There are many differing opinions on when one should consider the purchase of real estate. Some will never consider a purchase over and above the family home. Some will buy second homes and/or vacation homes depending upon their lifestyle. Others will buy real estate as investments. So, to answer the question, “Is it time to buy real estate?” depends upon your goal with the purchase.
I believe the first purchase, and the most important, is the family home. This is where the family will grow. Memories will be created that will last a lifetime for most people. There are few things in life that provide the security and the safety than that of the family home. Therefore, this most important purchase should be first. Once you are sure that the purchase of the family home is financially secure then it might be worth looking into additional purchases. Today’s market is a great market for first time purchases, move up purchases and investment purchases as the home prices have corrected and the interest rates are very low allowing for some really great purchase opportunities. Many times your money is made at the purchase rather than when you sell. Remember, “Buy ‘em cheap, and sell ‘em deep”!
A word of caution here…the family home should not be a speculation purchase. During the last market bubble many people bought homes and leveraged the new purchases with the equity in their homes as the speculated about the potential growth in wealth from market appreciation. Many of them have now learned their lesson and are now recovering from their mistakes. The equity in the family home should not be used for leverage with out very thoughtful consideration and expert consultation.
Once you are financially secure with your family home purchase it may be wise to look at opportunities in real estate investment. Prior to the proliferation of the internet millionaires and billionaires 97% of all millionaires and billionaires were made wealthy through their real estate holdings. Investment in real estate is rewarding and challenging. The decision to invest in real estate should be made only after extensive research into the upside and downside possibilities.
It would be prudent to speak to a real estate accountant/tax attorney for education on the benefits to owning investment properties. Some of the benefits are passive income and cash flow on good investment properties, having someone else increase your wealth by paying your mortgage down from their wealth, market appreciation opportunities, the possible tax advantages to depreciating your “investment” and taking advantage of the IRS code 1031 to put off capitol gains taxes when buying other investment properties. It is also a good idea to engage the services of a real estate professional to help find those great investment opportunities.
Coldwell Banker Vanguard, Realtors®