When Aisha Thomas, first runner up in the BLACK ENTERPRISE Own Your First Home Contest, went house hunting she wasn’t just looking for a place to live, but for an investment. Her goal: live in the home for five to seven years and then possibly keep it as rental property.
But finding something that was affordable was a challenge. “In my search for a home, the difficult part was finding something affordable for my situation in a relatively decent area,” says Thomas, who is also a real estate agent. “I overcame that by moving out of my comfort zone (which was the city of Detroit).”
Tips for choosing a home that will also be an investment
1. A house can be an investment. “Focus on buying in the path of growth and holding if you view your acquisition as a pure appreciation play,” says Kwame Jackson, Chairman of Legacy Holdings L.L.C., a New York-based private investment firm focused on real estate development, acquisitions, and leveraged buy-outs.
2. Check out the neighborhood. “Look for neighborhoods that are experiencing gentrification,” says Jackson, “as well as growth in supporting retail, future government plans for expansion, zoning, and entitlements.”
3. Consider family friendly areas. If selling your home is in your plans, remember that many prospective buyers will be seeking family friendly areas. “Consider schools, safety, and crime rates,” Jackson says.
4. Price matters. “Never buy the most expensive property on the block,” advises Jackson. “You want to allow yourself room for price contraction or appreciation if you may be in a so called ‘bubble.’”
5. Think ahead. “Always think of an exit strategy,” says Jackson. “What is your time horizon for living in this home and what are your goals for appreciation?”
6. Look at the home from the seller’s point of view. “If I were only going to be a short-term owner, I would think of the next possible buyer right away,” says Jackson. “Could I rent this property?”
7. Decode Zip Codes. Conduct a zip code search on the Internet to find out more information about the neighborhood. Try Yahoo! Real Estate at: http://realestate.yahoo.com/re/neighborhood/main.html
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