Barbara Friedberg has an MBA and a Master's in Science. She is a veteran Portfolio Manager, FinTech consultant, expert investor, and former university finance instructor. She is editor-author of Personal Finance: An Encyclopedia of Modern Money Management, Invest in Beat the Pros and How to Get Rich. She is CEO of Robo-Advisor Pros, a Robo advisor review and information website.
Additionally, she is the publisher of the well-regarded investment website Barbara Friedberg Personal Finance. Her work is found on U.S. News & World Report, Business Daily, Investopedia, Go Banking Rates, Investor Place, MSNBC and MSN Money, Entrepreneur, and many other places.
“Buying, although it's got a certain psychological benefit of owning your own home, financially, it may not be the best way to build wealth.”
Barbara and her husband are not newbies to the real estate market, having bought their first home in their 20s and 30s. It was while living in California and after having their daughter that they decided to move to another cheaper region.
The couple realized that their lifestyle would be crazy trying to work and raise a family in California, so they decided to move to the Midwest.
After selling their home for a tidy sum, they went house shopping in Indianapolis. To their delight, homes in Indianapolis were much cheaper than in California. Excited, they forgot the most important rule of buying a home: do your research. Struck by the relatively low real estate prices, they went all in and bought a beautiful four-bedroom home in a brand new community.
After two years, Barbara’s husband had to change jobs, which meant they had to move. Selling the home was not as smooth as they expected. No one wanted to buy the house. What they would have realized had they done their research is that locals preferred houses with a basement, and theirs didn’t have one.
The other problem they didn’t anticipate was Barbara’s decoration. See, she loves modern style decorations, so she’d decorated every room to her taste. Not to say, her taste is poor, but the decorating style in Indiana leans more towards traditional than modern. So her house was not the plum that she thought, given the area of the country they were living.
When they listed their house on the market, it did not get a lot of traction. Ultimately, they did end up selling the house two years after they’d bought it for a loss of $25,000.
Before you buy a home, do your research and understand the neighborhood well. Find out what are the must-haves for local home buyers. If everyone wants a house with a basement, buy a house with a basement. This will help sell the house faster when the time to sell comes. If you're going to sell in a certain region, you want to make sure the house fits in with the norms of the region.
Buying a home is an expensive venture, and so is moving. Don’t buy a home unless you are pretty certain that you're going to stay in that property or hang on to that property for five to seven years.
Unlike the stock market, which is quite volatile, the real estate market is much more stable and moves slowly. So unless you are planning on staying in a house for five to seven years, don't buy, rent instead. Buying a house and expect to sell it for profit in the next one or two years is very difficult.
Just because a house is cheaper than you expected it to be, does not mean that you should buy it. Consider all other factors of buying a home on top of the price. You may realize that it’s not a worthy investment in the long run.
When investing in a home outside of your area, be careful. Take time, think about it, do your research, and make sure that it’s the best thing to do.
If you're going to stay someplace for less than five years, rent. You don’t have to follow the so-called American dream to buy. Sometimes it’s more beneficial to rent.
Don't buy a home just because you are impressed by its grandness. Consider what's important to you in life. Consider if the house truly fits your needs putting in mind the future as well as your current situation.
Barbara has been working very hard on Robo-Advisor Pros and intends to continue to make the website the premier site to learn about Robo advisors. These are automated digital low-fee investment advisors. She believes that they can be a helpful tool for individuals to manage their money at a very low cost. Her goal for the 12 months is to continue to build that asset up to help people learn to build wealth, smartly and affordably.
“Buying is not for everyone. Whether you buy a rental property or own your own home, it will be a ton of work. Don’t be afraid to consider renting if you can’t handle the work.”