People always tell us when it is the right to do something. There is always a right time to get married. A right time to eat. Right time to sleep. And of course, a right time to invest in real estate. Talking about the last one, yes it does come down to a few things when buying your real estate property. Things like the situation real estate market in that area, your personal situation and where you are at in life. Before you make the decision and buy your own piece of real estate, below are the five things/questions you really need to ask yourself:
What is your goal behind buying the property?
We all have different reasons and goals for buying the real estate assets that we do. Some of us just want a place to live at. Some of us want to move to a better place. Some of us want to move closer to work so that we can walk upto the office. Some of us want to invest in a place which can pay us off really good later on. Some of us are near retirement and just want to settle in. All we need to do is to make sure that we think about these goals ahead of time and decide if buying real estate is necessary to achieve these goals. Also, do ensure that the price is well within your budget, otherwise your financial life ahead will become way more stressful.
How is your current life situation?
This question does not actually have any answer which is directly related to buying real estate. This is because there is no one-size-that-fits-all type situation suitable for everyone when to purchase real estate. It depends on various different factors such as whether you are single at the moment or in a long distance relationship or married and have a family or where you are working; whether there is a possibility that your employer offers you a transfer to another part of the country etc. So we all have different life situations. The thing that matters is that you need to make sure buying as piece of real estate fits your current situation.
Is your income stable?
You really need to first and foremost see whether you will be able to afford the real estate property you want to invest in. Is your current income stable enough to support monthly/quarterly or annual payment plans? It is very easy to get excited and decide to buy something in real estate when your business or job is doing really well and you get excited about taking such decisions. But the questions that you seriously need to ask yourself are: “How stable is my income? What is the likelihood of my income remaining the same or increasing in the next one year? And what about next year? If it turns out that you are uncertain about your future income status, then just picking up mortgage is not the brightest idea at the moment. You should wait a while more or until you have a clearer picture of your future earnings or when you have at least gathered up enough saving to afford the real estate piece easily.
What is your credit score?
This question will help you determine what interest rate you will obtain on your mortgage if you get approved. Just a few points more or less on your interest rate can make a huge difference of thousands of dollars over the time period of your mortgage. Ensure that your credit score is what you want it to be before you even apply for a mortgage. If it not, then before buying any property, then think of ways to rather raise your credit score first.
Speaking of investment, if your goal with your property is only to make money out of it by selling it off as you get any good opportunity then is not a really a good idea always. Only buy real estate with intentions of pure investment if you are absolutely sure about the deal, which honestly speaking you can never be. This is because there is too much risk involved, so this should not be your sole criterion.
How is the Real Estate Market in that area?
Lastly but most importantly, before you get involved into any kind of real estate deal make absolutely sure that you know all about that area’s market for real estate. Make sure you know how that specific property or similar properties in that area have had their prices gone up or down over time. You must track the prices pattern very carefully and closely before closing any real estate deal. If the prices for example have gone down and your finances are good enough then investing in that particular property may turn out to be an amazing opportunity for you. On the other hand, if the prices of that or similar property are at an all time high, you may want to be patient so that you can avoid buying into a bubble that may burst soon.
Sarah Smith has been a personal finance author for the last five years. She is also an independent and a very passionate finance and investment advisor. She regularly posts at www.personalincome.org.