Page 32 - EQ Mag-2019

FIRST-TIME HOMEBUYERS RESOURCES (cont d)
FIRST TIME
HOMEBUYER
TURNED INVESTOR
By: Vanessa Montanez
or most of us, buying a home will be one of the
most significant investments ever made. Why,
Fbecause we are using a large amount of money
to purchase a home. Why not use our
investment to make money while we
are living in the home. Most homes “Equity is the
appreciate over time building equity. difference
“Equity is the difference between the between the
market value of your home and the
amount you owe the lender who holds market value of
the mortgage.” (Weintraub)
your home and the
Let’s use an example. amount you owe
Sales Price of the home was $350,000
bought in 2015. The value of the the lender who
home today is worth $434,000 holds the
appreciating about 6% per year. The
home essentially gained 84,000 mortgage.”
dollars of equity or appreciation just
sitting idle.
What happens if you decide to sell the house? You can
use the equity to move up into a larger home or
reinvest your money to purchase more homes.
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Using equity wisely is not an easy task because one has
to be smart with how to reinvestment that equity to
build one’s wealth.
I started with my first starter home, and
it was a diamond in the rough. The
house was bank owned called an REO
(Real Estate Owned) in 1999. The sale
price of the home was $222,500. At
the time the home was a bargain
because of the area. The house was in
a prime location. It was a four bedroom
and two bathroom home with 1800
square feet of living space. The lot size
was average in the area of 7,500, with a
detached garage. The house needed
repairs. The bathrooms were
remodeled in the 1970s. The kitchen
was outdated with linoleum flooring,
particle board kitchen cabinets. Do not get me wrong
the house was habitable but not appealing to most
buyers. Hence, it was a good buy. Make no mistake
buying a home is the largest investment one will ever
make but use common sense and a long term strategy
to make money. It took a few years to remodel my
home. Little by little my projects came to life because I
wanted to continue saving money and think about how
I could reinvest the equity to buy another home.
The key to investing and buying real estate is not
buying the perfect home. I usually buy the diamond in
the rough, which means the ugly home in the
neighborhood
that has
potential. I
look for the
and the layout
opportunity
of the home. If
the floor plan, I still own my first home. The home gained alot
structure, and of equity, and I was able to pay down the debt
foundation are
of the home. I now rent out my home and have
reliable, then I
look at what a line of credit that I use for investment
purposes. From this home, I was able to buy
are the turnkey units and my move up home. Owning real
homes selling estate is a wise investment for most of us. It is
for in the area.
a tangible investment you can see, touch, and
Most buyers feel. The key is to buy low, a fixer that has
want to live in potential, and buy with a long term strategy that
a nice Vanessa Montanez makes sense for you.
neighborhood that has excellent schools, low crime
rates, walkable with amenities in the area or relatively
close. If you are looking at a home that is priced the
lowest ask yourself why? What is wrong with the
home? Can you overcome its challenges? As an
investor looking to make money understand no home
is perfect and expect the unexpected when investing in
a home. Most homes have issues that are not visible
to the naked eye. It is a wise choice to get a home
inspection once the offer is accepted as soon as
possible. “The home inspector describes the condition Buying a home will be one of the most significant
of the home at the time of the inspection but does not investments ever made. If you are not afraid of work,
guarantee future condition, efficiency, or life construction projects, and getting your hands dirty
expectancy of systems or components.” (“Home than real estate investments might be for you.
Inspection”) A home inspector determines the
condition of the home while an appraiser determines
the value. They serve different functions.
The million dollar question is what are you going to do
with the money if you sell the property? I say it
depends on you. I look at every home as an
investment to make money and use for my retirement.
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