16 years ago my wife and I purchased our first home. We didn’t know what to expect but we didn’t want to waste money on rent and needed a yard for our dog. So we hired a realtor and started looking at houses. We eventually found a cute little home with 3 bedrooms and 1 bathroom in a neighborhood just up the street from where we were living. We loved that home, but there were a lot of things we didn’t know going into home ownership that would have been very helpful.
Flash forward to today, we have purchased 21 homes and own and operate a successful real estate brokerage. All that being said, here is what I wish I knew when we purchased our first home;
- Location is everything.
Of all the homes we have owned and sold, we always did better on the homes in better areas. I define “Better areas” by 2 things. The first being, areas that people want to live in are by Universities, or other places people generally visit, such as downtown and resort areas. The second is areas where you don’t see cars on blocks parked on lawns. I know the second is different, but I have found that areas where people park on their lawn they don’t care about the yard work, or upkeep on their home in general. This indirectly brings down the value for the neighborhood.
- The mortgage payment is just the tip of the iceberg when it comes to costs of home ownership.
After all of our home purchases, I can safely say that you should keep at least 1% of the value of the home in reserve for repairs / upgrades. If your water heater goes bad, you can bet your furnace will go out at the same time. It is always safer to keep a small reserve to pay for repairs.
- The mortgage interest deduction is only exciting 1 time a year.
Sure, you get to write off the interest you pay on your mortgage and that is great. However, it only makes a difference in April when taxes are due. Many real estate agents and lenders talk about this bonus when buying a home, but owning a home has more important benefits than a tax deduction.
- You can pick your home, but neighbors are a different story
My current neighbor, across the street, calls the city for every possible violation she can come up pretty consistently. It is annoying and there isn’t anything I can do about it. It could be worse. Unfortunately, it is very difficult to know what the neighbors are like until you move into your new home. Looking online at crimereports.com will help give you an overall idea of the neighborhood.
- There is no such thing as a PERFECT home
Homes come in all shapes, sizes, and conditions. Some people prefer brand new homes, others like myself prefer homes built between 1900 and 1925. It really comes down to expectations. Many of our client’s want to live in a neighborhood called Sugar House, and they want an open concept kitchen (a kitchen and a great room combined). The problem being, a majority of homes in this area are 1940-1950’s ranch/bungalows. They weren’t built like the modern homes of today. So in order to find what they are looking for, they need to find a home that has had a serious renovation or choose a different area. When buying a house, it comes down to compromises. You can buy a home with all the features you want, but a higher price than you want to pay. Or, the features and/or location are not what you want but the price is right. In the end, finding that perfect happy medium between what you are looking for and what is available in the market.
- Yard work is fun but it can be a full time job
We purchased our first home so that our dog had a place to roam. This was great, except before we moved in we had to build a better fence. Sprinklers break and have to be repaired, the garden needs to be weeded and the dog’s urine killed the grass. Sure, having a yard is great, but don’t be fooled, it requires maintenance.
- Remodeling like a pro is harder than you think
I get asked all of the time if I like the new show on HGTV about flipping houses. Many people are surprised when I say that I haven’t seen it. I have watched many of those kinds of shows in the past, but they don’t represent the true amount of work that REALLY goes into a good remodel. The reason you hire a professional contractor, painter, tile setter, is because they have experience and skills. Most of us are not skilled at these trades. What seems like it should only take a couple of hours and a few hundred dollars, usually turns into a few days and several hundred dollars, not to mention the 19 trips to Home Depot. Don’t worry, you can do these remodeling projects, but always enlist the help of a professional to offer advice on your project. My first hardwood floor I installed, I paid a flooring contractor beer, pizza, and $20 to give me some expert advice. I have used that advice for a dozen or more homes and it was the best $20 I ever spent.
- Buy based on quality not price
With our first house, when something would break we would replace it with the least expensive option that would work. After all, we were saving money. Over the long term, cheap isn’t always best. For example, some brands of plumbing fixture are better than others. There is a big difference between the $10 bathroom faucet and the $100 faucet. The main difference is that you will have to replace the $10 faucet every year and the $100 faucet, maybe every decade. That’s not to say that more expensive is always better, but it can be a good starting point. Do research, ask questions, and whenever possible buy the best quality your budget allows.
Owning a home is full of surprises but there is nothing like coming home to a place you can call your own. The American dream was built on home ownership. If you have any questions about owning a home and the true costs please feel free to contact us. We have educated hundreds of pre homeowners on what to expect when buying or selling a home.