, because the alternative is to pay rent, which is exactly the same thing as paying someone else’s mortgage for them. Just don’t buy more than you can afford and put the rest into real investments, both in the stock and bond markets as well as in real estate.
Contact me if you’d like a professional to help you with doing that!
1.888.379.4352 Extension 1000
What Does Buying A House Do To My Investment Plan?
Ideally, nothing! It really should be a part of your entire plan, unless home ownership is not a priority to you.
Should it be a priority?
For many people it is, but like nearly anything on the planet it really comes down to solid understanding of the individual choices you could make, and why you’d make them. This is probably slightly different advice than you’ve heard other places, so I’ll tell you why I say what I say.
More important than anything else is, why are you buying a house?
If your answer is because it will be worth a lot more in future years, know the historical appreciation rate for your market, and the likelihood that people will want to move there in the near future. The appreciation rate must be higher than inflation for your investment to grow and actually BE worth more in the future.
If your answer is Read More …
Why Right Now Is A Good Time To Buy A House For A First Time Buyer
Why is right now a good time to buy a house for a first time buyer?
Real estate, along with many other investments such as stocks, bonds and mutual funds, can be found right now at prices lower than in recent years. Some would say it’s the best opportunity we’ve seen so far in our lifetime. Couple that with the $8,000 first-time homebuyer credit available if you close on a property and take title before December 1st, 2009, and you have a potentially winning combination.
So, what is a first-time homebuyer anyway? It’s not as restrictive as it sounds. IRS rules say that as long as neither you nor your spouse have owned your own home for at least three years prior to purchasing a new one, then you’re a “first-time home buyer”! If you’re married, and your spouse has owned a home, neither of you can qualify, but if you have a significant other and you’re not married, then you could. Read More …
Why We Are Economically Still Better Off Than Our Parents
August 26, 2009 11:47 AM ET Kimberly Palmer
Do you think you’re better off than your parents?
It’s a question that’s not so easy to answer: Plenty of 20- and 30-somethings say their parents were able to afford a first home, children, and financial security long before they even settle into a stable job. But according to a survey taken earlier this year by the Economic Mobility Project at the Pew Charitable Trusts, almost six in 10 respondents said their standard of living is much or somewhat better than their parents’ was at the age they are now.
Some people may wonder how this can be at a time when 20-somethings are burdened by higher amounts of student loan and credit card debt than ever before, as well as a recession that has left as many as one in five of those under 30 unemployed. Ianna Kachoris, project manager of the Economic Mobility Project, says the answer lies at least partly in Americans’ optimism. “Even during one of the biggest downturns, eight in 10 Americans still believe they can get ahead,” she says. Read More …
