Why location matters when investing in a home
January 14, 2015
A new home purchase can be an exciting investment, especially for first-time homebuyers. Location is typically the first factor potential buyers consider, and where a home is located can mean any number of impacts to cost.
Location includes more than the home itself
Location matters when choosing your new home.
When investing in a new home in an area you find promising, don't feel pressured to move too fast because you feel like your dream house is going to slip away. Make sure you consider all aspects of the home's location—beyond its physical appearance alone. There are many numerals to take into account in terms of location—not just the standard reasons you might think.
Before looking to invest in the right location, consider the following:
- Location matters beyond today: Neighborhoods change often. You don't want to be moving in while the neighborhood is moving out. Just because the home is great and the price is right doesn't mean the neighborhood is going to stay that way. Take a look at some of the surrounding elements. Are there parks and schools? Is public transportation nearby? Is the neighborhood predominantly young families or retirees? These are all questions you should be asking yourself. Think ahead about how the neighborhood is going to shift in the years to come.
- Expenses vary from house to house: When budgeting for your new house, you need to be aware of all affiliated expenses—not just those regarding the house itself. There is the cost of the house, home insurance and utilities to think about, but that is not all. Property taxes, inspection fees, municipal fees, neighborhood association costs and any other number of charges may come your way. These fees might also differ slightly from home to home even in the same neighborhood depending on when your home was built, whether it is historical or any other number of factors.
- Updates should improve the value: It's common for the city to require permits for significant upgrades to a house. Depending on where the home is located, some permits might be harder to come by than others. Again, if you are considering investing in a historic home, you are going to have a difficult time making renovations to the structure. This certainly depends on what your plans are and what the association will allow, but the point is don't purchase an old house with the assumption that you can simply renovate it cheaply to upgrade its value. More often that not, renovations are not a problem. However, it is worth looking into before you make an offer.
There are many factors to location, and you need to take them all into consideration before investing in a home. You want your investment to be exactly that, and it does you no good if you can't get out as much as you put in. Make a smart investment and be able to sell your home for more than you paid when it is your time to move on again.