Choosing a Property
Q: I have to make a choice between an updated home in an older neighborhood or a newer home in a more modern neighborhood. The home in the older neighborhood has almost everything I want and is much larger, but which makes the most sense as an investment?
- If your goal is to buy a home for it's resale value and the one you are thinking of buying in the older neighborhood is at the upper end of values for that neighborhood, then it may not be the wisest choice. If it is similar or lower in price to the others, then there should be no problem, because pricing should be considered in relation to the local neighborhood and not compared to homes in other neighborhoods (for the most part)
- Plus, is it a neighborhood on the decline, or are others going to be fixing things up, too, so that it is a neighborhood that is improving? It could turn out to be a very good deal as long as you don't "overpay" because of the recent improvements.
- Remember that you also buy a home for it's value to you as a "home," and that is something else you should consider. Which neighborhood would you AND your family feels most comfortable in?
- For general information on buying a home for its resale value, click here.
Q: When buying a new home, what upgrades should we go for? What holds the most value? Do we upgrade the lot? Pick more square footage in the house? Add an extra bedroom?, etc.
- A lot depends on why you are buying the house. Are you buying it mostly as a home or mostly as an investment? There is a difference.
- For the most part, upgrades are high-profit items for builders. They aren't designed to enhance the value of the house, but make you happier with the house you do buy.
- If you are looking at your home as an investment, then you buy from the smaller to medium size in the tract and spend only a minimal amount on upgrades. If you are looking at your purchase as a home, then you select upgrades that will enhance your quality of living.
- One rule of thumb is to always upgrade the carpet and padding.
- For specific information on what to look for in a house when resale value is a consideration clidk here.
Q: I need to buy a house with a good resale value. How do I determine if my house will increase in value within the next five years so that we can upgrade? I can buy a smaller house in a great location or get twice as much house in a good location. Which is a wiser decision?
- It's like buying stocks. How do you really know which ones will increase most in value over the next five years? As with any investment, there are risks.
- The most often quoted rule is that location is the most important factor. You want to make sure that the house does not back to busy streets and is as close to the interior of the tract as possible. Avoid corners and intersections. Choose the middle of the block or a cul de sac. You'll want to be sure it has at least two bathrooms (if you are buying in an older area).
- Sometimes it is just timing that works out best for you. For example, if you buy a home before a major surge in local prices.
- To get more information about what makes a great location click here.