Every day we can all go to the internet or listen to the radio to hear some expert say that a key to financial success is owning a home. Now this is not old advice, though the message about homeownership versus renting seems to change depending on which expert you're listening to. Rather than weed through the opinions to find the one you think best fits your situation, consider the following questions to make the right choice for your housing needs and investment goals.
1. What is your number?
Your number is the amount of money you will need for your retirement. This number is different based on such variables as: Where do you plan to live when you retire? How much money do you need to enjoy your life while feeling free of the worry of money? In order to find your number you will need to account for some very important variables.
First, start with the amount of income you need to pay for all life's continued needs such as food, shelter, health care, travel and any other contributors to the lifestyle that is comfortable to you and that you want to live. Then, add in the inflation number on a yearly basis, understanding that this will increase expectantly over the years of your life, to make sure you are not running short on funds when you need them most. Finally, don't forget two important numbers: At what age do you plan to retire, and how long do you expect to live? These numbers are just as important to the process as the rest because of their impact on your overall plan.
It's always a good idea to include some sort of financial planner who can help you find this number. A financial expert is important member of your team who can not only keep you on track, but supply you with more advice tailored to your particular financial goal. They won't necessarily make the choice between buying or renting for you, but they will be just as integral as a real estate agent, who brings the knowledge to help you make housing decisions.
2. What is your plan?
Like the number, the plan is different for everyone. As the saying goes, not having a plan is a plan to fail. For some, their plan will be to move as jobs, income or lifestyles change within a relatively short amount of time. Most would advise renting in those circumstances, but not necessarily is that always the right advice. Could you rent out your home if you already owned it and had to make a move and rent in your new area? Two important variables you will need to examine are the current trends in the market you are exploring, and the amount of time you have until your goal should be met. These two variables differ from person to person and location to location.
Remember, the best plan is the the one that suits your unique desired outcome and accounts for the long-term steps you will need to take in order to get to your end goal safely with the least amount of risk possible, and while leaving room for you to change directions quickly if you need to make adjustments along the way.
3. Can you rent to live and own to invest?
Some prefer to rent the home they live in and use their disposable income to invest in rental homes to work toward their financial goal, either by renting the investment properties to other tenants or flipping homes to sell for a profit. Others, meanwhile, prefer to own their own residence while slowly building a portfolio by investing in rental homes or even flipping homes to meet financial objectives. Either option can lead to financial success and happiness at home, and with the right plan, the right team and the patience to pick the right investments, the possibilities are endless.
Don't fall victim to the conventional wisdom and sales gimmicks that some will have you believe are your key to successful investing in real estate. There is no shortage of information to be found surrounding investing in real estate, but not all strategies fit all situations, and no one plan can be successful for everyone. It's essential to consider your unique circumstances and goals, and to speak to the right individuals who can share the right knowledge to identify and execute the renting or buying strategy that meets your needs.
Rent Or Buy: Three Questions To Ask When Exploring Your Options curated from Forbes - Real Estate
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