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6 Rules for Today’s Buyers
Whether you’re a first-time buyer or ready to trade-up, Ilyce Glink, author of “100 Questions Every First-Time Homebuyer Should Ask, 3rd Ed.” (Three Rivers Press, 2014), offers these must-follow rules for buying a home in today’s market:
1. Understand the relationship between income and house price
Look beyond your income when buying a house; you also have to assess the incomes of homeowners in the neighborhood of choice, which will help determine where the housing prices in the area are going.
2. Learn to forecast your income
As a potential homeowner, you must consider all possibilities when it comes to your income. It may rise, but it also may stay flat.
3. Buy your house as a home to be lived in, not an asset to be leveraged
Due to economic uncertainty, your home may not enjoy any appreciation over the next five to 10 years, so make sure when you buy your home, you'll enjoy living there.
4. Focus on income if you want to invest in real estate
It’s important to focus on how much income an investment property will generate, and not solely on price appreciation or the tax loss you'll generate from depreciation.
5. Rethink the concept of location
Over the next few years, it may not pay to be a traditional real estate pioneer, settling in a new or regenerating neighborhood with the expectation of outsized returns at sale. Rather, pick those close-in neighborhoods that will see their return and grow more quickly.
6. Know that all new construction is not created equal
It may not make financial sense to pay a higher price for a nearly new home rather than paying much less for an existing home that can be fixed up.
Matthew M. F. Miller is the author of “Dad's Guide to Pregnancy For Dummies” (Wiley, 2014)
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