Over the past decade, the real estate market has returned in the United States. While a lot of people were in over their heads when the housing bubble burst, thousands upon thousands of Americans are considering an investment property. But while the idea of making money off of an investment property is alluring, it’s not as simple as first time home buyers wish it would be.
First time home buyers are common. Over 30% of people looking for homes at a given time are looking to buy their first home. Similarly, given the current year, over 30% of millennials are considering buying a home in the next two years. However, this generation can stand to learn from the mistakes of previous generations.
After a global recession caused by home loans being given to people who couldn’t afford to pay them back and didn’t deserve them, mortgage planning is more important than ever. A staggering 59% of homeowners surveyed agreed that they wish they better understood the details and terms of their mortgage. That means that three out of five people who purchased a home (the average price of a home in the United States is almost $200,000) didn’t fully understand what it was that they were signing up for.
Clearly, knowing the details of your loan — whether you’re getting a conventional mortgage, a VA loan, or an FHA loan — is paramount. But there’s good news, despite the scare tactics.
It gets easier
Once you’ve bought a home, you generally know what you’re getting into for the next time. Even if you didn’t learn everything from your first home, by the time you’re looking at an investment property or vacation home, you’re at least aware of what you don’t know. That’s a powerful thing.
It’s not for everyone, but having an investment property can be a great thing. Success stories are more common than horror stories, but the truth is that it takes a lot of work to maintain a property that you don’t live in. In some cases, an investment property doubles as a vacation home, but it’s more common to own apartments or rentals near a college campus as a way to earn extra income. For some, it becomes a business of its own, for others, it’s just a way to pad the bank account.
In either case, make sure you know the details of your contract before you sign — it doesn’t matter if it’s your first property or your 50th.