Owning my first home

[PSYH]

Hey guys, well I'm starting to seriously look into buying my first home. It's a huge commitment and I've done some research on my own, but I'm not at the stage where I should consult a Realtor and waste his/her time yet, so I figured the next logical step is to ask other home owners about their experiences.

Please share anything from the process you went through, to home maintenance, to pitfalls/cautions, to opinions on condo vs house, to any sage advice; etc. – basically what I'm really looking for is personal experiences that you'd like to share (good and bad) that would help me in buying my first home, but general advice is welcome as well.

Let's try to keep this thread serious and on topic. Please take the time to shower me with your collective wisdom and don't be brief.

[BocaIvan]

I'll keep it short, stay out of associations if you can. House < Condo. Get a really good home inspection, 2 if you can.

[GiGGaplease]

dont buy a house that you cannot afford if youre laid off, dont want your house to be foreclosed..just something coming from a bum so dont take my advice seriously.

congrats...thats a huge step.

[Black Betty]

The best possible advice I can give you is do DO YOUR HOMEWORK. You may get some good advice here so that's a good start. Read and watch everything you possibly can on it. Be informed about everything from how escrow works, to how much taxes will be, to how home ownership will help you tremendously on your income taxes, to what your HOA can and cannot do for (and to) you, how much you should expect to pay for routine maintenance, how much homeowners insurance will cost you and what it covers (and doesn't). Check out neighborhoods and how much property values have increased (or decreased) over the past 10 to 15 years. If you have kids check out schools, crime statistics, etc. See how far it is to the nearest police and fire stations and what their response times are. Definitely talk to the people in the neighborhoods you are interested in. Introduce yourself as someone looking to buy in the neighborhood and ask them their pros and cons. As far as from an investment standpoint, don't buy or build the biggest nicest house in a neighborhood. Find a neighborhood where the house you can afford is on the lower end price wise, it will help your property to appreciate in value faster. Check for flooding. Ask the neighbors if it floods. Check for noise both day and night, on a weekend if possible. I live in a quiet neighborhood - except for Friday, Saturday, and Sunday nights when I can distinctly hear (and sometimes feel) the race track and drag strip about a mile away. If you are building, supervise your builder every possible moment you can - before work, at lunch, and in the evening. Just a few thing off the top of my head. I'll put more as I think of it.

Best of luck and congrats.

[g37rider]

I've been through 3 properties and made money on all of them. Just remember this: Location, Location, Location.

If you're going to buy a house, buy one in a city with an excellent school district. Property values in in communities with good schools don't take as much of a plunge during a bad market. Also, pick a house that hasn't been renovated to sell, as the seller surely expects top dollar. Find one that needs cosmetic work, but has good plumbing, solid roof, and is structurally up to code. A good example would be a home owned by an elderly person.

If you're thinking of a condo, you'll need to do a lot more homework. Homeowner's associations can be a nightmare. Get a copy of the handbook for the complex you're interested in and read it thoroughly. Also ask for financial statements to ensure the association has enough savings for unexpected issues, e.g. new roof, plumbing re-pipe, structure repairs, etc. If funds are mismanaged, expect hefty assessments whenever something goes wrong (these can break your bank). Also, pay the complex a visit during different times of day and days of the week (weekends too) so you can get an idea of the type of people who live there and their behavior. Lastly, find out the ratio of homeowners actually living in their condos vs those who rent their's out. More renters than homeowners usually spells trouble.

Again, location, location, location. I'd rather own the biggest pile of junk in the best neighborhood, rather than vice versa. It's easier to fix up a house than it is an entire neighborhood.

[PSYH]

Thanks black betty and g37rider for your information, those are the kind of responses I'm looking for.

I'm definitely leaning towards a house rather than a condo. The whole maintenance fee thing alone is not something I want to pay (especially along with a mortgage) and they fluctuate (usually increase) more than they should. There are other reasons why I want a house, of course, but I don't want to go off topic.

I'm also wondering what the thoughts are on older houses, especially ones that are over 30 years old. I understand location is important, but I'm not so sure about "owning the biggest pile of junk in the best neighbourhood".

Most of the good neighbourhoods (with houses that I can afford) have houses that are easily 30+ years old and honestly... I'm not so sure if the structure of those homes are built to last that long. My boss recently moved into a bungalow (40+ yo) in a really good neighbourhood, only to find that insulation is inadequate and consequently had to spend $$$$$ on ripping out all of the exterior-facing walls to redo all the insulation. He didn't like the "cosmetics" as well so he took the opportunity to reno the whole house. Like, wow, that's easily throwing another $50k into the house. I definitely cannot afford a fixer-upper of that degree.

In addition to that, most homes built 30+ years ago have very "tradition" layouts which is completely the opposite of what I'm looking for – e.g. open concept floor plan and closet space (which is surprisingly a rare thing with older houses). And most of those don't have garages. I think I want (need?) a garage.

And can you even look up somewhere online for info on good schools, crime stats, property value changes, etc.? Or is that something I have to consult a Realtor...

[da mayor]

i looked at 26 houses before choosing one. It's a few weeks before I'm finally closing but it was worth the wait to find a home on a cul-de-sac.

Jus tmake sure what your needs are for a home, I wound up with a custom ranch that I never thought I would do but it fit all my needs -- basement, garage, nice size driveway, in a very isolated block

[g37rider]

Psych, both houses I've owned, including my current house, were built in the 1930s, as are most of the homes in my town, and the average individual income in this town is in the six figures. Older homes were built to last. What ruin the structures of old homes are shoddy modern additions not done according to code. Generally the only major repairs houses need over the years are to the electrical and plumbing systems, and roofs.

The reason why one would buy the "biggest pile" in the nicest neighborhood is simply because the expense you spend in renovating the home, you get back 2-3 fold in the end, especially if you learn how to do some of the renovations yourself, or have friends in the construction industry to give you a break on costs. Obviously the "biggest pile" statement is an exaggeration, but the point I'm trying to make is that choosing a prime location is essential to your investment. I know so many guys with beautiful, recently built homes such as you'd see in a magazine, but they've lost over half their value in the last 3 years and they likely will never see a profit. Why? They along with many others were simply interested in a nice, big, brand new home at an affordable price. Location to them was secondary in their decision and now they're miserable. My small, 1400 sq foot, 73 year old house will easily sell for 20% more than I paid for it in 2004. It may not be nice enough to be in a magazine, but when I sell it in 10 years, I'll have plenty of profit, enough to buy another home in cash. ;-)

Looks like you're looking to buy in Toronto Canada? I have a good friend who lives in Kelowna. I'm not sure about Toronto, but in Kelowna the philosophies tend to be a bit different. The community is relatively new and there are new developments constantly being built, so new buyers tend to be attracted to newer homes. The problem is developers pinch pennies and use cheap materials and incompetent contractors, so you're left with a myriad of problems to deal with, more than you would buying an older home.

[solopresident]

in the same boat.

[PSYH]

Unfortunately, my income is nowhere near six figures... and fair point about an older house being arguably better built, but it still doesn't change the fact that the layout of those homes aren't exactly "fitting" with what I'm looking for. I guess you could also argue that I won't know until I've lived in one... but let's assume I do know to simplify things. How did you make your home work for you? What condition was it in? Did you have to do much to it?

In Toronto (or GTA), all of the new developments are in the outskirts (at least 1 hour away from downtown) and they're usually HUGE houses... huge, cookie-cutter shoe boxes. Thankfully those do not attract me one bit. Not convenient at all and I can't afford them anyway!

[PSYH]

Originally Posted by da mayor

i looked at 26 houses before choosing one. It's a few weeks before I'm finally closing but it was worth the wait to find a home on a cul-de-sac.

Jus tmake sure what your needs are for a home, I wound up with a custom ranch that I never thought I would do but it fit all my needs -- basement, garage, nice size driveway, in a very isolated block

Did you jump right into talking to a Realtor and started looking at houses or did you do a lot of the homework yourself beforehand?

[g37rider]

Well, after doing our homework and determining the neighborhoods that would yield the best investment returns as well as keep us safe and at peace, we spent 10-12 months for searching for our first house that fit our price range and expectations. Unfortunately finding an affordable home in a prime location meant we really had to lower our standards. We found a home that was owned by an elderly lady and extremely well maintained, but it was very small and there was nothing modern about it. The last renovation it had was in the early 70s. However, the neighborhood was great and most of the homes on our street were much larger and spiffier, so we spent ~$20k in minor improvements (central air, windows, Spanish tile roof, paint, refinishing wood floors). The house was transformed into a nice little Spanish style home and in 3 years we doubled our money. With that profit, we were able to put a hefty down payment on a larger house (still small, but in a very nice neighborhood) that already had a significant renovation in the late 90s. We invested another 15K in that and it's now worth 20% more than we paid for it.

We would have had no success had we not done our homework on locating the best neighborhoods. Realtors often will tell you anything to sell you a house, so you have to do your own research. Generally speaking, you want to live in a neighborhood that's been sought after by people with money for at least a decade. Homes in those areas don't depreciate much even in a down market, simply because there are always wealthy people moving into nice neighborhoods.

For me, getting a return on my investment in a home is the most important. Most of us who are under 50 need to take a mortgage to buy a house, so not only are we stuck paying the loan for 15-30 years, but we're also paying the bank a nice piece of change in interest. There's no way in hell I'm losing out on the deal, regardless how perfect the house is.

Originally Posted by PSYH

How did you make your home work for you? What condition was it in? Did you have to do much to it?

[elite]

This should be a sticky! Quality material in here guys. This is what forums were made for.

[DrJones]

OP.... PM me if you have any questions. I manage a Bank and I have a full-time Mortgage Lender who works for me.

[CHI-TOWN G37]

Location as has been said is key. My town was voted the best city in the USA to raise children in Business Week magazine this year and our property values have consequently held up very well because of this fact.
Don't expect to see big appreciation any more as those days are long gone, so buy a house you are comfortable to live in now and for at least a few years. Don't let an older home scare you at all, but make sure to check the mechanical systems as these are the pricey fixes. My house is 60 years old and built like a tank and blows away anything built in the last 20 years. I added 1600 square feet to this home ten years ago with no regrets. I'm an architect so I can make these kind of staements with at least some authority

If you need advice on something technical just send me a PM and I'll help you where I can. Good luck!