If you’re in the market to buy a home for the first time, everything about the process is new, obviously. From getting pre-approved and finding a real estate agent to reviewing the listings and making an offer, very little about the process is apt to be familiar.
Fortunately, it’s also exciting, though it can sometimes be a challenge to keep your emotions in check. The key is to dial things back and focus on one step at a time.
First on your list of priorities should be the decision regarding whether you want a “starter home” or “forever home.” Your budget may determine the answer to this question relatively quickly; otherwise, you may have a critical choice to make.
Since you’ve never owned a home before, most real estate professionals and seasoned homeowners would tell you to purchase a starter home. That way, you can get your feet wet, learn about what home ownership really involves, identify the elements you truly want in a home, and upgrade at some point in the future.
You’ll also get more for your money if you invest in a starter home.
“The term starter home always conjures up images in my mind of construction debris falling on Tom Hanks in ‘The Money Pit.’ But starter home and ‘fixer-upper’ don’t have to be synonymous,” writes Sarah Davis, a San Diego real estate broker.
“A starter home may simply be a small home or condo that you can afford now — with or without making some improvements.” In other words, a starter home isn’t necessarily a structure that’s falling apart.
It’s a home that fits your budget, meets your basic needs, and will likely appreciate in the next five years. Sometimes it might be a property that requires a lot of DIY work; in other cases, it could be a home that’s small but in perfect condition.
The most important thing to know is that you’ll probably have to go without a number of items on your “forever home” list if you choose a starter home. According to a survey by the National Association of Realtors, 75 percent of first-time buyers — who were right around 31 years old — said they compromised on their home purchase. The compromises typically related to square footage and price.
An agent can help you find an ideal starter home in your area, but it’s worthwhile for you to have an idea of what you’re looking for before you start. Beyond your personal preferences, here are some characteristics you’ll likely want to ensure you’re making a good investment.
If there’s one thing you need in a good starter home, it’s the right location. Location is equity in real estate, so it’s essential for you to target the best neighborhood you can.
It doesn’t have to be the nicest part of town (Hint: A starter home won’t be there), but it needs to be a safe neighborhood with decent schools, access to amenities, and a good mix of demographics. If you get a property in a good location, you’re almost guaranteed that it will retain its value.
The value might fluctuate up or down depending on various external factors, but you don’t have to worry about losing your investment. It’s the most stable facet you can target.
When it comes to the big items and major systems, you want to make sure everything is in good working condition. Unless you’re getting the deal of the century, you shouldn’t ever purchase a starter home that has a bad roof, foundation issues, termite problems, dysfunctional HVAC system, or a major plumbing issue. These are problems that could require substantial amounts of up-front cash to address.
If you can identify a home that has hidden or underutilized square footage, this is a great opportunity for investment. Examples include unfinished space, a garage that could be converted into an apartment, or a wall that can be torn down to open up the main living area. When such elements are available, you’ve got a chance to add immediate value to your home.
There are also items you don’t need to worry about. This is a “starter” home, remember. If everything goes according to plan, you won’t be here in five or seven years. That being the case, there’s no sense in stressing over things like:
Curb appeal isn’t something to spend a lot of time obsessing over. By the time you’re ready to resell, you will have had plenty of time to fix the landscaping and make it more presentable. Buyers will pay a premium for curb appeal — but there’s no reason you should.
As mentioned in the previous section, some aspects of a home’s condition are essential (such as the roof or foundation). But there are plenty of other items you don’t need to worry about. For example, don’t let the paint color in the kitchen dissuade you from placing an offer. Small issues like this are easy fixes for the future. You have to look past cosmetic flaws and focus on what really matters.
By definition, a starter home is most likely going to be small. However, since it’s your first home, the odds are you also don’t have a big family. In most cases, it’s just two or three people moving in … maybe just yourself.
Keep in mind that you’ll be upgrading in the future if you want a big family, so don’t let size deter you. When you eventually sell this home, the buyer will likely be another first-timer looking for a solid starter.
At Green Residential, we’ve been in business for more than 30 years. Over that time, we’ve established our family business as one of the premier names in Houston residential real estate.
Whether you’re looking to hand off your investment properties to a professional property management firm or need help selling your current house, we can help. Contact us today and we’ll be happy to provide you with more information.
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