1.18.13, Real Estate ?'s: Deciding What To Buy

Here is a hypothetical situation in real estate. Say, you find a great deal on a house. It has 100k in equity, and you pay $300 HOA, taxes & insurance are $400 a month ($4800yrly).

The property has been on the market close to 600 Days.

Do you Purchase the property knowing that you will have $100k in Instant Equity that you can use at anytime?

Well here are some factors to consider.

Initial Investment

Purchase Price: $220k
Property Value: $320k
PITIA: $1500
Equity: 100k

Now, if you are looking to stay in the property over the next 20-30yrs, the equity may come in handy when you need to do some improvements, send a child to school, or maintenance other family needs.

However, if you are considering selling the property is 5-10yrs, lets look at the likelihood of selli g the property at the value and cashing out on the equity and the principal payments.

How Long is it going to take you to sell the property?

If the property has been on the market close to 2yrs, when you are ready to sell, will the same cycle occur? If you are buying in a development where a builder went belly up, or there are several foreclosure a around you, there is going to be challenges in selling it.

Now, the good news is, 5years from now we will be almost out of the 2008 economic downturn in real estate and finance. So there is a 50/50 chance your property will sell in no time...given the fact that the development is at least 1/2 way is completed.

So, you will likely cash in your house and take your money and go buy a better home for you family.

Either way, it's a win/win situation. And, as usual, there is always risk involved! And, that is with any purchase you make. Now grant it, this is of one of those attempts to get rich quick, because that rarely happens.

And, if you decide you want to become a landlord and ultimately rent it out, the. good luck to you. My advice: hire a property management firm....especially if you happen to relocate to another area. They will do an excellent job at maintaining your property even if you end up all the way across the country in Seattle, Washington!