Although most of us are looking for a place to call home when we seek property to purchase, very few people totally disregard the prospect of resale value in the decision-making process. The majority of us look for a house that we can envision ourselves living in and loving. But we are also cognizant of the fact that buying real estate is a big investment – one that stands to deliver a major payoff one day when we’re ready to sell. And the nice thing about having such an asset is that even if it never appreciates in value, you’ll at least get out what you put in over 30 years of building equity. In some ways it’s even better than putting money into a retirement plan or the stock market because you can liquidate it for full value at any time (supposing the market is in your favor). The trick, though, is to find a property that is likely to not only hold its value, but to show a significant increase and return on investment. Here are just a few factors that could play a major role in the potential of a property to gain value over time.
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Location. This is probably the number one consideration when purchasing property of any kind. As a buyer, you may be interested in the relative prestige of the neighborhood you plan to move into, including overall property value, crime rates, school districts, and so on. And there’s a high likelihood that potential buyers down the line will be interested in the same thing. So you probably want to avoid areas where bars on the windows are a predominant decorating motif and the schools have metal detectors at the entrances. You can find a house anywhere, but if you want a comfortable home that has the best odds of increased resale value, the right location is key.
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Age. There is some appeal to the notion of purchasing an older home, especially if you’re on a tight budget and you are comfortable with DIY upgrades and maintenance. But you need to consider that buying a home that is 50 years old now will mean potentially selling a home that is 80 or more years old by the time you’ve paid off your mortgage. If you’re not prepared to do some major upgrades before then, you could have trouble making a sale. And don’t forget, you’re likely to be in an area that is full of older homes. If other homeowners are not as keen to care for their properties as you, they could make the neighborhood look run-down and end up tanking your property value.
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Lot size. When you’re buying in urban or even suburban areas, land is at a premium. So opting to spend a little more for a half-acre lot, as opposed to a 5,000-square-foot lot, for example, could spell a major return on investment. Lots are only likely to shrink over time as more people move into an area and parcels get divvied up, so having a large yard could be a major selling point.
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Square footage. The size of your home could have a decided impact on the value. In general, you can expect that larger homes are going to be worth more. All things being equal, the more square footage you have to offer, the higher the price you’ll get. That said, you need to consider the type of buyer you’re marketing to. If your target is a middle class family, you can assume that any interested parties are going to be on a budget, so an excess of square footage could hobble a sale. If, on the other hand, you’re going for an elite demographic, you simply can’t have too much space.
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Amenities. Not every home comes with the same amenities, so you need to consider what future homeowners might want and whether or not you’re willing to add these things to a home that doesn’t have them. Popular amenities might include central heating and air, a gourmet kitchen, a master suite, a granny flat, a swimming pool, and so on. Not all will contribute to the value of your home in a monetary sense, so you need to think carefully about what you’re willing to pay extra for and whether future buyers will pay for certain amenities, as well. If you’re unsure, don’t hesitate to contact the pros at Breckenridge real estate group or your preferred local agency for advice and help finding the investment property you can call home.