Is Buying a Home in Minneapolis/St Paul a Good Investment in 2015?

Owning a home is still the American Dream. But is buying a home in the Twin Cities metro area a good investment in 2015? According to Forbes.com it is!

Forbes just released the list of the top 20 cities of where investors should buy housing in 2015. Minneapolis/St. Paul/Bloomington came in at #17. These are all cities with strong population and job growth and relatively affordable home prices.  According to Forbes research, Twin Cities market is currently undervalued by about 7% and has a good rental value. 

So if buying is good for an investor, is it also good for the average first time home buyer? Absolutely! 

But buying a home is an investment.  So buy smart and treat your purchase like the investment it is. 

Key considerations of a home purchase

• Buy Smart--Price, Interest rate, Type of Mortgage and Resale Potential are all part of the equation. 
• Maintain and Protect Your Investment--Adequate insurance and scheduled maintenance are essential. 
• Don’t Jeopardize Your Investment--Be cautious when considering an equity loan.

One of my favorite type of client to work with as a REALTOR® is a first time home buyer. It is rewarding to educate them on How to Buy Smart. Buying smart is not as simple a foreclosed property at a good price. It is a combination of a buying at a good price with a mortgage at a low interest rate; preferably with a fixed rate of interest so it will not fluctuate into a payment that is not affordable.  

But it goes beyond the financials. A smart home buyer, always considers resale. If a home has negatives that cannot be repaired or replaced, it might not be the best investment. Homes on busy roads, near power lines, industrial areas, gun ranges, rail road tracks, cemeteries and airports could be considered less desirable to many buyers. I had one buyer who wanted to be miles away from any golf course due to the chemicals applied daily to keep the grass green. Granted some people would not mind any of these locations, but a location cannot be changed so it is important to weigh any negatives carefully.
 
Likewise an unusual floor plan or unique style to the home can be a deterrent. I showed a home once with the only kitchen in house on the lower level of the home. My buyers weren’t impressed and thought it odd. And honestly in all my years as a REALTOR® showing hundreds of homes, I’ve only seen one home with the main kitchen in the basement.
 
The best way for an home buyer to avoid a misstep in a housing investment is to have a good team of professionals to assist you through the entire home purchasing process. I partner with my clients and help them through every step of the process from loan preapproval through closing day. With an knowledgeable professional at your side, purchasing smart is much easier. 

Is 2015 the year YOU will INVEST IN YOUR FIRST HOME?  Let me be your professional guide. If you are buying, selling or relocating to Minnesota and need help from a professional REALTOR®, give me, Teri Eckholm of RE/MAX Results, a call or visit my website for a FREE Home Buyer Success Guide or FREE Home Value Report. I specialize in acreage and lakeshore properties in the north and east Twin Cities metro area including Ham Lake, Lino Lakes and all communities in the Forest Lake School District! Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.

Copyright 2015 www.terieckholm.com

Is Buying a Home a Good Investment in 2014?

“How good of an investment is a home in 2014?" This question can be a tough one to answer in this slowly stabilizing economy. A couple of decades ago, the answer was a no-brainer. Buying a home had been regarded one of the safest  and most important investments a person could make. Owning a home was equated to realizing the American Dream. But now first time buyers can be confused even as home values and average sales prices have rebounded. Many potential homebuyers continue to wonder,  "Is home ownership a solid financial investment?

 The National Association of Home Builders posed that question in a 2012 survey and MOST AMERICANS answered a resounding, YES!   "74 percent said that despite the ups and downs in the housing market, owning a home is the best long-term investment they can make." That is 3 out of 4 voting Americans who still believe in the value of home ownership!

And I agree,  buying a home is a wise investment. I make this statement not just because I am a REALTOR®, but because I, too, am a homeowner. The key to successful home ownership is to treat your home like the investment it is. It takes discipline and time for any investment to grow in value. And like any other investment, whether it is a stock, bond, mutual fund or a home,if you have to sell in a down market,  you might not realize as much profit as you may have expected.

Key Points to Buying a Home as an Investment
 

There are several things to consider when investing in your first home. Don't buy just with your heart, buy with your head too.

• Buy Smart

**Price **Interest Rate **Type of Mortgage **Resale Potential **Equity Builder?

• Maintain and Protect Your Investment

**Home maintenance **Insurance

• Don’t Put in Your Asset in Jeopardy

The best way to have a healthy balance sheet when you sell your home is to Buy Smart in the first place. Buying smart is not just about getting the home at an extremely low price. It also means getting a mortgage that you can afford. Consider a fixed rate loan rather than an adjustable rate, so it doesn't fluctuate into something that you cannot afford. Interest rates are still at very low rates. The first thing I recommend to my homebuyers is to talk to a knowledgeable loan officer and find out what options are available. There are hundreds of special programs out there and an experienced loan officer can help you find the best for your situation.

But buying smart goes beyond the price paid and the loan used to finance a first home. It is also buying with resale in mind. Many, who purchased homes in the price climbing frenzy of a few years ago, snatched up any home they could after submitting multiple purchase agreements on several homes. They often overlooked an unusual floor plan or that the home was railroad tracks with several trains passing by at all times of the day and night. They adjusted their needs to accept the power lines in the backyard or the noise from Interstate 35 just a few blocks away. But now if these same families are faced with trying to relocate, they are frustrated that buyers refuse to compromise on same aspects that they overlooked.

With the current low housing inventory in the lower price ranges, we are seeing multiple offers on homes once again. It is still important to keep calm and inspect a home thoroughly before purchasing. As a REALTOR® who loves to work with first time home buyers, I spend time helping my them to understand the positives and negatives of the location of each property we view. I point out how something quirky like having no basement or having a hot tub built in to a bedroom could affect the resale value by limiting potential buyers. Paint and wallpaper can be easily changed but foundation, plumbing and property location are much more expensive to deal with. Oddities it a home can drastically affect value when it is time to sell.

The final tip to buying smart is to determine whether equity can be increase with a little good old fashioned elbow grease! If the home hasn’t been updated, a good sprucing up could raise its value. A house that has an unfinished basement, could build equity if it can be done at a reasonable cost. Don’t take shortcuts and avoid required city permits. It will cost you  when you go to sell because that must be disclosed. Is gardening your hobby? Look for a home with a yard that can be upgraded over the years. Just be frugal and realistic in what your resale will be in the end.

Beyond a smart buy, maintenance is essential as is proper insurance to be certain a home owner can afford the required repairs should the unexpected happen. Time after time I have to bear the bad news when presenting a market analysis at a home where the interior and/or exterior has not been repaired or replaced in decades. It can be nearly 20% less, than the value of a well maintained home in the same area.  Doing several projects over time allows a homeowner to enjoy the improvements while retaining the property value. Likewise, not insuring a home properly can be a huge risk. Worse yet, are the homeowners that make a home insurance claim and receiving payment for a repair but opt to use the money for something else.

Finally, it is important for a homebuyer to not put their investment in jeopardy. Many of the people who lost their homes in the market downturn put their homes in jeopardy but taking risky loans against the equity. Some people took home equity loans at reasonable rates but didn’t use the funds to improve their home. Some of these loans were at very high adjustable rates and as the payment rose, the homeowners just couldn’t make the payment. When I was growing up, I remember learning to never take a risk with anything you couldn’t afford to lose. I think a home falls into this category.

Like any investment, a home’s value will fluctuate. But a house is unique as an investment because it serves a dual purpose: It is a your place to live as well as a way to increase your net worth. By using the money that would be paid for rent and putting it toward a house you can afford with a plan to protect and maintain your property, a home purchase is still a good investment. 

 

 
Copyright 2014 www.terieckholm.com

Question from First Time Homebuyer--Is a Home a Good Investment?

 “Is buying a home really a good investment?" That question is asked quite often these days especially as the real estate market continues to show signs of recovery. As the market heats up and there are more homes with multiple offers due to low interest rates, some first time homebuyers continue to wonder whether buying a home is a good financial investment.

For decades, buying a home was considered one of the safest investments a person could make. It was "The American Dream". But then came came the crash or burst bubble and people became more cautious about real estate investing. Now, homes are selling again but the question does remain; Is owning a home a good financial investment?

In my opinion, YES, buying a home can be a wise investment and not just because I am a REALTOR®, but because I, too, am a homeowner. The key is treating your home like the investment that it truly is. It takes discipline and time for your investment to grow. And like any other investment, if you have to sell when the market is down, there is a chance that you will not realize as much profit as you may have expected.

So what are some of the key points that must be considered when investing in your first home?

• Buy Smart

**Price **Interest Rate **Type of Mortgage **Resale Potential **Equity Builder?

• Maintain and Protect Your Investment

**Home maintenance **Insurance

• Don’t Put in Your Asset in Jeopardy

The best way to have a healthy balance sheet when you decide to sell your home is to Buy Smart in the first place. Buying smart is not just about getting the home at a low price though that is a very important piece to the puzzle. Homes were a at rock bottom prices a few months ago and when coupled with extremely low interest rates, many people started thinking now may be the time to buy that first home. But with more buyers in the mix, multiple offers are becoming the norm. It is important not to over extend and get caught up in a bidding war that you cannot afford to get that "perfect" home. 

Buying smart also means getting a mortgage that you can afford and that is safe, preferably at a fixed rate rather than an adjustable rate, that can fluctuate into something that you cannot afford. Interest rates are at record-breaking low rates. Talking to a knowledgeable loan officer is a great way to get started in the home buying process and find out what options are available to first time buyers now.

But buying smart goes beyond the price paid and the loan used to finance a first home. It is also buying with resale in mind. Many, who purchased homes in the price climbing frenzy of before the market crashed, snatched up any home they could  get an offer accepted on. They were tire of submitting multiple purchase agreements and being beat out by other buyers in multiple offer situations. They stopped worrying about the perfect floor plan or caring whether the home was on a busy road or next railroad tracks. As the market picks up, buy smart and always think about the need to potentially resell the home.

As a REALTOR® who works often with first time buyers, I spend time helping my them to understand the positives and negatives of the location of each property they view. I point out how something quirky like having no basement or having a hot tub built in to a bedroom could affect the resale value by limiting potential buyers. Paint and wallpaper can be easily changed but foundation, plumbing and property location are much more expensive to deal with. Oddities it a home can drastically affect value when it is time to sell.

Lastly, buy smart by determining whether equity can be built with good old fashioned hard work! If the home hasn’t been updated, a good sprucing up could raise its value. A house that has an unfinished basement, could build equity if it can be done at a reasonable cost. Don’t take shortcuts and avoid permitting because that can be costly if you go to sell. Is landscaping your forte’? Look for a home with a yard that can be upgraded over the years. Just be frugal and realistic in what your resale will be in the end.

Beyond a smart buy, maintenance is essential as is proper insurance to be certain a home owner can afford the required repairs should the unexpected happen. Time after time I have to bear the bad news when presenting a market analysis at a home where the interior and/or exterior has not been repaired or replaced in decades. These homes are not worth what a neighboring, updated home is worth. Doing several projects over time allows a homeowner to enjoy the improvements while retaining the property value. Likewise, not insuring a home properly can be a huge risk. Worse yet, are the homeowners that make a home insurance claim and receiving payment for a repair but opt to use the money for something else.

Finally, it is important for a homebuyer to not put their investment in jeopardy. Many of the people who lost their homes in the market downturn put their homes in jeopardy but taking risky loans against the equity. Some people took home equity loans at reasonable rates but didn’t use the funds to improve their home. Some of these loans were at very high adjustable rates and as the payment rose, the homeowners just couldn’t make the payment. When I was growing up, I remember learning to never take a risk with anything you couldn’t afford to lose. I think a home falls into this category.

Like any investment, a home’s value will fluctuate. But a house is unique as an investment because it serves a dual purpose: It is a your place to live as well as a way to increase your net worth. By using the money that would be paid for rent and putting it toward a house you can afford with a plan to protect and maintain your property, a home purchase is still a good investment. 


 Copyright 2012 www.terieckholm.com