Real estate has been a strong investment for centuries and is known to be a good long-term investment. In other words, real estate is a great way to protect your legacy and gain active through times. Although there are always risks when it comes to investments, real estate stays a sure bet, even while inflation. Here are 5 tips to remember when buying your first home during inflation periods.
Tip 1: Buy or Wait?
Buying a property is a smart way to protect your asset against inflation. On the contrary to stocks and bonds, real estate is a physical asset that can’t be devalued by inflation. Generally, real estate increase in value at the same time as inflation. This makes real estate the perfect investment for any person who wishes to keep their assets safe.
Tip 2: Know Your Budget
A down payment is necessary when buying your property. It varies according to the type of property but is usually a minimum of 5% of the buying price. Ideally, it is better to start saving as so as your desire to become a home owner is showing. The higher the down payment, the lower the loan and the interest rate payment will be. Then comes the mortgage loan step. This step comes after the mortgage prequalification, that indicates the maximum you can borrow. It is calculated based on the salary, assets, and debts. The prequalification gives the buyer an interest rate that is locked for a determined time.
Tip 3: Know the Real Estate Market
Beware, the current real estate market is not the same as the one from yesteryear. Real estate is led by supply and demand. For example, a property put for sale while 10 neighbours have followed the same lead will influence the buying price. Therefore, it is important to be informed about the real estate market. We could ask the buying prices of the last comparable properties in the last six months. This report on comparable is done on properties which own the same feature and located in the same area. It is relevant to choose between three and ten properties to create a representative price bracket, to know the price of the property we wish to buy. A real estate broker can help you out in these steps.
Tip 5: Know the Property
Before starting the buying process, a buyer must take the time to list the essential items for their own properties. Here are criteria to consider:
- The type of property: a co-ownership (condo), a single house, a building, a turnkey property, divided or undivided;
- The property’s features: the number of bedrooms, bathrooms, the length of the backyard, the existence of a balcony, a swimming pool or a garage;
- The location: in the city, in the suburbs, in the country, the neighbourhood, the view, the surrounding noises
- Close commodities: shops, schools, health services, leisure centres
- Existing transportation: bus, metro, train, bike path, express way
- Taxes and fees: co-ownership fees, school taxes, municipal taxes
Tip 6: Pay attention to details
If you are truly falling for a property and it ticks almost all your criteria, you must buy. This way, the property must be well located. It must have a few improvements to make. Also, the property must be a long-term investment, which helps fight inflation.
Conclusion
Inflation is a real estate investor’s ally. If we tend to think that inflation only makes life be steeper, it can be a powerful force that increases property value. Throughout, property takes value at a higher rate than the inflation rate. The investment is safe and profitable to be protected from inflation.
Do you wish to know more about buying even during inflation? Call me and I will answer all your questions: 514-975-1133.
