Cleveland Real Estate News

Besides renting, that is! Like other issues surrounding real estate, this is a complex one. Most of us can argue that none of us knows how long we are really going to be in a home we buy, in spite of our best plans. But if you know at the outset that you probably will be moving in two or three years, here are some thoughts from someone in the real estate trenches….yes, that would be me.

Do you have money to put down? If you put 20% or more down, you eliminate the extra PMI insurance (lower monthly payments), and you get one step closer to paying off the principal of your home…translation: equity in your home. 

It’s not an old wives tale, it usually takes an average of five years before you start paying off the principal you owe on the house.  And until you do that, you still owe the same amount you paid for it. If you sell it in two years, it’s going to be hard to make that money back, and even harder to not have to bring money to the table when you sell it.

If you are looking to do a ‘no money down’ program, read the above. No money down at all, well, it takes even  longer to start paying off the principal you owe.

What if I fall in love with a house and it’s  for sale for one of the highest prices in the neighborhood? If you are planning on moving in three years, I’m not sure this is the best idea.  If you are moving in three years AND not putting any money down, it’s not a good idea. 

 A house may be at the top end of the listing price scale because it’s upgraded more than others.  The age old saying is ‘do you want to buy the best house on the block‘ or one that you can fix up and eventually make the best on the block. I swear, the next house I buy will be mint condition and I will buy less house just so that can happen.  Because I work almost every day of the year and who has time to upgrade? Or even clean, but that’s another story! If you want the best house for top price (top price in your comfort level) AND you are moving in three years AND you are putting no money down….well, I think you know where this is going.  I’m going to advise you not to do it. Which is what I did today and the person on the other end of the phone was not pleased.

This strategy makes even more sense considering the fact that our 30 year history of an average of 3% increase in investment on our real ppty is ‘flat’ at the moment. But it holds true even in good seller markets.

I feel better about saying what I see as the truth rather than telling someone what they want to hear.  Even if they do get mad lol…  Peace Out – 3C