Questions to Ask Before Making a Residential Real Estate Invsestment

Written by: CashAdvice Staff


The real estate market changes very quickly. Listings are always being added, updated or removed. New developments and technologies are emerging all the time with modern “necessities” that make home buying an enticing go to option. Add to that legislative changes like the recent removal of the federal home owner tax incentive; and it is clear to see that home buying is a decision that any investor should not take lightly. 

Things change on the consumer side of things too. Career changes, unexpected financial loss and gains, family additions and lifestyle needs can quickly change decisions to purchase a home and the type of home needed. Making the decision to purchase a home is a big choice. Often a long-term financial commitment, there are many things to consider before making a residential real estate purchase. 

Answer these questions to ensure any residential real estate investment is the right decision.

Does buying a home meet my needs?
Attractive custom details, modern appliances and emerging technologies may influence someone to purchase a home. But does buying a home meet current needs? 

Home buyers must ask themselves this question to ensure that they are doing the right thing. Custom finishes can always be added to an existing property. Modern appliances can be budgeted for and installed later. Technologies develop quickly nowadays. The next one may be better. By looking at the real needs verses wants, home buyers can avoid making an unwise financial decision. It’s not just about the present needs though. If looking for a long-term property, will the buyer’s future needs be met? 

Are my finances in order?
Look to a financial planner, real estate agent or mortgage broker to ensure all the finances are in place that make for a proper real estate decision is a must. Entrusting an industry expert takes away a lot of the worrying, and it also helps to mitigate a poor financial choice. Industry professionals can provide buyers with the most up to date information, as well as make sure everything is in place relating to finances. They also make sure buyers are abiding by all legal requirements. 

If moving into a planned property, consider leaning on the advice of current tenants. See if there is any way to talk to a property’s occupants to get a better idea of actual verses expected costs. Building fees, average utility costs and other costs must be anticipated to ensure a wise investment is being made. 

Are there assistance resources for which I may qualify?
There are all kinds of assistance options for home buyers to examine. Before making a purchase, real estate investors should turn to any available government assistance programs. Industry professionals from banks, real estate offices, mortgage companies and the government can help make sure that all available options have been covered. 

HUD, the USDA, the FHA and the VA are among the government agencies that disperse financial assistance to home buyers. Prior to making any real estate investment, it is a great idea to to read up on assistance options to see if there are any extra ways to maximize a real estate investment. 

What is the neighborhood like?
A property’s neighborhood needs to be closely analyzed, when deciding to buy a home. Home buyers know what they desire, but do they know what else they are getting with their purchase. 

Schools, recreational areas, cultural enrichment and safety data all need to be studied. Without knowing all of these details, home buyers may be investing in something that does not meet their must haves. It also may lead to a poor financial investment. Local neighborhood rules and regulations can alter the vision for a property. Communities may have specific guidelines. Regulations about remodels, yards and occupancy must be known. For even more great advice in relation to this, check with the community’s elected officials and if present, any neighborhood or community association. If able, ask a future neighbor for answers to those questions too.

Do I know what I am buying?
There is more to a property than the look and functions of a home. Within all the nooks and crannies of any property, there are details that cannot be overlooked. Wiring, structure, add-ons, updated technologies and current regulations deserve proper attention. A detailed history of the property and any work that has been done should be examined as much as possible. Avoid the money pit nightmare at all costs! 

For a home-owner to be fully aware of what they are buying, turning to the professional knowledge of an inspector is a must. Appraisers are another great source. They can confirm whether or not a listed price is a fair price. Current condition, previous problems, future needs and fair market value need to be assessed. 

Do I really need this?
Above all else, homeowners must ask themselves if they really need to be buying a home. Are they purchasing the home out of desire, necessity or both. If both can be met through the purchase of a home, then the time might just be right.

Home ownership is a serious undertaking with real financial implications. By honestly answering if home ownership is really needed, home buyers can feel more confident about their decision or reap the benefits of their financial investment. 

Being Confident about the Choice
Upon taking a closer look at what all needs to be assessed before buying a home, potential property buyers may have hesitations. By answering the questions above, residential real investors can be more confident about their choice. 

Purchasing a home should be a great experience. Don’t fall into a bank drainer and don’t settle for less that what is wanted. The immediate and long-term impacts of home buying must be examined. By accurately assessing what it takes and being confident about the decision, the home buying process will be less stressful and sure to make for a sound financial decision.


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