Will Millenials Start Purchasing Property Online in Coming Years?

You can video chat with someone on the other side of the world. You can wirelessly charge your phone. Tell that to someone from a decade in the past and they would be shocked at how far technology has come. It’s only the beginning. What if, 10 years from now, it’s common to simply buy a home online once you’re ready to be a new homeowner? It’s possible today, but will it become commonplace tomorrow?

Advancing Real Estate Purchasing Technology

One of the main online real estate purchasing consumers are Chinese who are beginning to invest in the U.S. real estate market. Instead of traveling to the country, they use 3D virtual tours, video and online real estate value assessment websites to help them decide where and how to purchase both residentialand commercial property in the U.S. Websites such as the giant Auction.com has received millions in capital investment in recent years, partnering with Chinese website Juwai.com as well.

Are Real Estate Agents Threatened?

Looking ahead to the future, the real estate industry, and agents in particular, may be wondering what this means for their careers. Will their come a time when their knowledge will be viewed as outdated, old-fashioned and unnecessary? Will they lose their job to an automated online service that processes the transactions, leaving no room for them?

Why Online Real Estate Purchasing Still Has Far to Go

While investors from distant countries or even states may find online real estate purchasing helpful for their schedule, why buy a home online that you can visit in person? Millenials are not dense enough to think that buying a home is equivalent to buying a pair of shoes – online is definitely not preferred when it concerns the place you’re going to live and raise a family. While an online 3D tour might help you decide to visit the open house this weekend, it’s doubtful that it would cause you to plunk down a few hundred thousand dollars and sign your name to a 30 year mortgage without ever viewing it in person.

Also, there are a number of legal and financial steps that go into purchasing a home. Real estate agents earn their money. They educate people on the intricacies of the process, something that first-time millenial home buyers need. Not to mention, in most cases, the home seller pays the commission, not the home buyer. If anything, those who already opt to sell their homes without the help of an agent are probably the people who are going to take advantage of online services, but buyers may still prefer having an agent take care of the bargaining for them.

If there’s any generation tech-savvy and modern enough to take the leap and buy their home online, it’s millenials. But until a system arrives which walks them through the process step by step, explaining all details along the way, millenials are not impulsive enough to put their savings into an investment which may be the most important of their lives without viewing the property in person – at least, it hasn’t happened quite yet. The skill and knowledge of a realtor can’t be priced and can’t be ignored for first-time millenial home buyers. But when they purchase their second home? Maybe then they’ll take the next step.

Are You Buying the Right Income Property

Whether you’ve got extra cash to spare or simply aren’t a fan of the stock market, buying property with the intention of renting it out and making money can be a smart financial move. An income property can also help you diversify your existing investments, and if all goes well, it can generate a steady stream of cash while allowing you to build equity in something you can eventually sell for a profit.

While many people have great success with income properties, there are also those who wind up losing money in the real estate game. Keep the following factors in mind when deciding whether the income property you’re looking at is a smart investment:

Location

The location of your home can make or break your success as a would-be landlord. If you’re buying a property with the intention of renting it out year-round, make sure it’s in a desirable neighborhood with good schools and low crime. If your goal is to buy a vacation property, make sure there’s a nearby attraction, like a beach, ski resort, or lake, to help make it marketable. You can also try buying a home in a college town and renting it out to students. The key is to find a place where there’s a reason why people would want to rent it on a regular basis.

Age and Condition

Nobody wants to rent a property that looks and feels like it’s falling apart. You may be enticed by a lower price, but keep in mind that if you buy an older property in less-than-stellar condition, you may have trouble renting it out. Furthermore, you could wind up with a ton of maintenance and repair work on your hands, which means that whatever you save by buying a cheaper place could be easily wiped out by the amount of money you’ll need to put into it.

Real Estate Taxes

It’s not just your mortgage and maintenance you’ll need to cover with whatever rental income you generate; there are also property taxes to consider. In some areas, real estate taxes can add upwards of $1,000 per month to your overall monthly payment. When buying an income property, make sure you know what you’re getting into tax-wise, and make sure rents in the area are high enough to allow you to cover your costs. Also, do some research to see how often real estate taxes go up in the area. Your taxes may be reasonable now, but if the town you’re buying in has a
history of hiking property tax rates year after year, you may want to look elsewhere.

Accessibility

If your plan is to hire a management company to handle the day to day maintenance of your property, then you probably don’t have to worry about how accessible it is to you. But if you’re planning to do all the work yourself, make sure the property you buy is easy for you to get to. Ideally, it should be close to your primary residence, your place of work, or both. This way, if you get a call from a tenant demanding repairs, you don’t have to drive for hours just to fulfill your obligations as a landlord.

Under the right circumstances, buying a property to rent out can be a great way to generate income. Just be sure the property you choose makes sense from a financial and logistical perspective before you sign that mortgage and hand over your down payment.

Starter Home or Forever Home

Buying a Starter Home vs. a Forever Home: Weigh the Pros and Cons

If you are preparing to invest in your first home, you’ve probably had the discussion with your significant other or another trusted family member or friend: should you go big or go home? If you rephrase that question, it may sound like “should you fork over the cash for your dream home, or should you settle for a small beginner’s house?” Either way, you’re technically going “home”, it’s just a matter of how big your mortgage will be and whether or not you should throw away your moving boxes or save them for a few years.

Many adults struggle with the debate over purchasing a starter home or a forever home, but most of time it comes down to money. Unless you want to take out title loans, your best bet is to save and purchase what you can afford. If housing prices are high, your credit is less than perfect and you don’t have a large down payment, starter home may be your choice. If the housing market favors the buyer, you have excellent credit and the cash and monthly payment capability to make your forever home yours, maybe your focus is different. But don’t forget these additional pros and cons, questions and answers when making your decision.

What are Your Family Goals?

If it’s just you, or just you and your dog, or just you and your partner, you might only buy a home big enough for your small family to fit comfortably. But what are your goals for the
future? Do you want to have children? If so, how many? Do you anticipate an aging parent or other loved one may need a place to stay? If in the next five years you’re going to need more space, it might be better to look beyond the current square footage of the homes on your list, even if it means expanding your budget. It takes a lot of time and work to both buy and sell a home. If you’ll have to repeat the process in only a few years? Maybe it’s best to compromise between starter and forever home and purchase a middle-of-the-road property you can see yourself living in for at least 10 years.

Is This Your Starter or Forever Neighborhood?

Many people only look at the home’s specifications when determining their like or dislike, but consider the surrounding neighborhood as well. How far of a commute is it to your current job? Do you anticipate changing job locations in the next few years? If so, will that drastically change your commute time? If you have children or plan on having them in the future, do the local schools reach your standards? Is there a gym, grocery store and park nearby for you to enjoy? While these factors are important in both a starter home and a forever home, they may determine whether or not a home fits into either category, or no category at all.

Can You Find a Home with the Possibility of Expansion?

The best of both worlds? Finding a home that fits your space needs and the confines of your budget today, but allows you the opportunity to expand in the future. Instead of saving money to move and start your house hunt all over again, you could find a home you fall in love with then use your savings to finish the basement, add a room over the garage or put in a swimming pool over the next couple of decades. You could end up with a forever home, even if it doesn’t look like one the moment you buy it. If you are considering a renovation or expansion project home, make sure to review local building codes and the plot and plan of the home before you count on this as an option to be sure your dreams can become reality at some point in the future.

Benefits of Sticking to a Starter

Buying a starter home lets a new homeowner experience the process for the first time, from placing an offer to receiving their first set of house keys. It’s an exciting journey, and it’s an educational experience. New homeowners can learn what they like and don’t like about their recently purchased home and decide what they will do differently the next time around. If a starter home is cheap enough, it’s also possible for some to retain the property for rental income instead of selling and using the future cash flow to build equity and fund their dream of a forever home in the future. Starter homes are most likely lighter on the wallet as well, allowing younger homeowners to shed college debt and get stared on their retirement savings instead of wrapping up their entire income in a mortgage.

When Should You Take the Chance on Your Dream?

Obviously, you should not buy a home you cannot afford. You will set yourself up for a high level of stress and possible foreclosure. But in some cases, you don’t have to look for the cheapest house on the market if other areas of your life are coming together and you foresee job security in a reliable industry. Here’s the main thing to focus on: if the difference in price between your starter home and your forever home isn’t that large, it may be worth it to make the larger investment now. You want to have time to spend in your forever home, not wait forever to find it. When you spend money on future improvements, if any are even needed, you get to enjoy it, not simply look forward to the day when you can sell it and hopefully score a profit. You can raise your family and keep your memories intact under one roof.

Only you can be the judge of whether you’re ready for forever, or if it’s best to work your way up the homeowner ladder. Consider each perspective carefully before deciding – purchasing a home is one of the most life-changing financial decisions you can make.