Finding a home: A house – your home or an investment?

Properties are bought and sold every year for different reasons.  Some buy with the view of a house lasting a lifetime, with the property becoming their family home.  Others, although turning it into a home also, think of it much more as a short term investment they can on sell a few years after purchase.  Of course there are various permutations of these options, but it’s beneficial to look at what you really want out of your property.

A home

For most a house is their home.  Most people desire their house to be a warm, comfortable environment where they can live and grow.  But if you’re planning on sticking around don’t forget that your home is still your largest asset. 

You still have to think about any financial gains or growth.  Of course sitting on your home can mean growth in property value over time.  However, you still need to consider what you are doing to the property and whether you are adding value.

Some may say your home is your home and you should do to it whatever you want to make it as comfortable and suitable as you want.  And in some cases this can hold true.  But situations change, houses are being held onto less and less these days and at some point when you come to sell you don’t want to be looking at a loss. 

Whether you are putting in an extra bedroom, a bathroom, or making an open plan living dining area, you should still do your research on likely gains.  Weigh the cost against any potential increase in value.  If you need an extra bedroom for a growing family for example, is it going to be better, in terms of cost effectiveness and return on investment, to extend or reconfigure your current layout?  You might even want to consider moving to a new home entirely if that proves cheaper.

An investment

When buying a property that you will live in but that you mainly see as an investment, there is one thing on your mind – returns. 

Of course you need to stick to the basic rules.  Research your potential market, figure out what they want and expect and what they are willing to pay for this.  Don’t over capitalise.

But if you are going to be living in the house, don’t forget that this is going to be your home for a while.  Don’t leave yourself short, be it renovations, comfort or styling, just because you think you can make a little extra money.   

Instead of making changes that solely suit your lifestyle or that of your buyer, perhaps compromise and make changes that you will get the benefit of but that will also be a positive feature when it comes time to sell.  If putting in a new kitchen for example, your buyer may not want or pay for high spec appliances and work surfaces.  However, if you feel you want a better oven and rangehood for example while you’re living there, then it may still be worth paying the extra.  It’s a toss up between your comfort and what your next potential buyer is likely to pay.