Unlike renters, home owners who secure a fixed-rate loan can lock in their monthly housing costs and make prudent investment plans knowing these expenses will not increase substantially. Home ownership is a highly leveraged investment that can yield substantial profit on a nominal front-end investment. However, such returns depend on home-price appreciation. It does, however, have a price. The authors recommend that prospective buyers spend a few months investigating a community.
Many people make the mistake of buying in the wrong area.
Ultimately, the decision should be based on individual needs, the extent of work involved and what will add the most value. The highest paybacks come from updating kitchens and baths and, most recently, adding on a home office, according to the survey. Verify actual potential by checking local zoning restrictions prior to purchase. Sometimes, local zoning codes restrict rentals of such units so be sure the conversion is legal first. As for the return on your investment, home-price appreciation is hard to predict.