Whenever you’re purchasing real estate, you want to make sure you’re getting properties that are right for you. You never want to make a decision based solely on emotional attachment or financial reasons. There needs to be a combination of both. Today, I am going to give you my top 3 real estate questions you should ask before purchasing a property.
3 Questions to Ask When Purchasing Real Estate
1. “What are my reasons?”
Whether you are purchasing your first home, a second or vacation home, or even a rental property, you need to be really clear on why you want that property. My wife and I did this particular exercise several times. Honestly, we wanted a good quality, quiet second home that we could get away to, as well as somewhere that we could take our children and grandchildren to that they would really enjoy.
One of the big questions that we had to consider was also about size. We wanted something that was large enough to enjoy as a family, especially when it came to cooking the turkey at Thanksgiving. We knew that our grandchildren wanted a swimming pool, and our adult children wanted easy access to go skiing.
Our answers to the question “what are my reasons?” really helped us narrow down and find the right property for us. Your answers are going to be different than mine, so make sure to follow what you really want.
2. “How does this fit into my personal portfolio?”
Real estate often offers better long-term returns than the stock market. Because of the potential to earn big money, you have to make sure you’re monitoring your portfolio correctly. In order to do this, identify what types of locations you are the most interested in. For example, single-family homes make great rental properties, but vacation properties offer other benefits. You could also purchase apartments buildings, condominiums or duplexes. It is important to be diversified, but you don’t want to get too deep into territory you are wildly unfamiliar with.
You should also research the markets with the greatest future potential for appreciation. To do this, you would look at the supply of properties that are the same type you are looking into, and any indicator that tells you people are either interested in moving to the area, or outside folk are interested in buying in the area. The biggest indicator of this is prices rising.
3. “What kind of loan would meet my needs the best?”
There are so many loan products out there, and you need to be educated. The first loan a bank offers you most likely will not be their best one, or the best one for you, so do your research. Secondly, you need to get pre-approval for all of your loans and then look at if they want an interest-only loan or a fixed rate loan. This will help you determine exactly what your payments are going to be. I personally am a huge fan of the 10-year interest only in controlling real estate, but that’s something you have to determine based on your personal needs.
In considering which loans would work best for you, also consider what you can afford. Carefully plan out your price range, and find properties for $0.80 on the dollar based on the sales comparisons in that area. If you check all of these things off, you are on your way to finding a great property!