This can be a daunting and often overwhelming process but properly prepared and educated, a lot of the common problems can be avoided.Usually these problems are due to poor financial preparation, not directing builders although they too can create headaches.Another major pitfall is making the wrong choices for ownership.
Home ownership is not an easy decision to make in the beginning simply because of the vast unknowns facing the potential buyer.First and foremost the decision whether to buy or rent has to be made, then what type of ownership do you want.For instance, owning a condo has advantages over single family but essentially it comes down to a financial decision based on income and lifestyle choices.
Lifestyle Choices
If the buyer does not want the work associated with maintenance of the exterior then condominium or co-op housing should be a major consideration if not the first one.However, you will pay for this perk of ownership in the form of monthly condo fees that can be quite high depending upon the value of the purchase.It will remove things like painting, lawn care, and snow removal from your life however you will have no choice as to external appearance of your property because that will be controlled.Inside is yours to decorate as you please but not the outside, and this can even extend to things as simple as a flower garden.So if you want to be able to go away for a weekend all you need to do is lock the door and go.It is definitely a lifestyle suitable to the young urban professional who places personal recreation above maintenance.
The buyer of the single family dwelling or town house does have maintenance responsibilities not only to maintain property values but also to appease the neighbours who take great pride in the appearance of their properties.It can be time consuming but also very rewarding.You also have to do your own snow removal, lawn cutting and maintenance, or hire someone to do it for you.If you do this yourself and enjoy the work, the costs can be quite low except for the initial investment in equipment such as lawn mowers and snow blowers.However these and other necessary tools will last for decades if properly cared for.
Investment Choices
As an investment, your home is singularly your largest life expenditure and the option of purchasing for appreciation to sell later and “move up” is often the primary factor in first time purchases.Builders put up “starter homes” just for this purpose.
The starter home is often a bare bones low cost home where upscale interiors are not a part of the build.For instance, if you want oak cabinets, ceramic or cork flooring, fancy lighting and plumbing you won’t find them in a starter home.For the initial buyer, these are things they will upgrade on their own so that the value of the home is increased, but more importantly resale is made much easier.These homes are often small and packed into subdivisions with small lots.However, not all starter homes are purchased with resale in mind.Many people who are “downsizing” after their family is grown and gone, seek out this type of purchase for the lower cost, and they usually have the extra money to upgrade their purchase as they see fit.
The condo owner is more concerned with property management to protect their purchase.Poor property management will often result in stagnant or even declining values.For this reason, often a board made up of owners within the complex is in place to ensure that property is properly maintained so that values appreciate with time.In any event, before buying into condo or co-op housing, read the fine print; twice, then have your lawyer explain all of it to you in plain English so that you know what you are buying into.
A good friend of mine bought into a condo and when he wanted to replace the windows in order to decrease his heating bills, the condo association blocked his upgrade.It can be situations such as this that frustrate a condo owner.
In the next article, we will discuss financial decisions for the first time buyer.