Many real estate advisers will tell you that if you do not plan on staying in a home for more than five years that you should consider renting instead, as homes are more of a long term investment. Usually, the purchase of a home requires about five years of residency to break even on the cost of purchase.
Though the longer you stay in a home the more equity you build and the better off you will be financially, there are some exceptions to the rule. Read on to find out.
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The property value skyrockets
Over the last few years, there have been many markets that are so hot, that home values seem to jump overnight. If you live in a market where homes are selling within days or even hours of being listed, then you are safe to sell.
Be careful if you do not plan to move far though, as this can come around to bite you in the butt when you become a buyer in a seller’s market. You may not be able to find a home as nice as the one you currently inhabit in the same hot market that you currently live as listing prices will be much higher than when you purchased not too long ago.
You also want to make sure you account for extra costs of selling a home like closing costs, and pesky capital gains tax.
The neighborhood is changing for the worse
Homes in bad and worsening neighborhoods are much tougher to sell. The old saying “location, location, location,” still rings true. A neighborhood that is becoming less than desirable to live in will cut your chances at making a profitable sell later on.
There are a number of different reasons why a neighborhood can become less desirable including new construction of things like factories, apartment buildings, unwanted businesses, etc. If a majority of residents are against land use action, and things like town hall meetings to discuss incoming buildings are getting heated, it just might be time to sell.
If something is going to bring down the value of your home you want to get out before it does.
You Just Don’t Love Living There
Money can’t buy happiness. This is true when you are in a home you truly hate or brings a sad state to your life. Don’t let your home bring you into depression, your mental well-being is worth more than the profit on sticking it out in your home. If you can afford to, you might consider turning the property into a rental and moving to the sunny side of the street.
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