This has been on my mind for a while: Two ways to hedge against or reduce the potential for problems in a tough market, today and for the future.
#1) Buy something that you can improve.
Not a disaster, but a home that is priced right for the condition of the home.
If you are a do-it-yourselfer, have some home improvement skills and don’t necessarily mind some effort and sore muscles, locate a home that may need some improving.
Benefits of improving a home:
- saving tens of thousands of dollars over time
- gaining more skills
- obtaining pride of ownership
- realizing sweat equity
- making improvements that suit your style and tastes
- dedicating enough time to do it right (been there)
- costly mistakes (been there)
- poor budgeting & planning (no comment)
- marital tension (been there, been there again, and will in the future).
- it costs more than you think (can’t discuss this on a public blog due to potential for more marital fireworks, please forgive).
- throwing in the towel and hiring contractors (never done this, but have threatened so by yelling curses out towards the sky or at snickering neighbors peering through their kitchen window as I work in the mud and rain; cursing particularly after nearly cutting off my left forefinger and middle finger (Dr. said very important to save that finger for I-5 freeway discussions with other motorists). Note to self: place blade onto drywall, not human flesh. Props to Swedish Med. Ctr. in Ballard. I digress.)
The advantages of sweat equity really do outweigh the challenges. Patience and perseverance will pay off.
#2) Buy the right location with the end game in mind (ie, life happens, so you may have to move).
Because housing is not necessarily a quick sale, as many are finding today, it is important to never lose “location” in the midst of your search.
Although location has been an cliche for so long, it really has lasted the test of time. Location means a lot of different things to people. It could mean reasonably close to employment, school or school district. Perhaps you prefer a newer development.
So, when the time is right for you to buy your first home or move up to a home that meets your needs today, then don’t be afraid of being patient enough to find the right house in the right location and getting your hands a little dirty. It can pay off handsomely and may put you in the drivers seat through market ups and downs.
Bonus: #3) Invest in Case-Shiller Index Hedge Fund
Bonus #4) Rent