There are a lot of unsure homeowners out there and I keep getting the same questions about what owners should do with their valuable assets. There is never a one-sized fits all approach, so it’s very difficult to answer these questions with a blanket statement. However, there are some creative strategies to explore for the current environment. Here are 3 reasons I think you should consider in selling your home today.
- Political Uncertainty
Boy isn’t this an obvious one? Although we all may have our own political opinions, there is no denying that tensions are high in the political scene of the United States. High tensions are not exactly the best environment for home value stability. With increasing pressure inside our own landscape and outside pressures from North Korea, Syria, and even Russia, it’s hard to tell how the buyers and other sellers are going to react. The less people want to buy and more people want to sell, the worse off our asset becomes. And political tension can cause uncertainty in these areas.
- Economic Uncertainty
I am no finance expert. I am a real estate expert. However, the experts in the financial sector are starting to question how long this 8 year bull market can really last. Aside from the political landscape, there are other concerns in the economic landscape such as the student debt crisis that are a cause for concern to homeowners.
This might be the most important reason to sell your home today. Right now, the average price per home in the United States is 1% higher than pre-recession highs. If you purchased your home anywhere between 2009 and 2015, you could have anywhere from 25 to 50% equity in your home. This would make your home by far the most significant resource you have. Given current interest rates being still relatively low, there are better places for this money to be than sitting below your roof.
Investing Your Equity
Okay, so you have been considering selling your home for a while now, but the problem is that you don’t know what to do next. You may not want to use your equity to buy a bigger and better house (we have seen how that could play out). But maybe you want to start focusing on building wealth, instead of living lavishly, financially trapped in your single family home.
FHA loans do not only apply to single family homes. You can get an FHA loan (in Michigan) for up to $530,000 on a fourplex (a four unit multi family). That’s a 3.5% down payment of only $18,550.
There are a few criteria that the Multi-Family must pass like the units must be attached and all under one roof, as well as you must live in the building for one year. However, with $530,000 to work with, you could easily build your own immaculate 4 unit complex.
If you were to build a 4 unit complex in the right area (in MI, for example, Oakland County or Downtown Detroit), you could easily get north of $2,000 per month for a two bedroom. The cost of running a 4 unit complex would be about $2,500 per month. So after collecting rent on 3 units and paying off your expenses, you would be in the black of about $3,500 per month. And you would be living for free!
After one year, you could move anywhere you would like and fill the unit. Maybe another fourplex?! Or maybe it will be time to retire and move to the Dominican on your $6,000 a month passive income.
Finding Your Dream Home
Maybe a multi-family isn’t the right move for you. Maybe you want to cash in your equity for your dream home.
Here in Michigan, we have a team dedicated to finding your dream home at MI New Homes. Vincent Venturini recently joined the Property Marketplace team. He is a former sales person at Pulte Homes and knows the market and new home buying experience as good as anyone.
Fill out the form below to get more information.