So many of us are excited about a new space and do whatever it takes to get into that space and make it just right.
But if you are like many Americans who have stretched themselves to buy dwellings in this economic environment, you may be feeling a bit house poor.
Now the stress associated with locating, negotiating, closing, and moving into the space is enough for most people, but what if the place you purchased needs to be outfitted to your taste?
What if you bought based on what your mortgage loan officer told you you could afford but not based on what you could actually afford? Causing you to then have buyer\’s remorse?
According to data from the U.S. Census Bureau, the average person in the United States moves residences more than 11 times in their lifetime.
If you think about it, that\’s not that often.
Now I am sure that you move more earlier on in life as you are going off to college, getting into your career, getting married, and starting a family.
What many people don\’t consider is their exit strategy; assuming that you will move every seven years or so, what do you plan to do with that dwelling when it is time to move?
Here are five tips now that you have bought a new dwelling!
- Do not over-improve the space for the neighborhood. This will prevent you from pouring more into the property than it\’s actually worth. Within this being careful of personal preference in design and layout.
- Be mindful of the neighborhood. If the average home in the area has 3-5 bedrooms, do not combine a bedroom to increase the size of, let\’s say, a master if you then will have a two-bedroom home in a neighborhood where the demand may not be there.
- Remember that aside from location (which at this point would be unchangeable), kitchen and bathrooms typically sell homes. If you are going to put money into the property, take a look at what comparable houses sold at with what upgrades.
- Do your best to run the numbers before you refinance, as you restart the clock on your mortgage and push out the date of actually paying that property off. There are typically closing costs to doing so, so being mindful of how long it would take to break even from those is also important.
- Finally, have an exit strategy, knowing what the property would rent for as a long-term rental, as an Airbnb, selling it on a REC, or selling it on the retail market.
I mentioned in the last episode that I bought a home a couple of years back and invested about $42k in renovations in that house.
The neighborhood was developed around 2014, and my home was built in 2016. I looked at all the comparable homes for what the buyer in my area was looking for. I did not change the layout of the house, just updated it cosmetically. I installed wood-looking tile throughout most of the home but focused most of my efforts toward updating the kitchen, baths, and backyard. I knew I would most likely be selling the house on the retail market and not renting it due to the price point. Although my analysis was pretty straightforward on this home, it will vary from homeowner to homeowner.
CTA:
My call to action is to look at how your home compares to those around it before investing money into it. This will ensure that you know the product per-se of the neighborhood you live in as well as what it may look like to rent or sell it in the future.
