Factors to Determine if A Home is a Good Investment

When purchasing a home, many people focus on finding the perfect property that fits into their present and future lifestyle. Yet you also should determine whether the home is a good investment to make.

A good investment will typically net you more than you put into the home at its purchase (and in subsequent improvements). It should also be the right house for non-monetary reasons to make your lifestyle easier and more comfortable, of course. Here are several factors to consider when determining if a home is a good investment:

How Long Will You Live in It?

For some people who are constantly moving around due to work or other life events, purchasing a house may not be a good investment because they will never spend enough time to live in it. You may have to decide if owning the house will make a good investment when it is not in use. You may find that renting out the home can bring in enough income to justify the purchase. It all just depends on the local market, and your personal situation.

How Much Will You Pay for Maintenance and Upkeep?

Older homes with big issues can be serious money hogs when it comes to trying to maintain them. From an inefficient heating and cooling system to a roof leak that refuses to be fixed no matter how often you call a contractor, these problems can seriously impact your finances.

You have to figure out whether the amount you spend in maintenance for the house will be less than what you gain back from it — whether it is an increase in home value where you can tap the home equity, or it is an increase in the sales price when placing it for sale. There are times when purchasing a newer home or choosing a custom build may be a better investment for your finances than sinking money into a home that needs to be constantly repaired.

How Much Value Can You Add with Renovations?

People who are looking to invest in renovations for their home will need to decide whether the renovations, additions, and remodeling projects will pay off with higher bids when placing the house back on the market. By adding the right renovations and repairs, a homeowner may be able to bring in more money when selling than they spent on the home initially.

Be advised that some homeowners will seek to add too much to the home – this can price the property out of its chosen real estate market segment. While you may want to increase a home’s value as much as you can, placing in too many features can lead you to have a property that is priced too high to other comparable homes in that specific neighborhood. You may find the house sits on the market without any buyer interested in seeing it until the price is lowered to a more reasonable rate.

Is the Location Desirable?

Location matters to both home buyers and sellers. A home located in a great neighborhood that has appreciated in value can bring in a good profit to the seller. Meanwhile, home buyers tend to want homes located in great neighborhoods near schools, work, dining, entertainment, and other amenities. By researching the amenities of a neighborhood and any future plans for development, buyers can better predict if the property is a good investment to make.

Homeownership is one of the biggest, life-changing events that can happen in your life. You’ll want to make sure whether it is the best investment to make for yourself and your finances.


Guest Writer | Preston Guyton developed a love for the architectural landscape of the Lowcountry, and switched gears to embark on a career in Real Estate. Always a lover of creative design, Preston began drafting his own projects.