6 Tips to Purchasing a Home That Will Increase in Value

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6 Tips To Purchasing A Home That Will Increase In Value  

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A home is one of the most valuable assets a person will have in their lifetime. Typically, people are going to purchase a home to meet the need of having a roof over one’s head. But a house is more than just a structure to protect one’s physical well-being. Purchasing a home has value. It’s an asset and an investment, which means that when you’re looking to purchase a home, you should not only concentrate on a home meeting physical needs, but also selecting a home that is going to increase your wealth. By purchasing a home that is going to increase in value, a person is going to increase in wealth. But how do you know if a property is valuable? Here are 6 tips to purchasing a home that will increase in value:

  1. Focus on the property, not the house. The actual house on the property is not the most valuable aspect of the property. The house is going to age and most likely decrease in value over time. But the actual property is what has the potential to increase in value. Land appreciates in value based on the principle of supply and demand. Land is in limited supply. As more and more people continue to purchase land, there is less and less available land to purchase. This means, as time continues on, the demand for land remains, but the availability of land to purchase will decrease. This will cause the value of land to increase. You will want to search for a property that is going to increase in value over time because of a demand for properties in that location.
  1. Understand that the home still has value. The land is going to be the appreciating asset as the home is going to naturally depreciate over time. Keep in mind, though, that the home still needs to be cared for in order to not devalue the land. If the home reaches a point where it is no longer functional as a home, it can have a negative effect on the value of the property. The homeowner needs to invest back into the home, keeping the home both functional. Keeping up with the regular maintenance is important. The homeowner should also consider making improvements to keep the home modern. However, when choosing renovations, be sure to select improvements that are going to add value to the home. Not all improvements are going to be worth the expense, as you will not be able to recoup the cost for every improvement made. Renovating the kitchen is one improvement that tends to increase the value of the house the most.
  1. Look for the less noteworthy homes. When it comes to purchasing a property, what the home looks like is not very important. This is going to be contrary to people’s tendencies. Most people, when looking to purchase a home, are going to be looking for a nice, well-kept home. Maybe it will have a few areas that need fixing, but people like homes that are move-in ready. If you are looking to buy a property that is going to increase your wealth though, buying the best looking home in the neighborhood is not always the best decision. Homes are typically going to appreciate by the same amount if they are in the same location. Therefore, even if you were to purchase a less expensive home in a neighborhood with more expensive homes, all of the homes are going to be appreciating by about the same percent. Your house, a less expensive home, is going to provide you with a greater return than the more expensive homes.
  1. Find a good location. This is the most important aspect of purchasing a home of value. To invest in a good piece of land is to find a location where the supply is low and demand is high. According to Forbes, in 2015, the top ten best cities to invest in are: Austin, Texas; Provo, Utah; Houston, Texas; Orlando, Florida; Dallas, Texas; San Antonio, Texas; Denver, Colorado; Boise, Idaho; Oklahoma City, Oklahoma; and Fort Worth, Texas. These cities were selected based on their positive population and job opportunity growth as well as having affordable homes. If a city does not have a growing population or increased job opportunities, then the demand for homes is going to be low. And, if a city already has expensive homes, than that area has already experienced a high appreciation in the value of their properties. In the top 20 cities to purchase an investment home, the only Californian city mentioned by Forbes was Sacramento.
  1. Be cautious of neighborhood plans. The plans for the neighborhood could make or break the value of a property. It is important for a homebuyer to pay attention to what a neighborhood currently has available. If the neighborhood seems to be on the decline, then that is not the right neighborhood to purchase an investment home. However, if the neighborhood is currently not in great condition, but has future plans for new developments, then that could be the perfect neighborhood. New plans to build schools, shopping centers, hospitals, and other amenities are going to draw people to that neighborhood. A homeowner cannot just consider the current state of the neighborhood, but he or she also needs to consider what the neighborhood is going to look like in a few years’ time. You want a neighborhood that is going to be good for a family, that is near desirable amenities, and that is only going to grow over time.
  1. Buy when homes are cheap. In order to gain the most amount of income out of your investment, you have to buy the home for a cheap price. The best time period for a buyer to find a cheaper home is going to be during the off-season of purchasing homes. This is typically in the winter months, when the weather is not as nice and school is back in session. During these months, sellers are going to be more willing to lower the price of their home. The sellers know that there are not going to be as many buyers looking to purchase their home. Therefore, when a buyer does come around, the seller is going to feel more pressure to entice the buyer into buying their home.  A few other benefits of buying during the winter months include real estate agents who are going to have more time to help you and lenders are going to be more willing to provide you a lower interest rate.

A homebuyer who considers purchasing a home as an investment is a wise individual. Purchasing a home as an investment takes forethought. A person has to look beyond the current state of the home and neighborhood and think about what both of those are going to look like years to come. By doing so, not only will a person have a roof over their head, they are also going to be setting themselves up to become more wealthy individuals. Making a good investment by purchasing a home that appreciates over time is not a matter of luck, but a matter of research and time put into making the right purchase.