Well this one kinda hit home for me. I want you guys to read the article below and give me some feedback. In the meantime, I’m gonna give you my two cents. Not that it’s worth two cents, but it’s my two cents.
Myth One: They say that buying a home is a great investment, but then they go on to talk about how over ten years, the home price has risen only 0.3% annualized and they are leading you to understand that the S&P 500 has returned an average of 8.26%. What they are not telling you is that the ENP ratio for the stock market right now is a 25. This tells us that the stock market is bound for a crash anytime right now. We have seen every major crash in the stock market created after the stock market’s ENP ratio has hit a 25% or higher. We are at a 25. right now. Don’t let this article fool you about moving your money to the stock market. Watch the stock market because when the stocks crash again, real estate is gonna be the next boom!
The other myth in this statement is that real estate has only gone up 0.3%. There are markets all over the country that are getting 20, 30, 40% appreciation annualized. You can analyze by finding this info from Zillow.com, Trulia.com, Foreclosure.com, and many, many other sites out there. Don’t be fooled by that.
Myth Two: “Buying is always better than renting.” My input on this is that it depends on your financial situation. Buying comes with several benefits, you get the depreciation, the tax write-offs, the leverage, and the appreciation. There is such bigger upswing other than just throwing your money into a landlord’s pocket. I’m not saying don’t rent. I’m saying be careful if you are renting to be in a position to build your credit and then build a financial stability to then go out and buy.
I would highly suggest that. If you are not in a position to buy, then you need to be looking for some type of seller financing or lease to own property where you have the benefits to own one day and you can use that property as your sole position as a future home owner. That’s my two cents on that.
Myth Three: They talk about the “three most important factors” which they state are location, location, location. I somewhat agree with that, but I also disagree with that because sometimes your location could be the greatest location in the world; however, trying to buy a home in that location can be the most challenging process.
Look at buying a home as in a stepping stone. Are you moving out of renting and into home ownership and then from homeownership into long term homeownership? Location is gonna be key in this case. You don’t wanna be in a bad part of town, but you also want to make sure you are in an area of town that can be transitioning depending on price points and so forth.
Myth Four: “Buy the worst home in the best neighborhood.” I absolutely agree with this! Now, they try to detour you by saying you could run into huge flaws, but the downside to that is you have to know what you are doing!
If you are buying the worst home in the best neighborhood then you are buying it with the purpose of knowing that you are going to build that property up by fixing it up. Know what you are getting into before you do, that it is my two cents.
Myth Five: “All real estate is local.” That’s just a common thread when people say “you should buy locally.” I don’t agree with that! I think you should buy where it makes sense and live where you want to.
So, give me your feedback on what you think about the 5 myths about buying homes.
5 Myths about Buying a Home
By Les Christie CNNMoney aug 13,2014
NEW YORK (CNNMoney) — From housing bubble to foreclosure crisis to somewhere in between, the housing market has changed dramatically over the past decade — and so have many of the rules of homebuying.
Here are five once commonly believed myths that no longer apply.
Myth #1: Buying a home is a great investment
If the housing bust taught us anything, it’s that the housing market can be just as risky as the stock market — if not, worse. Homes lost a third of their value nationwide and some markets took an even bigger hit.
Over the past 10 years, home prices have risen just 0.3% annually, while the S&P 500 has returned an average of 8.26%.
There are, of course, other factors that can eat even further into those returns, such as maintenance. Have to repair the leaky roof? That will be $500. Need a new water heater? That’s another grand.
Myth #2: Buying is always better than renting
Now that the housing recovery has taken hold, some markets have become way too expensive for homebuyers.
One quick way to figure out whether to buy or not: If the home costs more than 15 times the annual cost of renting a similar home, you’re better off renting.
In Manhattan, for example, the average cost of buying a house is about 24 times the average cost of renting one.
Some other factors to consider: What would that 20% downpayment have fetched if it was invested in stocks or bonds (recall those returns for the S&P 500 we talked about before)? And beyond maintenance and repairs, what will the extra costs of owning the home include?
He said it’s better to keep an eye on a location’s potential for growth — and value.plan to stay in the home. If you think you can stay put for five years or more then it might be worth taking the plunge. The timeline is longer in expensive markets like Manhattan, where it would take nearly 10 years before buying becomes a better deal than renting.
Myth #3: The three most important factors are location, location, location.
Finding the perfect home used to mean that it had to be in a well-established community with low crime, good schools and far from annoyances like airports or heavily used roads. But these days some of the best deals are found in neighborhoods that have yet to reach their peak.
“There should be more emphasis on the future outlook for a location, on what is the upside,” said Jonathan Miller, president of Miller Samuel, a real estate appraisal company.
Myth #4: Buy the worst home in the best neighborhood.
The advice seems sound: You can fix up a bad home but you can’t clean up a whole neighborhood.
Those bad homes, though, can come with some pretty huge flaws.
“Every home you buy should have an engineer’s report because it could become a money pit,” said Michael Morris of Coldwell Banker M&D in Moriches, NY.
Few Americans have the skills to do the work themselves — or the money to hire someone to do it for them, he said
In the end, you may end up paying more on that fixer-upper than if you had bought a home in better condition in a up and coming neighborhood.
Myth #5: All real estate is local.
It wasn’t too long ago that the way to make profits in real estate was to study the local market inside and out. Local conditions, such as wages, unemployment and population growth, would dictate the direction of local home prices.
“Real estate is much more of a global phenomenon today,” said Dottie Herman, CEO of Prudential Douglas Elliman, one of New York’s biggest brokers. “The Internet and social media age has drastically altered [the] business.”
International buyers accounted for about 7% of all U.S. home purchases during the 12 months ended March 31, while investors accounted for 20% of sales. And many of these buyers are paying in all-cash, driving prices sky-high.
In some markets, like New York, Los Angeles and Miami, this phenomenon is particularly profound.
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