5 Tips for Buying Your First House
If you have ever watched the Property Brothers, Drew & Jonathan Scott, you will see them taking first time home buyers to their “dream home” with all the bells & whistles only to send their dream crashing into pieces when Drew ultimately reveals the price of their dream home which is ridiculously over their budget. The two twins then do their sells pitch as to why the young couple need to buy a fixer upper in order to be able to afford the house they want.
For most of us, its really challenging to be able to afford our first house but there are some things you can do to make this easier for yourself.
1. Take Advantage of Government Incentives for First Time Buyers
Many states and provinces offer incentives for first time buyers to get into the market. When we bought our first house many years ago, the government was allowing first time buyers to use their Retirement Savings Plan as their down payment. Each person could use up to $20,000 of their plan. For a couple that meant $40,000 deposit for a home. That’s how we bought our first home!!!
We needed to pay back into our Retirement Plan over the course of 10 years but it was a great incentive and that’s how we got started.
Check with your government to see what is available in your area. If there isn’t any currently available, keep saving for that down payment and keep checking in with the government for updates.
2. Location, Location, Location
Now that you have that down payment ready, where are you going to buy? Buying in the hot areas is the best use of your dollars because you know your home will increase in value for when you’re ready to sell.
If you’re not able to afford the perfect location, check out the trends where people are buying. Where are the up and coming areas? Realtors will know. Connect with a good realtor that has your back.
We couldn’t afford trendy downtown so we did our research and bought in the country’s fastest growing suburb. When we were ready to sell, our investment had increased beyond our expectations.
Most people can’t afford their “forever” home right away so they start with a “starter” home. Even buying a starter home in a hot or up and coming area will increase in value more than less desirable neighborhoods.
3. Buy The Worst House on a Good Street
Over 50 agents had showed the house but noone wanted to buy it. The basement had water damage and the old wood panelling smelled from wood rot. As soon as clients turned the corner to head downstairs, the smell overcame them and they turned back upstairs and right out the door. Our first house (pictured above) was the ultimate “fixer upper.”
After a month of negotiations, and the selling agent desperately running several open houses, to get a better offer than ours, finally sold us the house and we were able to get the house for $50,000 less than the listing price. Now that’s a deal!
Designer Tip: Most young people want it all when it comes to their home. They don’t want to buy a fixer upper and renovate over time. It’s too much work! But look at fixing up your house over time as a part-time job! Depending on where you buy and how much you invest in your home, your “part-time job” could “pay” you exceedingly more than your real regular job.
4. Don’t OVER SPEND for Your Neighborhood
As a stager, there are two houses that I remember staging with sadness. Both owners had over renovated their home. They invested more in their home in renovations, then what the market would bear. Both clients didn’t make as much on their home as they were expecting.
It’s important to check out your neighborhood. Go to open houses and see what houses are selling for, what condition their house is in and what renovations they have done to their home.
We also sanded and applied urethane to the badly worn & stained hardwood floors upstairs before we moved in. We then repainted the entire upstairs and moved in two weeks after closing on the house.
Sure, we had alot of work to do in two weeks, but it was worth it! We made more money on the house when we sold that our yearly incomes!!
As time when by, we eventually finished the basement. Finishing the basement would double the size of the home and greatly increase its value. We kept to an open floor plan and put up drywall, ceilings with pot lights and laid berber carpeting throughout.
My father built a beautiful pine bookshelf between the two support beams. We also added a 3 piece contemporary bathroom including shower (the open door with the light on) and we freshly painted and updated the room at the far end of the rec room area to make it a spare bedroom/office. Adding a fourth bedroom to a home increases the marketability of a property.
The front of the house was in a dire need of an update. Overtime we replaced the roof, and the original door and windows. The door and windows were an expensive upgrade but one that contributed to the quick sale and high dollar amount received for the home.
5. Know When To Sell
Typically in most areas, the spring real estate market is the best time to sell. That is when you will get the highest amount for your home. Keep your eye on the market and if possible, sell when the market is strong.
We were able to sell our home in 4 days with 4 offers receiving 111% of asking. AND our list price was an aggressive one to start! Taking all our expenses into consideration, we more than doubled our initial investment! We earned the equivalent of 3 years’ salaries for both of us by buying & selling our first “fixer upper” home. Not bad for a first home!
My apologies for the quality of the photos. They were taken many years ago, long before blogging days.
I’m Debi Collinson. Designer. Stager. Real Estate Investor. In 2006, at the request of a realtor, I staged my very first home. Staging houses was just starting to become popular. I was very nervous staging my first house, but the sellers liked their newly redesigned home so much that they turned down an offer for full asking price. I went back to design school and have never looked back. Since 2006, I have been staging & styling spaces to make them look like they belong in a magazine page, and buying “fixer uppers” to fix up & either sell for a healthy profit or to rent them out. I’m currently living in my 8th “fixer upper.” Sign up to receive my e-mails of how to make your home stunning, how to sell your house for top dollar AND how to become financially independent one fixer upper at a time!