What will your home investment be worth in the future?
There are no absolute guarantees when you make investments, especially in real estate. However, you can estimate the future value of a real estate property based on your expected rate of increase in the value, and for how long you own the property. Making these estimated calculations can help you decide if the purchase is right for you, or if you are better off looking elsewhere for investments –
On average, owners live in their homes for 5-7 years. It is important to know how long you will live there so you can estimate how much net you will make when you sell. This way you can invest into something else- another bigger and better home.
Location is key when searching. Make sure that your new home will be somewhere with room for growth or somewhere in higher demand. Location will determine an area’s appreciation rate.
Looking at this scenario..a home located in Culver City is selling for $600,000. The area’s projected rate of appreciation is currently at 5.6% percent within the next year.
That being said, if you were interested in selling it the year after you buy it, it will sell for around $633,600. And if the market follows the same trend of 5.6% for the following years, by the fifth year of owning it will be worth $746,115.
If you are interested in selling your home, you can have your local real estate agent create a Seller’s net sheet for you. This way you can see a breakdown of how much you will net from the sale of your home.
Things to take into account when home searching:
- Current Interest Rates to determine how much you buy overall.
- Comps in the area to determine if you are buying at current market values.
- How long you will live there.
Love your Home, Love your Life.