This column is often focused on intangible investments like stocks that a young investor might hold in their portfolios. Although this is one of the main components of an investment is not the dominant for most people. His life even for some that much further down the road of life, stocks and bonds often pale in comparison to the role a home plays in their investment.
Buying a home is a huge investment. It is easy to change the size of the overlook, because the down-payment required is relatively small. Yet we all realize that we invest the entire purchase price. However, most people do not give the investment aspect of their home a second thought, thinking of their home as nothing more than a place to hang their hats on. Since this may be the biggest investment in the first half of a person's life it would be wise to look at it less as a burden, and more like a financial decision. There is saving thousands in your retirement account if you are going to miss out on tens of thousands on your home. No point in scrambling
This leads to a series of questions about district choice, price ranges, over-extending themselves, and the trade-offs between immediate comfort and long-term wealth. There are more questions that can be covered here, so let's focus on a few key points that can help most people get an extra ten or twenty thousand dollars or more.
First, any good broker tell you that neighborhoods are crucial. What is the meaning? The three most important factors are location, location and location. But, let's expand what we learned about stocks to open door. We know that we want to buy low and sell high. So, if you want to make your home buying in a neighborhood that is improving a profit. Not only look at the current state of the district. As an investor, the trend of the district is much more important. Look for signs of deterioration or repairs to take place. Repairs of older homes can mean a neighborhood on an upswing, while homes can left in a nice neighborhood to show un-repaired. Beginning of a recession
The tax legislation relating to home ownership also offer some incredible incentives. In the past decade, the opportunities for homeowners improved, and this is especially true for those lucky enough to see their home value increase. Under current law, the profit on most single-family homes sold at a profit are completely tax, as long as you've lived in the house for two of the last five years. The tax-free amount of up to $ 250,000 (or $ 500,000 for a couple). Many people still believe that these profits are rolled in their next home, but that was the old law. Today is the time to your home to take profits because they are tax-free. My approach is to take the profits when I can, because you never know when that tax laws may change again.
For many young couples struggling to make ends meet, can this relatively new law to be a windfall and it is especially popular among those who are handy doing small repairs. Many have bought fixer-uppers, added a little paint and wallpaper, and come a few years later with a hefty profit. Let's say you've decided it's time to buy a house. If you plan to buy a $ 150,000 home would be better off with a traditional suburban home in perfect condition, or a mansion in a fashionable district near the center, paint and upgrade should take? Consider: after two years, and maybe $ 20,000 in repairs, can bring that big old house $ 350,000, netting our home entrepreneurs a cool $ 180,000 in profits, all completely tax free. On the other hand, our suburbanites luck selling for $ 180,000. Of course, even they are better off than the tenants who have moved their investment to other people's pocket.
Obviously, it's not as easy as it sounds. There are problems with building codes, neighbors, maintenance, higher heating costs, and contractor disputes. Let us not believe that money comes without any worries. Still, worth $ 180,000 is a lot of headaches, and it would take to make it right. Many part-time job Remember, this is tax-free money. How many years do you work at your regular job to make $ 180,000 after taxes? That's like $ 300,000 before taxes for many people.
Finally, the real key to success in this (or any) investment is to buy at the right price. No matter how well you fix it, and regardless of how advantageous the tax rules, a bad starting price limit your potential profit. My rule of thumb is to never pay more than half of what I think something is worth. That means I end up walking a lot of good deals away, but I also think I protected against just about any disaster that may strike. Even if you are under Murphy's Law, you will find yourself still a good chance to come out a winner.
Scott Pearson is an investment advisor, writer, editor, instructor, and business leader. As President and Chief Investment Officer of Value View Financial Corp., he offers investment management services to a wide range of clients. His own newsletter, Investor's Value View, is distributed worldwide and provides general money tips and investment advice to readers both internationally and in the U.S.
No comments:
Post a Comment