What will be your next home?
What will be your next home?
What will be your next home?
For many folks, deciding on a next house is a difficult decision. There are a lot of factors to think about. Now more than ever, there are so much more choices to pick from, such as condominiums, townhouses, duplexes, or the ever favorite house and lot. To make matters easier, let us look into some factors that the wise buyer must consider before taking the plunge.
What do you need it for? Think of this carefully. You need to decide if you will make use of this as your home or as an investment. This, in turn, will determine the location of the property you're aiming for.
How big should it be? Of course, the more spacious, the more costly it will be. After all, land is a precious resource. Are you living alone, a young couple, any little ones? Will you have house help living with you? See if you can be imaginative with how you utilize space, like using bunkbeds, or sleeper sofas, etc.
Location? If your main motivation for acquiring property is for business, location is very critical. Not to say that location isn't a major concern if you're buying property for your residential use. But, as a real estate investor, the location of your property can spell the difference between recouping your investment or not. For example you would want to lease out your property to university students who live from provinces. It would make perfect sense to acquire property like apartments or condos near universities. If your target market are young urban professionals, it would be great to own rental properties that are accessible by public transport near the commercial business district. Finally, if you're aiming for families, preferably you should have apartments in quiet residential locations that are accessible to markets, shopping malls, places of worship and schools.
Price? Now, we've come to the easiest question of all. For some, determining what they can afford is easy, and the decision to purchase is simple. For others though, it's not that uncomplicated. Not a lot are well-versed with accounting and financing. There is a lack of knowledge where financing is concerned. Firstly, determine the total contract price (TCP). Then, depending on the owner, find out how much you can pay for down payment (D/P). Find out how long you can extend the settlement of the downpayment for zero interest, as most owners/developers these days offer terms like those. As for bank financing for the remaining amount, the buyer should know of interest rates and loan periods. It bears mentioning that the longer the payment term, the bigger the interest charge is. Moreover, know that there are taxes to pay for, so make sure to ask about all of the charges that you will pay for to get a better idea of your total loan and cash out. If you are not aware how much you can loan if you can only manage to pay a certain total each month, read up about the present value of an annuity. The same could also help you compute for the monthly payments given a loan amount, interest rate, and payment term. The time value of money can also be utilized to gauge if delving into property investment will produce a marginally superior rate of return than other types of investments. Of course, it is not the only tool for investors deciding on whether or not property investments are better; they should also compute for cost of capital, return on investment, return of investment, net operating income, internal rate of return, income capitalization approach, etc. If all these sound alien to you, seek advice from your trustworthy real estate agent.
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