Fresh Thinking on Investment Real Estate, Rent, Home Ownership July 24, 2008Posted by shaferfinancial in Uncategorized.
Tags: investment real estate, investments, real estate, rent
Recently had an interesting conversation with a young man. He was wondering if he should buy a house in his area to live in. I asked him some basic questions like why he wants a house. He answered, for an investment! Further he said he was happy with renting the place he lived in because it was ideally located for him and relatively cheap. He couldn’t afford to buy into the same area he lived in, so he was looking into some less desireable neighborhoods to buy.
So I suggested he treat this transaction as what it is, an investment. I explained to him that the decision matrix for investment real estate was very different that for a personal residence. It was like a light bulb went off in his head. He had been struggling because he was approaching this decision from the wrong direction. He really didn’t want to move. I sent him off to do some research and gave him a couple of names of trustworthy folks that understand investment real estate.
This is, of course, anathema to my real estate agent friends, but renting can make sense for people. And since people aren’t trained to think like a real estate investor, they are unprepared to make good decisions about real estate. Like my client who was paying $600/month for a place he was comfortable in and finding a similiar place to own would have cost him $2000/month. Now he is free to look all over the US to find a investment property since he is not limited to being close to work. He can still bike to work and own an investment that will give him double digit returns putting him in good stead for his future!