Where can I find entry-level housing?
First-time buyers often assume they can only buy a home in the least desirable neighborhoods. Many can't afford to buy a home that's equivalent to the one they're renting. But don't be disheartened. There are options for buyers who want to make a good first-time home investment.
One option is to buy on the outskirts of town. There's usually an inverse relationship between housing prices and the commute time to a major metropolitan area. The longer the commute, the lower the housing cost.
To maximize your resale potential, choose areas that are close to public transportation suitable for commuters and that have good prospects for future economic growth.
First-timers who are willing to compromise on the size of their home in exchange for a shorter commute should research neighborhoods located on the periphery of ones that have already experienced healthy appreciation.
Another possibility for first-timers who don't relish a long commute is to buy a condominium or townhouse closer to town. There's usually a significant price differential between single-family homes and condominiums. Be sure to take a close look at condo homeowner association fees and regulations. And try to buy into a project that has a high percentage of owner-occupied, rather than tenant-occupied (investor-owned) units.
First-time tip: Much has been written about the tremendous profits that can be made from buying a fixer-upper for a discounted price and renovating it. If you take this route, try to find a cosmetic fixer that can be completely refurbished with paint, wallpaper, new floor and window coverings, landscaping and new appliances. It's wise to pad your fix-up budget because renovation projects tend to cost more than anticipated.
Stay away from rundown houses that need major structural repairs. A house price that looks too good to be true probably is. Find out why it's priced so low before you buy it.
Buying a foreclosure is also touted by many as a way to become a property owner for a bargain price. A foreclosure property is one where the owners have been unable to make their mortgage payments to the lender.
Although profits can be made buying and selling foreclosures, dealing in distressed sales is not recommended for amateur homebuyers. Savvy investors who have bought and sold many properties are in a better position to distinguish a good deal from a lousy investment.
The closing: Keep in mind as you look for your first home that every homebuyer, even the wealthiest, makes compromises. The perfect dream house doesn't exist, not at any price. In most cases you'll be buying a home that's not as big or as conveniently located as you'd like. But remember, this is the first, not the ultimate, home you're likely to own. A good first investment will enable you to trade up later to another home that better suits your needs and desires.
Dian Hymer's column is syndicated through Inman News Features. Send questions and comments care of Inman News Features, 5335 College Ave., No. 25, Oakland, Calif. 94618.