You are here, probably because you want to own a house or some other property, now or somewhere later in the future.
In this article, I am going to reveal to you some things that you must consider, if you had ever plan to own a house!
Welcome to iamwealthguru. Property is both a necessity in many ways as well as a good investment class.Many people around the world toil hard, just to have that roof over their heads, that they can call home.
But Buying a home or owning a residential property has become more difficult in today’s time than it has ever been.
I don;t want you guys to just consume the information but rather think on it! Therefore, try to answer these questions in your mind ( and keep them in your mind 🙂 ) while you read the full post.
1.How old are you?
2.Are you a student or an employee?
3.Do you have dependents?
4.Do you have a credit history?
Done answering? Great, then let’s move on with the article.
1.Assess your career
Buying a house for many is a big investment. Sure there are people like Brad Pitt and Angelina Jolie who have properties worth millions of dollars around the world (check out glamour.com to admire their mind-boggling wealth! )
But many of us unfortunately, do not fall into the super rich category.
Is there a way out? Well of course, and that starts with assessing your career. You must assess your career critically depending upon the stage of life you are currently in.
If you are just starting out, great, go out and find your passion, develop skills and make out good money.
Knowledge always comes before money
All the young crowd can continue with the article (it’s a good read!).
If you are someone older who has either started a career or is experienced, then you have to look things in a more critical yet optimistic manner.
You must carefully understand the points that I am mentioning to own a house and live peacefully in it.
Yes, peace is important, after all have to toil at least 10 years to own a decent one.What use is it if it does not offers peace of mind.
Remember if you are buying your first house, do not look at it investment alone.
Your first house is a stepping stone to build wealth.
You must think long-term, like an emperor trying to build an empire, not a day trader flicking stocks!
I have written a full article on career planning that you read here
2.Do good house research
Take a look at this graphic showing how much you must earn to own a house in the US.
The above has been taken from Zerohedge.com and howmuch.net.
Clearly, it provides us with some significant insights on planning to buy property.
The above graphic presents a broad picture, but you must do research within you state as well and find the best bet for yourself.
If you are married and have a job, chances are you will not be able to immediately do anything as you work at a place and would most likely wish to settle there.
If you are financially OK, my advice would be to invest in a decent low-cost accommodation in states where the prices are at rock bottom.
You may well argue, why to take burden of rent and mortgage on my shoulder?
That is correct to some degree, but if you can comfortably afford it (provided you cut down on unnecessary spending), and voila! You have an asset backing you up.
The US dollar is not backed by gold. It has lost more about 90% of its value since the 1950s.
You won’t believe me, check out this interesting website here, punch in the numbers and see the magic!
Adding a sound asset to your portfolio at a very reasonable and manageable price that does not break the bank is not that a horrible idea after all!
3.Beware of the housing-bubble.
Bubbles are inevitable in capitalistic economy where central banks can print money that is not backed by anything!
I am not debating whether it is good or bad, it is just a phenomenon that is associated with such economic model.
Most of countries in the world go through such cycles of boom and bust.
What you need to do is to assess the market properly and correlate it with your age.
If you are about to retire and does not own any house, I would suggest buy a house for your retirement that you can comfortably afford in few of the states where prices are very low.
If you have just started or are at the middle of our career, go to a professional and seek advice.
Try not to get into any mortgage trap.
Assess yourself honestly, whether you can afford that expensive house or not.
The cheap credit with almost no documentation, made available by most of the banks, blinds our judgement.
Stay away from deals that are too good to be true
4.House-Rent or buy-make your mind.
I personally would suggest acquiring asset, if you can comfortably afford that, as that leads to creation of wealth (if you’ve not been caught up in a financial bubble).
But many are opting to live on a rent rather than buying a new property.
Renting can be great if you are single, or at an early stage of your career.
But you should seriously consider buying a home than renting.
Also remember that renting makes sense only in short-term. No value is created when you are paying rent, it is more of a consumption, like drinking coca-cola!
But when you are paying for mortgage, you are creating value, provided it is not a financial bubble.
You can click here to find out about classification of states by renting and buying .
More people have started living on rent than buying a house according to research by Pew that you can check here
It just shows that people have been greatly affected by the recession that hit 2008.
But you must see positive side, and make the most of this opportunity to create an asset for yourself.
5.Do not compare a house with stocks.
Comparing one asset class with another totally jeopardizes the reason for investing.
I will admit that from purely return perspective S&P500 has beaten the real estate market in the past.
From 1975 to 2015, S&P500 gave a return of about 2300%, significantly higher than about 590% returns given by realty markets (Data is approximate.you can google for latest data)
Remember, it is financially prudent to diversify portfolio. You must also keep in mind that, most likely you may own only one house.
So unless you are really looking out in the property market for buying a second or a third house or other property, comparison is not at all justified.
Let me put it this way, a Macbook costs around $1500 and an ounce of gold also cost about $1500.
From an investing standpoint, any one will pick gold as a laptop will lose most of its value in less than six months.
But this argument cannot be used by someone to stop you or me from buying a laptop altogether!
You must look at housing in a similar fashion.
6.Keep an awesome credit score.
The aftermath of 2008 financial crisis triggered many changes in the lending system.
Banks may become more cautious in lending than before, so it would be wise to keep a good credit score to avoid any hiccups in your journey to amassing wealth.
I have written a detailed article on building credit score that you can checkout here.
I hope my post added some value to all of you.
Please like it and share it if you found it useful in any way.
I will appreciate the love.
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