Real estate represents one of the greatest investments available to millions of Americans and its performance can have a major impact on individual portfolios as well as national economies. When making this important purchase decision – either as an investment or primary residence – many factors must be taken into consideration.
Real estate properties can be defined as any combination of land and any permanent structures affixed to it, such as houses and buildings, according to Cornell University Law School’s Legal Information Institute. Real estate can be owned by people, companies or government agencies and used for various residential, commercial or industrial purposes.
When purchasing real estate, two options exist for purchasing it – outright or via mortgage. A mortgage is a real-estate-specific loan backed or insured by either the federal government or private lenders; making it an affordable solution for homebuyers.
Real estate market performance plays a pivotal role in whether or not you can afford a new home purchase. A stronger economy usually boosts consumer confidence and increases buyer demand while weaker economies may lead to lower prices and an increase in foreclosures.
An effective way of determining whether you can afford new real estate is analyzing economic indicators and home price trends in your area. For instance, the New York State Association of Realtors (NYSAR) provides annual reports detailing local housing trends such as median home prices, inventory levels and more.
If you’re considering purchasing a new home, take time to carefully consider which community and lifestyle features match up with your needs. Speak to a real estate agent in order to assess home values and trends in your desired neighborhood; additionally consult with an New York real estate attorney so your contract includes appropriate contingencies such as an appraisal and home inspection clauses.
Real estate investments can be highly rewarding for those who seek to become landlords and earn rental income through short or long-term rentals. Other investors may engage in house flipping, which involves adding value to a property before selling it at a profit. Unfortunately, however, real estate investing often requires large initial capital outlays for maintenance costs and unexpected expenses.