Renting a home can be a great choice if you’re trying to save for a down payment, improve your credit or better prepare yourself for homeownership. But buying the home you’re renting? That’s a totally different story.
While sure, you’d eliminate the hassle of a big move and you’d get to stay in the place you’ve grown comfortable and accustomed to, rental homes don’t always make the best investments.
Are you considering switching from renter to buyer on a home you live in? Before you do, heed these tips:
- Know your property. What state is your home in? Is an older property? Do you often have lots of maintenance issues and repairs? Remember, when you become an owner, you won’t have the luxury of a landlord anymore. There’s no one to come fix your broken water heater or mow your grass for free. That’s all on you, so make sure you know what you’re getting into. Have an inspector come look at the property and evaluate its systems and structure. You want to make sure there are no safety hazards and no big issues that need repairing. These could put you and your loved ones in danger and they could cost you a pretty penny to fix. Both are not something you want in a home you just
- Know the market and neighborhood. Buying a home isn’t just about finding a property you love; it’s also about finding one that’s a good investment – one that will give you a good return when you sell it a few years down the road. So before you go purchasing your rental home, take some time to get to know the local real estate market. Is the area an in-demand place, where people are flocking to buy? What have homes on your street or in the same neighborhood sold for in recent years? How does that compare to what they were priced 10 years ago? Make sure you’re buying a home that’s going to improve in value – not decline.
- Get the financial details. When you buy the home you rent, you can’t always count on the same – or even a similar – monthly payment. You see with rent, you’re simply paying your landlord, but when you’re the homeowner, you have your mortgage, property taxes, PMI and many other monthly fees to consider. Make sure you know the details on these amounts, so you can accurately determine what your monthly payment will be. Also take into account the other added costs you’ll have – stuff like home and yard maintenance, home insurance, etc. These will all come out of your budget once your landlord waves goodbye.
- Get preapproved for a loan. Before you even consider buying your rental home, go ahead and get preapproved for a mortgage loan. They’ll need some basic financial details and some paperwork, but within a few days they’ll be able to tell you what sort of loan you can expect and how much you can expect it to be. Sometimes, you’ll be surprised at what number your lender gives you. Thanks to low mortgage rates, it actually might be much higher than you originally thought, meaning you can look to newer properties, newer neighborhoods or even consider building your home from the ground up. Just make sure to know all your options before moving forward!
- Consider rent-to-own. If your preapproval doesn’t turn out quite the way you expected and you need a little bit more time to save for a down payment or to raise your credit, consider talking to your landlord about a rent-to-own situation. This can establish a timeline for you to rent the home now and, in a few months or years, eventually own the property outright. If you’re both amenable to the idea, be sure to get a lawyer involved. There are numerous contracts you’ll want to have in place to protect yourself and your finances along the way.
- Have a good agent on your side. Never go through any sort of real estate transaction without a qualified, local agent on your side. They’ll be your advocate every step of the way, and they’ll make sure you’re getting the best possible deal (both now and in the future). They also have priceless local knowledge that can make your transaction easier and more lucrative.
Are you thinking of buying your rental home? Don’t go it alone. Contact an agent at The Claus Team today, and we’ll help you make the decision that’s right for your family. Call now to get started.