Ask the Experts by Suzanne O’Brien
Q: My family is considering a move to a bigger house. I’m worried about the stress of trying to find the right house, understanding the financials, and making the best choice for everyone. Do you have any tips on how to do this with less stress and confusion?
A: This decision can be a tough one for families. And now, many folks have told us that they are ready to make a move since values have recovered, and interest rates remain at an all-time low. Finding the right living situation can present a challenge based on what is available. When options are scarce, the decision to move can a very stressful one that often results in frustration and defeat and can cause some turmoil at home.
However, there are ways to take advantage of this kind of real estate market and approach it differently both as a homeowner looking for a different way to live or an investor. Think of it, first, in terms of the homeowner. The secret is to get ahead of the inventory and be the first to know when an option that fits will become available. For this reason, we have tapped into state of the art technology and can reach out to folks who are the next most likely to move. It’s a simple concept when you consider traditional real estate marketing typically involves marketing a home to prospective purchasers.
We now have the technology to identify and connect with those people and homes that suit potential buyers before they are actually ready to come to market. The beauty of this approach is not only that we are able to help folks make a successful move, and in their timeframe, but also have an opportunity to purchase a property that makes sense and in many cases without having to get into a bidding war. That said; the first step is to understand what your best path to purchase would be. For example, we are seeing many folks use savings to purchase with cash. Though it may seem that is an advantage and make sense for your individual circumstances, consider this: the average interest rate is about 4.5% right now. There are many investment opportunities that will guarantee a higher return than 4.5%. It may make much more sense to invest your cash in something that will earn you the 4.5% and a profit on top of offsetting your mortgage.
As a real estate example; we have many investors taking advantage of some suburbs yet to fully recover from the recession; whereby they can make an investment of $50,000 or that yields rents of $750-900 per month. That is a cash on cash return of 30-58%. I am not a financial advisor and only have expertise in the real estate world, but don’t know of returns available from any other industry at those levels. Please consult individually with your financial advisors to be sure that any path you take will insure that.
Suzanne O’Brien is a with Johnstone & Johnstone. Her mission is to enhance the way people make life transitions by integrating all of the components that add confusion and stress to the process of making a move. She can be reached at 313.516.6644 or at firstname.lastname@example.org. O’Brien is a member of The Family Center’s Association of Professionals.