You’re young and living the way of life. It’s pretty normal with your age, but financial literacy is something that you should consider as an interest. Having financial sense when it comes to investments will help you how to handle money efficiently in the long run. One of the first things you can invest your money in is your first home.
The trends in real estate change every year. However, most of the time, the prices are going higher and higher. People nowadays turn to real estate when it comes to investments as they believe it would rake in profits sometime later. One thing beginners should be aware of is that the land appreciates in the long run or simply the price will go higher and higher. On the other hand, properties built on the land may depreciate depending on that property’s maintenance, structure, etc. Why does the land price appreciate? Simply because it follows the law of demand and supply. The land is a limited supply and can’t be manufactured, hence, the high demand for it.
However, house or building depreciation shouldn’t discourage you from investing. Here are some reasons why you should make your first house an investment property:
When you buy your first home, the usual scenario is that you have a good job, either single or married and have lesser responsibilities than when you get older. As most financially-literate people do, it’s better to buy your first home in your 20s than in your 30s or 40s. Furthermore, it’s best to establish your financial track record to build a good reputation when delving into real estate investments later on.
It’s becoming a trend nowadays to rent out houses for a fixed monthly income to buy other properties and make them as future investments. You can also do this with your first house.
First, location is one thing that you should consider before you buy a house. If it’s within the urban area or near working offices, finding tenants wouldn’t be as hard. Another beneficial thing for you is that you learn how to manage maintenance and the business.
As you have established a good financial record with your investment property, banks can scale up your borrowing limit depending on how much you earn. Lenders in bank inculcate your income from rent, salary from your main job, and others to determine your borrowing capacity.
It’s not uncommon that there are cheap properties in the market. These are in the form of distressed sales which mainly come from banks that previous owners had offered as collateral. These properties have been around for many years, and banks sell them at a bargain to get rid of them from their records.
If you can buy one of these houses, better for you because you can own a house that is less than the normal pricing range. Then, with little improvements here and there, you can appreciate the price of your first investment for future endeavors.
The times now have changed, and it’s best to encourage younger people to invest in properties that they can call their own. However, you should remember that buying properties especially your first home is not child’s play as there a lot of things to weigh. Not only you will know how to handle money, but also how to take care of that property so that you can make it as a source of income in the near future.