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Buying High? Why Not Buy to Invest?

Posted by emmapelton@kw.com on March 4, 2021
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Hi Everyone! Happy March!

I CANNOT believe that this crazy world and market has been going on for an entire year!!

Over the past month, I’ve heard a lot of buyers, and potential buyers, complaining about how high prices are in the real estate market, especially here in South County. Whether they are worried that they are going to be forced to buy high and never get that money back, or they are worried that they’ll get themselves in over their heads, or whether they are intimidated to find something they love and get beat out by other higher/better offers, they don’t want to even get involved in the market.

What’s the Alternative?

Pay rent continuously and watch that money fly out that window each month? Live with your parents/relatives long-term? Wait and wait and wait until it’s the “right time”?

I am totally on board with being frugal with your money and being smart about your investments. I always suggest having a cushion of savings set aside, no matter what type of market you’re buying in. Those unexpected obstacles do happen, and you always want to be prepared and not caught by surprise economic challenges. So what if part of that cushion was used as an investment. To these people, I always ask – “have you ever thought about buying an investment property?”

What is an Investment Property?

An investment property can be a duplex, three-family, four-family or a mixed-use office space/residential space. This can be owner-occupied or solely income-producing with tenants. Although privacy is something to be revered, having someone else pay your mortgage could be viewed just the same. If buying high is something that scares you, imagine not having a monthly payment, and using what money would be used to pay your mortgage for other aspects of your life (paying down student/credit card debt, saving for a nice vacation, saving for a kid’s college fund) and weigh what’s important to you.

Especially in South County, rentals are a hot commodity. As the prices of homes steadily increases, it becomes increasingly difficult for working-class people to afford purchasing a home here. This is causing rental longevity to increase, and thus the need for more and more rentals. Therefore, if you purchase a multi-family, you have an increasingly greater *insurance* for always having tenants, and therefore, always having someone paying your mortgage for you.

What’s more, if you are planning on living in the space for a while, down the road there may be an opportunity for you to move and fill your space with other tenants and keep that property as an investment property to pay for your next mortgage or lifestyle choices. A great podcast that I’ve been listening to is “Think Like a CEO” with Gary Keller. The latest season talks about how to improve your financial freedom and a large part of this owning investment properties. Definitely a thinker, so have a listen (it can be dry at some points, but the information is important!)

Bottom Line?

So even though this market can be intimidating and patience is definitely key, there are ways to “win” this market. Even though you may be buying higher than you’d like, buying a property that benefits both you and others, as well help finance most, if not all of your mortgage is a great option and could set you up for financial success over the next many years.

If this has brought up questions for you as a potential buyer, feel free to reach out to me and we can discuss your options further! Know that there are options to find a home in this market, and even make some great financial strides, so don’t feel stressed – let’s discuss your options!

-Emma

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