It is human nature for one to gear their lifestyle according to the environment at the time. When the economy is good people tend to spend more. When it is not, most people tighten their belts. Often the spending that takes place may not be done in the most beneficial manner. People tend to over invest or over buy property because they feel financially secure.
A better approach is to use the good times to prepare for the bad times. When there is some extra money a lot of people think about ways they can invest it. For many, they don’t have enough extra to become involved in stocks. Plus, it is too risky for them. Their next train of thought is investing in property. But, in the back of their minds is what happens when the economy sours. Will they be struck with a second property that will now become a financial burden? The answer to that could be yes or no.
Property Becomes a Burden
If one invests in an investment property that is already high priced then there are some risks. What kind of rate of return will it bring in a poor economy? If the mortgage is high but can be managed now, it may not be in the future. As a rental property it will be tougher to rent in a poor economy. It may mean that it has now become a financial burden.
Property Becomes an Asset
If one buys property at a good price when they are financially secure they are placing themselves in a good position. The cost to carry the property will be low enough that is should be easy to carry when money is tight. The owner can afford to rent at lower rates because their carrying charges are lower. The owner is in a good position even in a tough economy.
How Much Success Can There Be?
Individuals that buy run down homes do so with different intent. Some buy them to fix them up and then put them back on the market. One former Marine got started in this. His concept was to buy when the economy was in poor condition.
Going from Renting to Buying
Not everyone wants to buy a second home. In fact, they are thrilled at being able to buy their first primary residence. Which is often the case in a good economy. There are a lot of success stories about people buying their first home. Some go for the home that is move in ready. Others go for the one that needs some tender loving care. The choice is a personal one based on individual circumstances.
Buying at the Right Time and the Right Place
When one comes to the conclusion that a good economy is the ideal time to buy a fixer upper there is another decision to be made. Where is the best place to buy this type of property? It’s all about getting the best fixer upper at the best price. There are some cities more favorable for this than others. Among the top ten best cities list for these types of homes is Cleveland, Ohio. The savings are based on the discounts that fixer uppers can generate. For Cleveland for example, it is estimated that the discounted savings can amount to 31.9% amount to cash saving of $22,000.
The objective is that when the economy is good apply the same concept one would use in a bad economy. When making big decisions concerning property investment.
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