In today’s market you should certainly consider not only whether or not you can afford the home (down payment—10% or so, insurance, maintenance, etc) but it is critical that you are comfortable with the stability of the market in the area where you are considering purchasing. Are property values still sliding, or have they stabilized? Do you plan to live in the home for the next 8-10 years so the market conditions overall have returned to a more normal state? Can you buy the home at an amount which you feel will not have you upside down (owing more than possible re-sale) on day one? If the home needs repairs do you have the funds readily available to handle them or can you do them yourself? Are you sure?
Lastly, please tell me you are looking for a house for shelter, not a house as an investment. On the surface the question above gives the impression it is from an individual looking for a personal residence. I answered based on that assumption.
If you are very strong financially and want to invest in rental property for the long haul, then go for it—with caution. Keep in mind that everything written above still applies.
Answer Submitted on Mon, Mar 23 2009
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