Short-Term Homeownership - Is it Worth it?
Life happens
Purchasing a home is one of the most significant life-changing decisions you could make. Therefore, if you are considering buying, you have probably devoted sufficient time thinking about it. However, sometimes unexpected occurrences have an impact on your well-thought plans. You might have to change your job, which entails moving to another city, or you plan on flipping a house. Whichever the reason may be, you might be wondering if short-term homeownership could wreck your finances. Owning a place for a short period is a risky venture. However, there still are ways to make it as profitable as possible.
Renting or owning
Anyone who has ever considered buying a house is aware of the costs this decision entails. There's always the down payment (traditionally going up to 20 percent), mortgage payment, property taxes, closing costs, etc. Apart from the initial expenses, owning a house is usually more expensive than it meets the eye. Maintaining and repairing your home should be a priority on your list. Therefore it's necessary not to forget to set aside at least 1 % of your total home value for unexpected repairs.
Estimating the breakeven horizon helps you decide whether short-term homeownership is a profitable decision
You might be wondering whether renting an apartment is more cost-effective. Although it's challenging to provide a straightforward response to this question, you might be able to calculate the difference. Pay attention to your monthly rent payment, rental insurance, and security deposit.
The breakeven horizon of short-term homeownership
The financial information you collect helps you calculate your breakeven horizon. The breakeven horizon can differ depending on the location of the house you intend to buy. However, it can help you evaluate the exact moment when renting an apartment will become less cost-efficient than owning a house. This calculation even enables you to consider whether owning a home for a short amount of time is more economical than renting. The longer you hold a property, the more it increases in value, enabling you to profit when selling it. However, the moment when selling your home becomes profitable depends on various factors. Some of them include the inflation rate, the location, tax deduction, etc. Depending on how long you plan on being a homeowner, you might need to reevaluate your plans according to the equation.
Selling is not just about profit
Whether your homeownership is more long-lasting or short-term, you should be aware of the most common mistakes you must avoid when planning to sell a house. If you are currently involved in the process of buying a home you plan on selling shortly, you must have recently experienced having to deal with the closing costs. However, if you haven't sold a home before, you might not be aware of the closing costs covered by the seller. They can add to 10 percent of the home price, meaning that for a house valued at $350,000, you might need to cover $35,000 in closing costs.
Moving costs
When planning to buy a new property, your financial evaluation should consist of the moving expenses. They usually include loading and unloading services, moving supplies, and sometimes even the cost of storing your belongings. However, if you are considering short-term homeownership, your financial estimate can impact your breakeven horizon. When planning to move twice in a short time-span, you will have to cover the moving expenses once again. Therefore, it would be necessary to include them in your calculation.
To avoid relocation costs skyrocketing, do your research in advance to find the most sensible option for your budget. Detailed analysis can help you find an all-encompassing and affordable relocation service, such as the one at mod-movers.com. When your relocation depends on a reputable company, your repeated moving will not significantly impact your essential life decisions.
Short-term homeownership common mistakes
A complex endeavor such as buying a home you don't intend to stay long in depends on hiring an expert realtor. An experienced real estate agent guides you through the negotiation process. Apart from providing you with all the listings, an expert ensures your selling aligns with your best interests. However, if you are afraid the action might turn into a financial failure, assess the most common mistakes you can avoid.
Buying in an up-and-coming neighborhood
Sometimes it's completely understandable to be enticed with an emerging neighborhood. Lower price when purchasing a home in an up-and-coming area attracts buyers quickly. Although this idea might appear as a crucial saving point, it could easily misfire. Transitional neighborhoods make it harder to predict your exact breakeven point. This position could hamper your ability to get a clear picture of your financial situation.
Instead of plunging headlong into an unpredictable purchase, opt for a stable family neighborhood. Unlike the emerging ones, family areas do not lack the relevant institutions and services, such as schools or grocery shops. Although the market can be challenging to foresee, purchasing a home in a stable neighborhood ensures minimal risk.
Settling quickly to avoid stress
Buying a home is usually the most memorable event in an individual's lifetime. You might be excited about the forthcoming years you will spend in a lovely new home during the usual purchase. However, short-term homeownership could make your stress-levels escalate. Apart from the standard double calculations, coping with relocation anxiety twice could lead you to settle for a home rapidly. You might pick the house near your current neighborhood to avoid the distress of storing your belongings. Although it might seem like an affordable option, this could prove wrong in the long run. Choosing a home hastily without a proper home inspection can complicate the selling process and obstruct your plans.
Investing too much in the improvement
It's not a secret that every renovation, no matter how small, could boost your home's value. However, when aiming to sell quickly, it would be more challenging to regain the renovation investment. DIY tasks prove to be more effective instead of thorough renovation processes. If possible, try to do the painting work yourself. Any practical improvement you could do yourself helps cut costs down and sell your home without surprising delays.
Long story short – is it worth it?
It's possible to turn short-term homeownership into a profitable and cost-worthy process. However, the outcome depends on proper planning and careful estimates. Sometimes, sudden life-events could thwart the detailed process of organizing your selling. If that's the case, it might be more challenging to breakeven, but not impossible. Try to stay calm and hire professionals to guide you and assure the most desirable selling conditions.
