I have pondered this question from time to time in my personal life and have come to the conclusion that there is not a generic answer to fits this question. I could come up with some scenario where the answer could be determined more rapidly such as:
- Your doctors just informed you that you have six weeks to live: You have no heirs and no great possessions, and some lending institution has just offer you a sizable unsecured loan. LIVE IT UP ON THEIR DIME. Go out swinging.
However, the likely hood of that happening is slim at best and none realistically.
The good thing about that example is that is shows us the likelihood of our minds image of the future seldom are reliable.
There is not one way to answer the title’s question which always make sense. Every individual must take the time and evaluate their circumstances, then arrive at their own logical solution. To achieve this there are some free tolls I wish to share with you. They are found on the website: realtypublications.com/forms. These are forms 209-3 which is a balance sheet and form 320-4 a sheet which helps determine if you should purchase a home or continue renting.
There are two types of people which purchase properties:
- Those who know their financial standing and make sound long-term decisions
- Those who aren’t aware of their financial standing, and willfully disregard any effort to figure it out.
Those in the first category:
- Are more likely to obtain more than one quote for the first purchase
- Are more likely to shop for the best rates and conditions (Anyone can afford to occupy a six-million-dollar property give the right term and conditions.)
- Are more likely to research and develop an approach which works for their income and lifestyle.
Those of the second category:
- Are more likely to fall victim to a banker’s or developer seem
- Are more likely to purchase on a whim or temporary emotion
- Are the one most like to expose themselves to greater risk
Useful Resource Files:
Balance Sheet Financial Statement
Buyer VS Rent After Tax Analysis
I am a professional. I hold a General Contractor’s license in California # B 696662. I am also a Real Estate broker in the State DRE # 02131799. I received a flyer in my PO box the other day and offer capital so I could remodel houses and they would loan for the property and 100% of the cost for the remodel This caught my eye because I could possible us something like that to help my clients. They did offer those types of loans but they were on a one-year fixed rate note of 10%.
- I wondered why a short-term note was tied to a long-term investment strategy
- I questioned if I could get all the due diligence for the potential property accomplished and the plans from the architect in time to customize the unit with a year with all the delays which Covid has bless us with.
- I understood the banker didn’t care weather I made profit or lost my shirt in the transaction as long as the bank made ten percent on the agreement.
Would their offer been covenant, it was present on the flyer as if it was. Would it be logical to pass on a cost of $50,000 to a first-time home owner needlessly. No! It is much more prudent to work with the client to develop a plan. Sometimes that plan involves staying put and achieving certain goals before purchasing a home. So be it. It is better to make a sale that the purchaser will not regret, that will not negatively impact the community. It is better to plan your work and work your plan than have to develop a plan that works you. Let’s dispel a few myths. If you do not have the 20% down-payment for the conventional loan, is it prudent to acquire an FHA, Freddy Mack or Fanny Mae loan. There are many situations where this would be logical. Yes, you would have to purchase PMI insurance. You can drop it as soon as you have 20% equity in the property and they must cancel it a year after you do if you forget. Plus, ask you tax person, PMI may still be tax deductible. The real question is not do I have to pay PMI but can I afford this property and its proper upkeep. The real question is does this property fit my needs and can it be adapted to continue to do so in the future. The real question is do I plan on staying in this location or will I be moving within 7 years. If you’re not staying for seven years with the time value of money consideration and maintenance cost and closing costs it may not be the time to purchase.
The point being we are all unique and the answer to the title question will be unique.
Still, if you know your staying in the community is a long-term investment it may be the proper time to begin building your generation wealth. Obtaining a home properly may very well be the foundation of building that wealth. Fill out the forms honestly, the answer is math. It is only math, another piece to your puzzle of your future.
- We like hearing, reading, or watching YouTube about how someone stared their business in their parent’s garage and now they are wealthy beyond their wildest dreams.
- Sometimes wealth involves being willing to believe in yourself. It isn’t always blind luck.
Colin Powell said,” There are no secrets to success, it is the result of preparation, hard work, and learning from failure.”
W. C. Field said,” If at first you don’t succeed try, try, again. Then quit. No use being a damn fool about.”
We can all say which quote we accept: our lives will show which one we’ve applied.
Colin Powell did say learn from our failures but from failure. Many who tried to purchase a home in the past did so without an understanding of the market and may have been mislead by individuals who had their own best interest in mind.
It is true, we are still suffering as a nation from the aftermath of the “To Big to fail Banks bailout”. Most people who shop find that they get better service and rates from smaller banks or credit unions. Think about the fact that we are still paying for bailing them out and their still in business profiting from us while we bail them out. They didn’t lose when they made unwise financial discussions, we bailed them out. Who bailed out the people who were misled down the road and ruined financially? Maybe it’s time to study the system and realize what is really happening.
Banks are the country’s largest debtor. The bigger the bank the bigger their debt. The 208 market proved two things:
- Houses are not an appropriate economic driver.
- People, innovative people are. I
It time to take stock in ourselves and help each other rise together.
In an article by Tyler Sonnemaker on June 9th 2021 https://www.businessinsider.com/american-billionaires-tax-avoidance-income-wealth-borrow-money-propublica-2021-6?op=1
In the article he gives reasons and facts as to why even billionaires borrow.
They are tax:
- loopholes
- government policies
- to keep their liquid capital for rainy days
If you are looking for an alternative way of obtaining your lifestyle
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- Contact me with your thoughts
- email me at spi.socal@gmail.com
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