HousingMarket Article: The U.S. Housing Market and How-to Benefit in 2019
The housing market is something many think they know something about – but most lack a proper understanding. Sure, the American dream is to one day own a home, raising a family and saving for retirement. However, the housing market, if used correctly can be one of your single-most considerable wealth creating assets.
There are several ways to use the housing market as a wealth creation tool, and this article will detail a few methods you may take with you on your financial journey.
Home Ownership Creates Familial Wealth
Starting with the most apparent wealth creator and that is owning a home. You save and work hard to have the chance to own your own home. However, the issue is for many it never becomes an asset.
According to a recent report by the National Association of Home Builders, the average first-time home buyer spends 11.4 years in their home, while precious owners purchasing for a second time spend 14.8 years. With a typical mortgage lasting 30-years in length, it’s often difficult to build equity.
To turn your home into an asset, you may want to do the following:
- Instead of a 30-year mortgage, look to obtain a 15-year mortgage, which will help you build equity more efficiently, as well as save you in interest expense.
- Make a sizeable down payment. Doing so will limit the amount you need to finance.
- When making your down payment, ensure it is greater than 20% of your home’s value, avoiding the need for PMI or private mortgage insurance.
“Flipping Homes Still En Vogue for 2019”
Thanks to reality television, many of you have seen one of the modern renovation or house flipping shows. While the show makes it look easy, it can be a stressful time, and it’s important to know what you’re doing. Even still, it’s a powerful way to build wealth or assets.
When flipping a home, you want to ensure the asking price for the property is below fair market value from the start. This arbitrage will allow you to have breathing room during the flipping process. From there, you’ll likely freshen up the house with new paint and other cosmetics. Lastly, you will sell the cleaned-up home for a higher price and keep the difference as a profit.
If done correctly, you can generate tens of thousands of dollars.
Why is Everyone Renting in 2019?
Lastly, if you have multiple properties and don’t want to sell them, look at renting them out. Renting out your properties can not only cover their mortgage but also reduce the principle. That additional incoming cash flow can then go toward building your portfolio.
On the other hand, if you are a consumer looking to rent, this can be a cost-effective way to feel what it’s like to own a home without all the risk involved in actually owning the home.
These are three effective ways to financially benefit from the housing market. Keep in mind that your home should be one of your most substantial assets and if purchased wisely can quickly become the asset that allows you to buy more properties in the future…