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Finding Your Castle Rent or Buy Calculator Blog About David Cohen Property Search
Is it months or years before the benefits of buying and owning a property becomes greater than the cost of renting and investing the monies elsewhere or the enjoyment of using it for a vacation greater than having something to retire with? Many factors and variables need to be answered for a rational, meaningful answer to surface. If you invest the money that you would use to purchase the home elsewhere at what rate of return? Those expensive vacations would the happiness return you greater value than the economy vacations? Would they be worth more than the accumulated wealth of owning a home.
Is there a affordable home available? Is our credit score capable of convincing a loan company to give use a loan? If not than this discussion for the moment is academic. It is the moment for credit repair and planning our financial future.
Perhaps themoment to repair and improve our credit score, while continuing our search.
I would be remiss if I did not review the non measurable economics of home ownership. In addition to living the American dream there are aspects of home ownership which have an indirect economic effect. The children's future, having an suitable place to study. Having a stable set of friends. If you are in business or a profession where you must entertain guests, business associates, and patrons having a place that you can customized to your needs has economic effects. Having a home that you can customize such as a man cave or adding ganate kitchen tops have an effect on a person state of mind. A person state of mind has an affect on productivity.
Your friends may think automatically or just intuit that home ownership is the best answer. The mortgage broker and real estate agents will have their our bias toward real estate ownership, even with the best of intentions, even if it might not be a perfect fit for you. So how do you decide? The easy answer is still home ownership makes financial sense if you can afford to buy, you are in a position to buy, and you do not plan to move in the near future. Real estate transactions with loans have a costs that may take years to reach the point of profitability. A mortgage calculator will help you determine how quick that point may be reached. That point would naturally take longer to reach if you are the type of person that saves every dollar that you earn and somehow have a ROI, a return on your investments, which is far greater than the real estate market.
There are other factors that a calculator can not answer. The information that it provides is only as good as the information that is used. Accountants and programmers have an expression GIGO. Appreciation: If you buy a piece of commercial ground which had no easy access and a super highway in approved next week on a neighboring piece of property perhaps you just provided for you retirement. If you purchased a residential piece of property next to it is where a week later the Environmental Protection Agency (EPA) declares a super fund site you just help the previous owners get rid of what is now a worthless piece of property. These are extreme examples, both highly unlike yet possible.
With change comes stress: good stress and perhaps bad stress. How well do you handle change? There are many hours involved in a search for a new dwelling. Will the diversion from your work help you or being a professional earning $50. or $500. dollars per hours cost you a greater amount than you can afford to lose? How you answer these questions determines how much of the process you delegate to the real estate agent.
Some people might find the activity of home repair a welcome change from what they do at work. Other people might find repairs and maintenance a major headache. If planned for, most of the stress can be relieved. See the chart for the average life span of appliances.
These factors should be calculated. These factors will vary drastically from person to person and property compared to other properties.
What is the trend of prices in the neighborhood. It has been said that property is a safe investment due to the fact they are not making any more of it. That is looking at the investment in a very board perspective. Real estate has a tendency to increase in value. However, real estate is a local market, "location", is a very important word: location,... location, location, location. A particular piece of property increasing? Maintaining? Is the area due for company to relocate that will increase job availability? Does the area have reasonable travel to and from. Any possibility of a toxic landfill being discovered next door? Or building an highway on your front lawn.
These costs may be the same if purchasing or renting.
Are you a person that would save the monies that wuld otherwised be invested in the property? Would the monies be spent on vacations, dinners and consumer goods? Note: investment counselors would urge you to have additional investments.
There are many costs with completing a real estate transaction. Loan costs, Inspection, Title insurance, Title search... Most costs can be anticipated.
The ability for other investments to bring a return vary. The ROI (return on investment) may depend on your abilities are you a day trader? (buying and selling stock on a dailey, hourly basis?)
Here is the creme de la creme the goverment gives you a huge gift! If you keep said property the profitability point financially you are doing better as an investment than other investments. Why other investment will be taxed at the long term capital gains rates. However your main residence... well the following is copied from the United State Goverment Internal Revenues web site (click for orgininal page) Please note this may change some year. Plus reading the details is a must, see orginal page! This is posted 2018. :
Qualifying for the Exclusion In general, to qualify for the Section 121 exclusion, you must meet both the ownership test and the use test. You're eligible for the exclusion if you have owned and used your home as your main home for a period aggregating at least two years out of the five years prior to its date of sale. You can meet the ownership and use tests during different 2-year periods. However, you must meet both tests during the 5-year period ending on the date of the sale. Generally, you're not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home. Refer to Publication 523 for the complete eligibility requirements, limitations on the exclusion amount, and exceptions to the two-year rule.
Reporting the Sale If you receive an informational income-reporting document such as Form 1099-S.pdf, Proceeds From Real Estate Transactions, you must report the sale of the home even if the gain from the sale is excludable. Additionally, you must report the sale of the home if you can't exclude all of your capital gain from income. Use Form 1040, Schedule D.pdf, Capital Gains and Losses, and Form 8949.pdf, Sales and Other Dispositions of Capital Assets, when required to report the home sale. Refer to Publication 523 for the rules on reporting your sale on your income tax return.
Suspension of the Five-Year Test Period........ "
Please check this website directly for any changes. The regulations and policies do change.
While waiting for this to appear the simple answer is: If you plan to stay in the house longer tha the time it takes to recoop the purchasing costs ( such as closing costs, surveys, inspections, loan orgination fees, ... etc ) it is cheap and advantageous to purchase
Please look at the the following questions they will give you some idea of what factors are involved with calculating how long you need to stay in a house to have it make economic sense and begin to make it profitable
Calculate how long does it take to bring a return on investment|
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Dave Cohen’s Direct Line: 856.974.1891
Dave Cohen’s Direct Line: 856.974.1891
The office is located in Berlin, ... Atco New Jersey. My license is good anywhere in New Jersey, from Cape May to the statue of Lady Liberty .
This page coming soon: Purchasing real estate process and sequence: PERT, CPM. and Ganatt charts
