Why Buy a House?
Owning a home is one of the best investments anyone can make. Don’t expect to get rich by being a renter. The U.S. Federal Reserve Survey of Consumer Finances reports that in 2004 the average renter had a net worth of $4,000 while the average homeowner’s net worth was $184,000. In addition, homeowners have the comfort of knowing that they are building equity and living in a place that belongs to them. They can plant trees, paint rooms, build a wall, and no one can stop them, or raise their rent. If you rent for 30 years at $1,000 a month you could have spent over $350,000, and wind up with no house.
Ways to Buy a House That Will Make You Money
1. Buy a house where you can add value, such as fixer-uppers. Some sellers don’t bother to clean up properties before putting them on the market. This often requires them to accept a lower price, and allows you great ammunition to negotiate a better deal. Painting, replacing old carpeting, replacing old appliances or doing some landscaping, are things that most people can easily do to make a fixer-upper look like Cinderella.
You can also buy a property with enough land, and with zoning, to allow you to build a rental property in the back. Or, you might have a larger house where you can convert one room, one section, or a basement, into a rental.
2. Buy when others are selling. When the economy is slow, and unemployment rates go up, people purchase fewer houses and prices go down. You will have less competition from other buyers and more houses to chose from.
3. Buy from motivated sellers. If you view enough houses, eventually you will cross paths with someone who is highly motivated to sell. They may need to move, or need cash for a new house that they bought before they sold their old one, or for a variety of personal financial problems. How do you know if someone is motivated? Ask a lot of questions!
4. Buy during the holiday season when sales are slow. Hardly anyone looks to buy a house around Christmas time. It’s another opportunity to buy with less competition from other buys, and from motivated sellers.
5. Learn to negotiate. One good way to be a good negotiator is to be in a position where you don’t have to buy. Be patient and be willing to walk away from a deal that doesn’t suit your fancy.
6. Buy in a nice area. If you buy in the right area, you greatly increase your chances for a lifetime of increasing equity in your house.
Here is a version of this article that includes book recommendations I posted at Amazon.com entitled Home Buying for Advanced Dummies.