Do you want to buy a house but aren't sure that you'll live in it for more than a few years? While the traditional thinking is that you should plan to live in a purchased home for many years, there are a variety of ways to make a short stay work to your advantage.
What are some of these ways? Consider these ideas to maximize your return on a short investment.
1. Make It a Rental
You don't have to live in the home for many years in order to own and make use of it. Why not purchase one that you can turn into a rental unit when you move on? A rental property is a great investment in the long run, and you don't have to live anywhere near it in order to make money from it.
2. Boost the Down Payment
The more you put into a down payment, the lower your mortgage payments will be. Even if you can afford higher payments, this is important if you plan to sell soon. That's because mortgage loans are designed to charge more interest and repay less principal at the beginning. Knowing this, the lower your mortgage payments are, the less interest you'll lose out on.
3. Negotiate Closing Costs
Aside from the up-front interest built into a mortgage, closing costs are the other big financial hit when you sell early. You can avoid losing too much money on these costs if you negotiate them more assertively than other aspects. These costs are usually on the table, so you have some room to maneuver.
4. Upgrade the Home
If you plan to sell relatively soon, you won't have time to build up the equity organically over many years. Instead, make plans to boost its value in other ways. You might finish the basement, add a bathroom, update the outdoor entertainment areas, or modernize the kitchen. Any of these medium-sized renovations would likely add thousands to the home's selling price.
5. Don't Overbuy
If you may lose some money on a short-term transaction, avoid spending too much on it. You can get a great home that you'll enjoy for three, four, or five years without buying the top-of-the-line model. When you opt for a more modest investment, closing costs will be less, mortgage payments will be lower, interest will be less, and you won't have as much to care for or renovate during your stay.
Even if you can put into practice just one or two of these tips, you'll be in a better place when you sell the home in a few years. And then you can move forward with your next home plans, whatever they may be. Make sure to talk to a real estate professional when you want to buy a house.