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In Today’s Economy – Should You Buy Or Rent Your Home? February 4, 2009

Posted by minnesotarealty in 1.
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Those of us who are conscious of the current economic conditions would say that choosing between owning and renting a MN house at this time poses quite a challenge. It is very easy to fall prey to others whose opinion seemingly sound “good.” However, we cannot deny that this requires expertise on the part of the information source. In so doing, we can possibly avoid costly or unnecessary mistakes. Preferring the right information source with reference to owning or renting also affords us the chance to anchor our decisions from an authority on the matter.

A good adviser takes into account several factors to help you come up with sound financial decision. One, he must consider your individual situation; and two, he must be experienced enough to back his claims with solid evidence. Since no two people have exactly the same predicament and your case is unique from the others – it is crucial to weigh the costs and benefits of buying versus renting. As the co – author of the book Equity Happens (Russell Gray) puts it, “Do the math!”

Intelligent decision arises when you do careful examination of both buying and renting. Having said that, I will spell out some considerations here, which you might find useful. Moreover, since I am not aware of your current financial condition – I will not belabor you with countless rhetoric anymore. In renting, all you need to add up are the costs of your rent, some additional fees, and other utilities.

For ownership expenses it’s a little trickier. You must add together more items and might need the help of professionals to determine what the expenses will be. The main expenses are commonly abbreviated with the acronym PITI. This stands for Principal (the amount of money you pay toward the principal of your loan), Interest (the amount you pay toward the interest of the loan), Taxes (property taxes you must pay), and Insurance (both property insurance and mortgage insurance, if applicable).

Owning a home also covers utility expenses plus other maintenance outlay aside from the PITI. In the case of renting, while it is compelling that you only pay the same amount on a monthly basis; you can go back and determine what your previous payments could buy you a home for. Monthly monetary costs are important aspects in deciding what to choose between owning and renting but it is also equally significant to look at the long-term benefits.

In this case, ownership seems to be where the long-range financial rewards are. Renting a house does not guarantee a title even after years of investment. You will also notice that your rent increases as time goes by. On the other hand, the payment or main cost allotted to buying a house practically stays the same even through the years except for some such as utilities, insurance, etc. The good news is that there is a promise of equity from all the payments you have made towards the ownership of your house. In an appreciating market like ours – a wise choice can go a long way in as far as the value of appreciating our home is concerned!

There is a good chance your choice shifts according to your personal feelings and opinion. Simply put, making the best decision towards renting or owning a home involves your subjective feeling. What can be more fun than having a house you can call your own, and enjoying the independence in creating changes with it however you like it! On one hand, you might favor the side of renting if you will give emphasis on other concerns such as having no lawn to mow, or other maintenance issues.

Often, financial consideration plays a big role but also brings into mind subjective feelings over the argument: to buy or to rent a house? To be more specific, purchasing expensive appliances no longer bothers you when you have huge savings from renting instead of owning. Or maybe, the freedom to do whatever you want with your own house appears inconsequential if you will note the massive expenses you shed off just to purchase your home. Either way, the dictum “numbers do not lie” proves that the former is still weightier than the other.

Conversely, this piece wants to point out two important concerns relative to renting and buying a house. One is to seek advice from the right authority to help you identify the best course of action. Next is to examine carefully both the financial and subjective considerations. The gains or benefits usually become apparent on a long term basis. Finally, it would help to bear in mind that we are in a buyer’s market where ownership is deemed favorable over renting.

Alexandria P. Anderson is a licensed Minnesota Realtor that helps people to find and purchase Bloomington houses and other Bloomington properties for her clients’ needs.


What Type of Property Investing Is Right for You? September 17, 2008

Posted by minnesotarealty in Minnesota Homes for Sale.
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Everyone knows that investing in property is a lucrative opportunity for enterprising people to make money. The advantages of entering the Minnesota real estate business include paying less taxes and being able to make more money without actually lifting a finger.  The prospect of putting your money to work while you sit back and relax is certainly a tempting one, and this is why so many seek a piece of the action.

Striking it rich as a real estate investor doesn’t happen overnight, though.  One needs to learn the ins and outs of the business, learning everything there is to know about real estate.  A good place to start is to simply ask, what is real estate?

Well, real estate is made up of parcels of land, and includes any structures built on said land.  The prices you will pay for pieces of real estate are largely dependent on how the local market is faring.  As an investor in real estate, you will find ample opportunities to pay less in taxes than others would.  In regard to exactly what type of investing you will do, you have quite a few options.

Investing in an REIT or a Real Estate Investment Trust means that you are the owner of either parcels of real estate, mortgages on pieces of real estate, or some combination thereof.  This type of investment has quite a high yield along with some tax benefits, and its liquidity means that you can easily convert it into cold, hard cash.

A partnership in real estate is just what it sounds like; investors may elect to partner with other people or organizations in building new structures, or making money off extant ones. Appreciation is another great source of profit for property investing partnerships, even when you’re dealing with undeveloped land.  Tax benefits and growth potential make forming a partnership another great option for investors

The rental of vacation property is pretty self-explanatory. Your vacation property is one that is used for recreational purposes and is not your primary residence, the piece of property on which you live.

Rental property is another common choice for those looking to make money in real estate.  Everyone has dealt with landlords, so this type of investing doesn’t take much explaining.  Do, however, mind the differences between residential and commercial rental properties.

Even raw or undeveloped land can afford the canny investor a chance to make money off appreciation on its value, and this type of investing also provides the aforementioned tax benefits.

Learning about each type of investing out there is a great idea, since it is up to you to determine which path will be the most advantageous for you personally, in light of your personal strengths and talents, in addition to what you want to gain. Whichever way you go, though, the decision to invest is a good one; as well as compounding your wealth, it keeps more of the money that would have gone to taxes in your pocket.

If you spend more than 750 hours each year on property investing, you should seriously consider becoming a real estate professional, as this will allow you to claim almost unlimited tax deductions, while not taking advantage of this opportunity will cost you deductions. To qualify for these enhanced tax benefits, however, (in addition to the previously mentioned 750-hour requirement) you will need to be participating in your duties as an investor, rather than hiring others to do everything for you.