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My wife and I have been shopping around for a home. The biggest factors to consider seem to be the size, how nice it is, the price and the location. Since we're not made of money, we can't afford to have the best of them all. I'm curious which of these scenarios you might choose. Bear in mind, after all is said and done, we won't really have the motivation or money to do much in the way of fixing the place up.

1. Big townhome. Beautiful on the inside. Affordable. Location is just okay.
2. Standard townhome. Needs some work. Affordable. Location is good.
3. Decent sized single family home. Needs a lot of work. Affordable. Location is good.
4. Decent sized single family home. Inside is nice enough, but needs some work. A little more than we can afford. Location is good.

If you have children, determine which area has the best schools. If they're all in the same school district, my first instinct would be to say #4. But, before going with #4, make a big effort to save a little more so that home isn't 'a little more than you can afford'. My motto...always live below your means. That said, good luck with your decision!

How talented are you at home repairs?
That should tell you weather or not you should go that way.

Children? Schools should be a big consideration too.

Good luck what ever way you go.

FunkHouse9 wrote:My wife and I have been shopping around for a home. The biggest factors to consider seem to be the size, how nice it is, the price and the location. Since we're not made of money, we can't afford to have the best of them all. I'm curious which of these scenarios you might choose. Bear in mind, after all is said and done, we won't really have the motivation or money to do much in the way of fixing the place up.

1. Big townhome. Beautiful on the inside. Affordable. Location is just okay.
2. Standard townhome. Needs some work. Affordable. Location is good.
3. Decent sized single family home. Needs a lot of work. Affordable. Location is good.
4. Decent sized single family home. Inside is nice enough, but needs some work. A little more than we can afford. Location is good.

Given these options, I'd pick number three. Townhomes, in my opinion, are not a "real" real estate. Number 4 is bad option b/c you should NEVER buy something you can't afford, even when the economy is good. TRUST ME-YOU NEVER KNOW WHEN S*IT'S GONNA HIT THE FAN. I remember you have kids, right? Get a home that you plan to improve over the course of the next ten years. DO WHATEVER YOU HAVE TO to keep you mortgage paid on a timely basis. Let that value increase every year.

Just my opinion, of course. I don't have children, but I am a homeowner familiar with the real estate industry who's married to a contractor with a family history full of real estate transactions.

I'm not trying to be an ass, that's something I'm good at without trying, but as f**ked up as the economy is if #4 is "a little more than we can afford", why is it even an option? Maybe it's just me, but if it's $1 more than I could afford I'd run in the opposite direction.

wLs

Go with what you can afford and that you would feel happy in if you never got to move again. Make sure you would be OK with sending your children to the schools in the area. Make sure you are able to make the updates to the house that it needs (or can afford to pay someone to do them). There will always be more repairs than you can see on the surface and things like roofs, hot water heaters, furnaces, etc. have to be replaced, and those things don't like to give you a lot of warnings. Make sure that you have the TIME to make the updates, in addition to the money. Don't buy it just because you can. Buy it because you WANT to live there.

ONLY ONLY ONLY ONLY ONLY buy what you can afford--maybe even less. Being a homeowner is WAY more expensive than renting. Did I mention to ONLY buy what you can afford???????

I would splurge for a mold test, a radon test, and get yourself a DAMN good inspector.

LIPH wrote:I'm not trying to be an ass, that's something I'm good at without trying, but as f**ked up as the economy is if #4 is "a little more than we can afford", why is it even an option? Maybe it's just me, but if it's $1 more than I could afford I'd run in the opposite direction.

ditto...and go for a single family home. We live in a townhouse and have had enough.

I'm all for single family homes, but as the others have said; scratch #4 off right now. Your emotions are probably the only reason there is an option that you cannot afford listed. Even with the new home buyer credit, stick with what you can afford.

Now, as for homes that require repair... they ALL require work to be done. If you see a few minor things, you can bet there are other things you don't see. In my first house, I had what I call the $1000 dollar Summer the first year. Refrigerator broke, garage door broke, plumbing burst; each item was $1000. In this house, it was the master shower having a crack in the floor. For that reason, I would bump #3 off the list as well.

As they say in real estate; location, location, location. If things fell apart next year, would you be able to resell the unit? In a good location, probably so even without any improvements.

In this market, there are a ton of foreclosures and short sells going on. Find a good seller's agent who can help you find these.

you need to look at the longer term in this market. you need a house you can live in for at least 5 years and you should probably consider 10 years....

You are including taxes and insurance in your calculations, right? I don't know what they're like in your area, but ours come out to $350 per month- and that was after switching insurance companies. You may want to look into the insurance rates for the areas you're checking too- you may find that your car and home insurance is lower or higher depending on the area.

Are you looking at good location for you, or good neighborhood? Remember- that's one thing you can't change about a house.

Are you looking for a forever home, or are you looking for somewhere to live until you have kids/move to where ever/build your dream house/retire?

AlbatrossFlyer wrote:you need to look at the longer term in this market. you need a house you can live in for at least 5 years and you should probably consider 10 years....

This is exactly right.

I am closing on my first home tomorrow. I dont have to tell you, this economy is the time to buy. I bought this home 1. for that reason, and 2. because I know I will be in there for at least ten years and will be able to make a great return on my investment when I decide to sell ten years down the road after the economy rebounds.

With the price my home was originally listed at, and what I purchased it for, and some calculations for ten years down the road, I figure that I will come out $50,000+ when I sell ten years from now. (NJ is a very expensive market for real estate, and I am in a great location IMO).

I may be eating mcdonalds for a year, but with the $8,000 tax credit (Which I am filing for now, I filed for an extension for the 2008 return), plus my graduated pay scale at my job, the second year of owning this home and beyond will be easier and easier for me. But the first year will be tight with money. Which is why I agree with what Mal said. Do not buy something you think is a little more than you can afford. There are so many extra costs that come in to play that you never even think about (as mentioned above by surfpirate). You need extra cash in the bank for things like that. I found out the hard way, during my inspection they found mold in the attic and the roof needs to be replaced. I got a bunch of money from the seller for that, but if it was never caught by the inspector, I would be on the hook after closing......so get a good inspector.

Good luck, and let us know how it turns out. Don't forget to think bout resale, because no matter where you are, the housing market has tanked.

Oh, and FYI, this market is so tanked, my mortgage payment will only be $300 more a month than my apartment rent payment
Buying now is kind of a no brainer.

LIPH wrote:I'm not trying to be an ass, that's something I'm good at without trying, but as f**ked up as the economy is if #4 is "a little more than we can afford", why is it even an option? Maybe it's just me, but if it's $1 more than I could afford I'd run in the opposite direction.

#4 is only included because people keep sending us things a little out of reach. We have enough savings that if we're willing to dig into them for the first year, we should be back into the safe zone in a year or so, barring problems. But, we are not really considering this option.

surfpirate wrote:One of the first "gotchas" I encountered when I bought my first non-townhouse home was how many WINDOWS there actually were and the subsequent window treatments needed. Heck, even cheap pull down blinds added up when I got around to counting the windows.

Then a hundred other small "I never needed or thought of that when I lived in my townhouse" things popped up.

Lawnmower, edgers, wheelbarrel, rakes, shovels, garden hose, etc. general outdoor gardening.

Towels, bathmats, etc. Suddenly we had more bathrooms and all were bare.

Trash cans, indoor and out. In my section of Gaithersburg we have to pay for trash service independently ... it's not part of the county service.

Tools. I always had a small amount, but suddenly I was finding I needed much more to do all of that minor "I can do that" stuff. It added up .... hammers, levels, power tools, and dozens of other things.

Bottom line ... forget #4. Go for #3 and don't under estimate the "small things" like I mentioned above. They'll add up fast.

As a personal side note to you, any thoughts on Montgomery Village? It's the "just okay" location area in #1. It is in a better part of MV beyond the golf course.

FunkHouse9 wrote:

LIPH wrote:I'm not trying to be an ass, that's something I'm good at without trying, but as f**ked up as the economy is if #4 is "a little more than we can afford", why is it even an option? Maybe it's just me, but if it's $1 more than I could afford I'd run in the opposite direction.

#4 is only included because people keep sending us things a little out of reach. We have enough savings that if we're willing to dig into them for the first year, we should be back into the safe zone in a year or so, barring problems. But, we are not really considering this option.

Glad to hear you say that. "barring problems"....there WILL be problems. You can COUNT on it. If not the house, then one of your cars, or SOMETHING. And as surfpirate said so well, there are WAY more expenses than you thought of. Be SURE to have your property taxes funded through escrow in your mortgage payment, not sent as a separate bill. We've done it both ways, and I HIGHLY recommend the first of the two options, even for Queens of Budgeting like me.

Hmmmm..... Lots of good advice here on the thread.....It used to be that you bought a place that was just a hair out of your range...the idea being that as you lived in the house your salary would grow and that what was at first a streach would be affordable in 3 to 5 years. In this economy that might not be the prudent thing to do.....probably depends on what you consider a "stretch" and your adversity to risk....

As far as criteria goes....
1 LOCATION
2 LOCATION
3 LOCATION

In reality, all of your criteria boil down to location......whether it is schools for your kids, proximity to work, proximity to shopping/entertainment, Views, friends and familly.....it is all about location......you pick the topic/criteria and I can make a point that it is location driven...

We choose our first house based on 2 criteria...the first being LOCATION.....the second that it was a fixer-upper...... We wound up with a 1906 craftsman bungalow on top of Queen Anne in Seattle....The location has proven, through the years to be a place where people want to live (Great for renting out now) and will probably always have a good market demand. The fact that it was a fixer-upper allowed up to appricate the "sweat equity" of fixing it up.....

As for house #2....we were too big to be able to move back into the Queen Anne place when we moved back from Alaska.....that and Wife-poo had become addicted to having a view of the water (In Alaska)....we wound up in a place that overlooks Lake Sammamish....big enough for the familly, Some of the best schools in the state, just a hair more than we wanted to spend (which we have grown into ....along with re-finances at significantly lower rates)....so again...LOCATION!!

Now, what makes the best location ....all depends on what you what.....

I gotta agree with Marcus . . Location, Location, Location . . . .

If you have an OK house in a nice location, you can always fix up the house . . .
If you have a nice house in a bad location, well . . it's gonna remain a bad loaction no matter what you do to the abode.

I can't cite any stats, but I'm willing to bet that houses in better locations appreciate faster than houses in poorer locations . . .

as for being a money pit, you WILL be at home depot saturday and sunday of every weekend for the next 2 years. then pretty much every saturday for the next 5 years. then almost every saturday for as long as you own the house.

and remember this, your neighbors DO NOT appreciate sheets acting as curtains.

SeattleParrotHead wrote:I gotta agree with Marcus . . Location, Location, Location . . . .

If you have an OK house in a nice location, you can always fix up the house . . .
If you have a nice house in a bad location, well . . it's gonna remain a bad loaction no matter what you do to the abode.

I can't cite any stats, but I'm willing to bet that houses in better locations appreciate faster than houses in poorer locations . . .

Appriciation aside..... In an economy like this, location can mean the difference in being able to sell your place vs. not being able to sell it....(Anybody buying homes in DETROIT for instance....????)

Again I make the agrument that all criteria boil down to LOCATION!