I’m inviting you to an upcoming “How to Retire Rich in Real Estate” workshop. On Saturday, March 14, at 10 a.m. we’re hosting this workshop with my broker Neil Schwartz, who has been in the business for over 40 years. He’ll share some of the wonderful investment tips and strategies he implements with his agents and clients. This workshop will help you learn how to retire rich in real estate.
The event is at my office: 5150 E Pacific Coast Hwy Ste 770 Long Beach, CA 90804. When you arrive, you can park either on the surface lot or on the street, then head up to the seventh floor. We’ll have light drinks and other refreshments. We look forward to seeing you there!
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Come learn how to invest and retire rich in real estate!
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Please feel free to forward or share this with friends who may be interested in investing in real estate. You don’t want to miss this!Click here to RSVP!
If you have any questions about this event or real estate in general, please call or email me. I would love to speak with you.
New loan limits are affecting homebuyers. As you may have heard, loan limits have been increased. To clarify, any loan obtained below its limit is a regular conforming loan; any loan obtained above its limit is a jumbo loan.
Increased loan limits mean more buying power for buyers. Here are the exact limits for different types of housing:
Single-family homes: $765,000
2-unit homes: $980,000
3-unit homes: $1,184,000
4-unit homes: $1,472,000
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As you may have heard, loan limits have been increased.
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You can get a better interest rate and a lower cost for all loans under these amounts for these properties. Conforming loans can be sold on the market, which makes them more desirable than jumbo loans. Jumbo loans can’t be sold, which makes them more expensive.
FHA reverse mortgages and HELOCs have been increased as well, which opens up more possibilities to draw money from a home. The VA has completely removed the limit for their loan, so VA buyers can buy with 100% financing with no limit. Previously, VA buyers could only use 100% financing up to a certain amount. If they purchased above that amount, they had to pay the down payment.
I know this is a bit of a tricky subject, so if you have any questions about it, don’t hesitate to call or email me. I’d be happy to help.
Today I’m joined by Liz Fajardo of Comerica Bank to answer a few important questions about home equity lines of credit (HELOC).
Why would anyone want to get a home equity line of credit?
According to Liz, it’s a great product for anyone in need of emergency funds. This way, they’ll be able to access these funds instead of getting a credit card with a higher interest rate. Home equity lines of credit have lower interest rates.
Why get a home equity line of credit instead of refinancing?
By getting a home equity line of credit, you don’t have to touch the rate on your first mortgage, and it’s there to utilize when you need it. If you refinance, you’ll have to touch the rate you have, and given the fact that a lot of rates are great right now, most people don’t want to touch them.
What are typical rates for a home equity line of credit?
Right now, Comerica offers a great promotion with a rate of 2.99% for the first six months. After that, it increases to 5.25%—that’s way better than a credit card!
In what type of situations do people usually get a home equity line of credit?
Many like to use them for debt consolidation so they only have one payment for everything they owe. They’re also handy for those who need to make home repairs. Additionally, as mentioned above, they’re great for anyone who needs an emergency fund. It’s ready for you to use when you need it, but you don’t need to touch it. This means, in addition to not needing to get a credit card with a higher interest rate, you also don’t need to borrow money from a family member or dip into your 401(k).
In summary, home equity lines of credit can benefit all types of homeowners. If you have any more questions about this topic, you can give Liz a call at (562) 590-2588.
As always, if you have any more real estate questions, you can call or email me anytime. I’d love to help you.
Today I’m discussing the red flags to watch out for when buying a home and to check on when selling your home:
1. Check for significant cracks in the foundation and walls. Small cracks here and there are natural, since the ground shifts over time. However, you should get larger cracks checked out by a professional. That way you have peace of mind if there are issues.
2. Check sewer piping. Older homes, particularly ones built during or prior to the 1940s, they may have cast iron or clay pipes. If these are cracked, they can still last many years; however, over time, they can develop issues. This can be expensive to replace, so get this checked out while in escrow. You can hire a plumber to send a camera down the pipes to analyze any damage.
3. Investigate the roof. Many older roofs will have damage or even contain asbestos, which is more expensive to replace than a roof with average wear and tear. Some older roofs can last up to 50 years, but not all of them will.
Many insurance companies will not insure a home with knob and tube wiring.
4. Find out if you have knob and tube wiring. Many insurance companies will not insure a home with this type of wiring. You want to be aware, especially in homes built in the 1940s or older, that they can frequently have knob and tube wiring in the walls. Some homes have been remodeled and have newer wiring, but you need to have it checked out by an electrician.
5. Watch out for mold and mildew. These are very common to check out, they’re everywhere. Some types will be damaging, some will not. There is a test that can determine if it’s something to be concerned over.
6. Check for lead-based paint. This is sometimes neglected in homes that were built before 1978. If you’re going to have adults only in the home, then you likely won’t have many issues with this. Older homes will doubtless have it in them somewhere. If you have smaller children or the paint is flaked or peeling, the chemicals from that can be released into the home and can be ingested, which is harmful.
If you have any questions about these red flags or real estate in general feel free to give us a call or send us an email. We’ll be sure to walk you through any process you’re concerned about. We look forward to hearing from you.
In light of the Thanksgiving season, today I want to send you a simple message of gratitude. My team and I have had the pleasure of working with many great people in 2019, and we want to thank you from the bottom of our hearts. We wish you a happy Thanksgiving, a happy holiday season, and all the best for the new year. As always, if there’s anything we can do for you—whether it’s helping you with your real estate needs or providing a recommendation—don’t hesitate to reach out to us.
Today’s message is somewhat different from our usual content. Why? Well, to see what I mean, you’ll have to check out our latest video for yourself. To give you a hint, though, we recently received the endorsement of a very special (and very cute) guest. As for the content of the message, the point is simple: If you know any new parents who are planning a move and might need a new crib (or a space to put their new crib), the Melinda Elmer Team wants to help. If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon.
It’s come to my attention recently that many homebuyers think it’s much more difficult to qualify for a mortgage than it actually is. Granted, back in 2009, there were some pretty strict requirements put into place for purchasing a home, and many of those requirements are still in place today. Those seemed especially strict considering that, from 2004 to 2005, if you could fog a mirror, you could get a loan.
Obviously, those requirements created a big change in the loan process, but it’s not as difficult as most people would think. A recent survey from Fannie Mae found that most borrowers thought they needed a minimum credit score of 650 to purchase a home—this is simply not the case. To qualify for a loan, you actually only need a credit score of 580. There are some extra requirements that may be put into place, but it’s still possible to get a mortgage.
There are really a lot of great options for people to be able to put down less than 10%.
Now, the survey also found that most borrowers thought that, at a minimum, a 10% down payment was required to buy a home, but that’s also untrue. In addition to a 3%-down conventional loan, you can also get a 3.5%-down FHA loan. There are even some grant programs that allow you to put as little as 1% down on a home. Of course, don’t forget the VA loans, which allow veterans of the Armed Forces to take advantage of 0%-down requirements. There are really a lot of great options for people to be able to put down less than 10%.
If you do put 20% down, you aren’t required to pay for monthly mortgage insurance, but sometimes the amount and the rate at which people can save is not the same, and interest rates and appreciation can go up higher and faster than people can save.
Many people also believe that they simply have too much debt to buy a home. You can actually have a maximum of 50% to 56% of debt, depending on the loan program you utilize—and that’s including your mortgage payment. Obviously, it’s great to have no debt as you begin the home buying process, but this isn’t always practical for everyone, especially those with a lot of student loans.
If you want to find out more about home loan programs and their requirements, if you want to talk about whether or not it’s a good time to purchase a home, or if you have any real estate questions at all, feel free to give us a call. We’ll be happy to look at this information to see if you can qualify for a loan to buy your next home.
As the temperatures outside have begun to heat up, so has the real estate market. Here are the latest statistics from our Southern California real estate market:
With interest rates at the lowest levels that we’ve seen in the past two years, hovering right around 4%, now is really a great time to take advantage of the market. Buyers are anxious to snap up properties and to take advantage of locking in low interest rates. In turn, sellers are interested in taking advantage of that demand.
Last winter, interest rates almost reach 5%, so our current rate climate provides some pretty significant savings by comparison. In general, home prices have remained relatively flat over the last year, having only gone up about 1% year over year.
The market may have slowed price-wise, but demand has been increasing this summer due to the low interest rate environment. But who can take advantage of these low interest rates?
The market may have slowed price-wise, but demand has been increasing this summer due to the low interest rate environment.
If you currently own a home and your interest rate is higher than 4.5%, you may find it worthwhile to explore a refinance. If you purchased a home in the last couple of years using an FHA loan, your equity may have increased to the point where you could be able to refinance and finally get rid of your private mortgage insurance. Doing so could allow you to lock in a low rate for many years to come.
Of course, first-time homebuyers can take advantage of these rates, as well. With prices having leveled off last year, there are some great opportunities for buyers.
Sellers who plan to move up or downsize will find great opportunities, too. If you’re downsizing to a smaller home, your current home may be in high demand right now, meaning that you can get top dollar for your home. If you need a loan to make your transition, you can do so at a much lower rate. If you plan to pay with cash, that’s even better.
With this 1% drop in interest rates, move-up buyers can save thousands of dollars over the years. Additionally, investors who aren’t planning to pay with cash will find the perfect opportunity to increase their cash flow.
If you have any questions about whether a move is right for you or about any of your real estate needs, please feel free to reach out to me. I look forward to hearing from you soon!
If you don’t want the state you live in to decide what to do with your assets when you pass away, your two options to handle the matter are to establish either a will or a trust. But what’s the difference between the two?
A will is a legal document that states how you want your affairs to be handled. This is an essential component of estate planning, and there are several DIY options for making a will, but I strongly recommend reaching out to a professional when writing yours. I’ve seen many DIY wills turn into a complicated mess for the family of the deceased because they were poorly crafted.
Furthermore, while a will does allow you to decide what to do with your assets, it still has to go through probate court for confirmation. This means the state looks at it and decides what to do with your assets, and because they merely use it as a guideline, they may or may not comply with your wishes.
A trust also helps you avoid probate court, which makes matters a lot easier for your heirs and your trustee.
A trust, on the other hand, is an established fiduciary relationship. You determine who you want to handle your assets after you pass away. That person then becomes your trustee, and they make all the decisions regarding your estate with the guidance of the will you’ve put into place as well.
A trust also helps you avoid probate court, which makes matters a lot easier for your heirs and your trustee. It costs more up front than writing a will, but it will save you money in the long run because, again, it helps you avoid probate court (the fees of which can range from 2% to 8% of your estate). Your executor is ultimately responsible for sorting out your estate, which could take six to 18 months even with a trust, but it’s a lot less expensive.
Additionally, trusts need to be actively managed, so you need to review them anytime you have a life change or every few years to make sure your wishes are still being administered.
Whether you choose a will or a trust to decide your estate, it’s important to reach out to a professional when doing so. If you have any questions about this topic, give me a call and I’d be happy to refer you to a great attorney or legal advisor.
As always, if you have any other real estate needs, feel free to reach out to me as well. I’d love to help you.
Is it better to buy now or wait in case the market dips? The answer to this question depends on your circumstances, but you can benefit greatly from buying now.
Over the past 60 years, the average appreciation rate per year in our Southern California market has been 6%. That’s a pretty good rate—certainly better than a lot of other investment opportunities out there. Also, interest rates are the lowest they’ve been in a year, and they’re expected to remain flat throughout 2019.
Homeownership is essentially a forced savings plan.
Ultimately, if you buy now and hold on to your property, you’re going to make money off of it. Homeownership is essentially a forced savings plan in that you build equity every month you make a mortgage payment.
The bottom line is, if you plan on staying in the home long-term, it absolutely makes sense to buy now before interest rates increase. As an added bonus, you can also take advantage of tax write-offs.
If you’d like to talk more about whether now is the right time for you to buy or you have any other real estate questions, don’t hesitate to reach out to me. I’d love to help you.
Though there are a number of investment strategies you can deploy for long-term financial growth and retirement planning, there are also some lesser-known ways that you can bolster your portfolio. This is accomplished by using your home’s value in the following ways:
1. You can carry over your tax base via Prop 60 and 90. This often-overlooked method allows you to carry your current tax base to another property of equal or lesser value. Specifically, it gives a homeowner license to take the value of their, say, four-bedroom, two-story home, and move it to a smaller home such as a condo or another property of equal or lesser value.
As such, the homeowner is downsizing, yet also transferring their tax base to the new property; you’ll benefit from significant tax savings and, because you’re downsizing, the assumption will be that you own your home free and clear or your loan balance is small.
The often-overlooked Prop 60 and 90 option allows you to carry your current tax base to another property of equal or lesser value.
2. You can buy into a duplex. If you’re looking for another source of income, this can be a great option as well. Take the above scenario and say that your four-bedroom, two-story property is worth $900,000 and you’re looking to buy another home. Remember: Anything you buy must be of equal to or less than $900,000.
Let’s say you’re eyeing a duplex that’s valued at $1.2 million, and it’s a 50/50 split as far as what your primary residence will be. In this hypothetical, the home’s value would be $600,000 for the portion you’d be lending in. Factoring in your old property, you’d have a reduced basis for the portion you’d live in. While it’s true you’d have an adjusted basis for the remaining portion, there will be much to gain in tax savings. As a bonus, you could rent out the other portion of the home and increasingly generate income as rent periodically rises.
3. You can cash out and move out of state. Many retirees or those approaching retirement are doing this because they want to be closer to their grandchildren and other family members.
4. You can get a reverse mortgage against the home. By and large, this option is geared toward homeowners who don’t plan on leaving their home to a family member. Otherwise, it will eat away at the equity and, eventually, it will either need to be paid back or the property will need to be sold.
If you have questions about this or you have any other real estate-related questions, feel free to give me a call at 562-316-2915 or you can email me at Melinda@TheElmerTeam.com. I look forward to hearing from you!
If you own a home and you’re ready to move into a bigger, better one, one of the most important questions to ask before you embark on the journey is whether you should sell your current home before you buy a new one or vice versa.
A majority of homeowners choose to sell before they buy, and it’s generally the better way to go. Here are a few reasons why:
1. You might not want to risk carrying two mortgages. In a perfect world, you’d buy your new house, sell your old one, and the timelines would match up nicely with no fuss or risk. For most of us, however, things rarely go that smoothly. If you don’t have the savings to carry two mortgages for at least a few months, you’ll want to sell before you buy.
2. You can’t qualify for two mortgages. To buy a home before you sell, you’ll either need to have the cash on hand or qualify for a second mortgage. Understand that lenders won’t consider your plans to sell your current home when reviewing your second mortgage application. Your debt-to-income ratio will need to fit the criteria of the loan requirements at the time of purchase; your lender assumes you will keep both homes, so your debt-to-income ratio needs to be able to support both mortgages. This means that your monthly debt payments should total less than about 36% of your monthly gross income. If you don’t think you meet those criteria, you might have an easier time selling your home before buying the new one.
To buy a home before you sell, you’ll either need to have the cash on hand or qualify for a second mortgage.
3. You’re buying in a competitive market. In some markets, people are practically climbing over one another to get their hands on desirable properties. Although this means that your house may sell faster, if you’re living in the same market that you’re buying in, you also need to be able to put in a competitive offer.
If you haven’t already sold your home and you can’t afford two mortgages, you might need to put in an offer that’s contingent on selling your current home. This means that the seller has to wait for you to sell your current place before closing the sale, and understandably, that’s not the most appealing option for a seller. If the offer is contingent, it might not even be considered in the running for the home if there are multiple offers on it.
Selling your home before buying a new one allows you to bid on a house without it being contingent on a sale. That’s super critical in a competitive market.
4. You might be in a sluggish market. If your present home is in an area where the surrounding homes aren't exactly selling like hotcakes, you might want to sell first, for two reasons:
You might not get the sales price you want, which will affect your new home purchase.
It could simply take a long time, leaving you with two mortgages.
5. You might not be ready to commit. Sometimes, it just doesn’t make sense to buy; you may want to get the feel of a neighborhood before living there permanently. Buying a home is a really big commitment, but if you want to take advantage of the schools or amenities of a new place, renting temporarily might just make sense.
If you’re hesitant about renting between homes, consider doing a leaseback contingency. We do this all the time, and it works best in a seller’s market where buyers are willing to wait to get into the new home. With a leaseback contingency, you sell the home to your buyers, but lease it back from them for a set term—this could be 30, 60, or sometimes even 90 days. This improves your chances of finding a new home before you have to move out.
Another strategy is to enlist the help of an experienced agent. Follow your agent’s recommendations for getting your house ready to sell, and familiarize yourself with the market where you want to buy. As soon as you have a contract on your home, look for the new one. If all goes well, your agent can help you line up your closing dates so that you only have to move once.
If you have any questions about how this process works, feel free to reach out to me. I’d be happy to guide you through the specifics.
I’ve been getting a lot of questions about whether potential buyers should purchase now or wait until later. People are hoping for prices to drop a bit, but since we’re in a rising interest rate environment, it’s actually a good idea to purchase now—even if home prices do drop. Our prices now are not due to a market crash; we’re simply going through a market correction. We’ve seen rapid growth in the last eight years and now things are going back to normal. With this in mind, here’s why you shouldn’t wait to purchase when rate hikes are on the horizon.
These figures include principal, interest, and a 20% down payment.
I’ve calculated some scenarios to see what rate changes mean for buyers. Currently, a 5% interest rate is standard, which is an increase from 4% last year. They’re planning to raise it four to five times over the next year, so let’s assume the rate will go up another 1% in 2019.
A 5% interest rate on a $500,000 home comes to $2,147 a month. With a 5.5% interest rate, the payment is $2,271 a month. At 6%, your payment has jumped up to $2,398 each month.
For some perspective, let’s say you’ve held that property for 10 years. At the end of 10 years, a 5% interest rate means you will have paid $203,080 in interest. With 6%, you’ve paid $225,869 in interest. That 1% costs you around $25,000 extra.
Even if you pay $50,000 less on a home by waiting, you’ll pay a lot more over time.
At 5% over 30 years on your $400,000 loan, you’re paying $373,023 in interest. For the 6% interest rate on a $360,000 loan, you’ll pay $417,017 in interest over 30 years. That’s $43,000 more for just a 1% difference.
A lot of single-family homes are going to cost more than $500,000, so let’s look at another scenario. A 5% interest rate on a $700,000 purchase brings a payment of $3,006 a month. At 5.5%, the payment is $3,179 a month. At 6%, it’s $3,357.
Let’s say the home price has gone down to $650,000. At 6% you’re paying around $3,117 a month. You’re paying almost as much as you would at 5.5% for the same property.
Over 30 years at 5% on a $700,000 home, you’re paying $522,232 in interest. At 6% on a $650,000 home, you’re paying $602,359 in interest. With just this 1% increase in interest rates, you have $80,000 more in interest payments.
This is why, even if you pay $50,000 less on a home by waiting, you’ll pay a lot more over time when interest rates increase.
If you would like to know more about your own scenario to see if it makes sense to buy now, I’d be more than happy to help you. We can sit down, review it, and find out what works best for you. Feel free to reach out to me at 562-316-2915, and know I look forward to hearing from you.
You’ve Helped Us With Your Business—Here’s How You Can Help Your Community
Today’s topic is all about gratitude. We are fortunate to have so many opportunities to help so many great families buy and sell homes this past year. We also got to support a lot of communities in the area, including:
Project Self-Sufficiency
Musique sur la Mer
The Red Cross
AIDS/Lifecycle
Beacon For Him
The goal of Project Self-Sufficiency is to help individuals who are highly motivated, low-income, single parents with minor children to achieve economic independence through personal and educational development.
This Thanksgiving Week, we at the Elmer Team have chosen to support a family at Project Self-Sufficiency. This organization’s goal is to help individuals who are highly motivated, low income, single parents with minor children to achieve economic independence through personal and educational development.
We hope you’ll join us in sponsoring a family this Thanksgiving or Christmas. To become a sponsor, visit www.PSSFoundation.org.
As always, thank you from the bottom of our hearts for all your referrals, support, and continued loyalty throughout the years. If you have any questions about these causes or about real estate in general, you can always reach out to us. Until then, have a happy Thanksgiving and holiday season.
Today I want to talk about how you can get your primary residence capital gains tax exclusion.
In order to understand what capital gains are, we first have to understand the tax basis. Your tax basis is the cost of buying, building, or improving a property.
Let's assume that you pay $500,000 for a property, $5,000 in closing costs, and about $45,000 in home improvements. Your tax basis is $550,000 for your new property.
If you sell the property later for $800,000, you will incur about $50,000 in sale commissions, transfer taxes, and other sales expenses. Subtracting your basis of $550,000, your capital gains would be $200,000. With the 15% capital gains tax rate we have right now, you would likely owe $30,000.
If this is your primary residence, though, you have what's called a primary residence exclusion. This means that a certain portion of the capital gain is excluded from the tax. Married couples filing jointly can exclude up to $500,000 while married couples filing tax returns separately can exclude $250,000. For our example, this means that the entire $200,000 would be excluded from tax and you would save at least $30,000 by using this exclusion.
Married couples filing jointly can exclude up to $500,000 while married couples filing tax returns separately can exclude $250,000.
Again, this is only applicable for your primary residence and can't be used for rental properties, investment properties, or vacation homes. You would have had to live in the property for two full years out of the last five full years. Of course, there are some limitations and exceptions so it is best to speak with your accountant about all of it.
There are some extra calculations that can apply if you convert a rental property into a primary home. How much you can exclude in this situation is based on the percentage of time that you lived in the home as your primary residence.
For example, if you rent out the home for three years and then you live there for three years as well, you can only exclude 50% of the gain. This is because you only lived there for 50% of the time that you owned the property and didn't live there initially. If you rent the home out after you lived in it, though, you do not need to worry about this calculation because you are eligible for the exemption
It is important to note that you can take this exemption every two years. This means that if you've gotten a lot of gains in your home, it may be worth considering moving now to be able to bump up your tax basis.
If you have any questions about this, or if you're looking to buy or sell, please feel free to reach out to me. I look forward to speaking with you soon.
As indicated by the California Association of Realtors, Proposition 5 and Proposition 10 are two ballot measures all Californians should be aware of. With that in mind, I want to share some basic information about what will appear on the ballot this November.
These two initiatives could dramatically affect housing opportunities, private property rights, and the availability of affordable housing.
Proposition 5 is California Association of Realtors' own initiative to create new homeownership opportunities by generating more sales of single-family homes in existing neighborhoods. California is facing a severe shortage of houses for sale, so this initiative is expected to greatly help young families. This property tax fairness initiative qualified for the ballot earlier this year, after nearly one million signatures were submitted to the Secretary of State's office.
This initiative will afford eligible people the ability to transfer their current property tax base to the purchase of another home in any of California's 58 counties. Proposition 5 will provide respite to seniors, many of whom are on fixed incomes, the disabled, and disaster victims by allowing them to move to a more suitable home for their needs. This is not only helpful to them, but also future generations who will be able to purchase these now-available properties.
The new property tax will be based on the original home’s assessment, and will also be subject to an adjustment of the difference in value between the sales price of the original home and the sales price of their new home.
The other measure is Proposition 10, also known as the “Affordable Housing Act.” Proposition 10 will actually make the housing crisis worse because it repeals the long-standing Costa-Hawkins Rental Housing Act, eventually allowing local governments to impose rent control.
These two initiatives could dramatically affect housing opportunities, private property rights, and the availability of affordable housing.
The California Association of Realtors strongly opposes this proposition because it will reduce the availability of affordable and middle-class housing. Experts from the University of Southern California, UC Berkeley, and Stanford all agree that it would drive up rents while discouraging new construction and reduce the availability of affordable and middle-class housing. Even the state's nonpartisan legislative analyst has found that passing this proposition will discourage new construction thus resulting in existing rental units being taken off the market and reducing availability.
Instead of renting properties to tenants, property owners will either sell their property or convert them into more profitable uses such as short-term vacation listings like Airbnb. This will increase the cost of existing housing and make it even harder for renters to find affordable homes.
Another side effect of this proposition, if it were to pass, according to the legislative analyst is that it will likely reduce the value of rental properties and single-family homes by driving down local property tax revenues by up to hundreds of millions of dollars per year. This will not only hurt middle-class families, but also reduce revenue for education, public safety, and roads.
Proposition 10 will also eliminate homeowner protections that we have enjoyed for over 20 years and lets the government dictate pricing for privately owned single-family homes. They will be able to control how much homeowners can charge to rent out their home.
Finally, in the event that a homeowner does take a property off the rental market, there could be surcharges.
If you have any additional questions about these propositions, please feel free to reach out to me. I would love to speak with you about them. And, as always, if you have any questions about buying or selling, don't hesitate to call or email. I look forward to speaking with you soon.
There are a lot of reasons why people would want to buy a house as opposed to buying a condo—like having complete ownership of the property, for instance—but here in Southern California, houses can be very expensive. Today I want to discuss the pros and cons of buying a house versus buying a condo.
The Pros of Buying a Condo:- You generally have access to better neighborhoods for the same price as a house. - The HOA manages most, if not all, of the exterior of the property. That’s good news for those of us who run busy lives and don’t have time to dedicate to lawn work. - HOAs have monthly dues, which turn into sort of a forced savings plan that goes toward big expenses, like a new roof. - If you so desire, you can simply walk away from the property if you’re going on vacation or traveling elsewhere. It’s easy to close up, and no one knows that you’re gone, so it can be better, security-wise.
The Cons of Buying a Condo:- HOAs tend to have a lot of rules that come along with purchasing a condo within it. Depending on your perspective, this could be considered either a pro or a con: These rules prevent your neighbors from doing all sorts of crazy things, but it can also be restrictive for you, as well. - HOAs can be poorly managed. Sometimes, not enough money is collected to follow through with certain features and services, and other times, the people in charge aren’t active enough to make the community run smoothly. - HOA costs can increase from year to year, and there may be special assessments or repairs if the property hasn’t been properly maintained over the years. - You’ll have neighbors, meaning your privacy is lessened. - In order to get repairs, you might have to deal with a property management company or the HOA board.
Is buying a house ultimately a better purchase than a condo? That depends on you. Here’s what I mean.
The Pros of Buying a House:- A house is your own space, and you can do whatever you like with it.
- A house doesn’t share walls with your neighbors, which means you have more privacy and space.
The Cons of Buying a House:- Your neighbors also have the ability to do what they want with their space, which can, depending on the circumstance, be a good or bad thing.
- A house’s repairs are entirely on you, so you have to make sure that you have enough money put aside in the event that you’ll have to pay to repair something.
- You are responsible for your own lawn and exterior, meaning you have to take the time and spend the money to attend to those areas.
- The bills in a home may well be higher than a condo. Trash, water, electricity—all of the bills associated with these may be higher in a single home, especially in the summer, than they might be in a shared building.
If you have any questions about this or are having trouble making a decision about which type of property to purchase, reach out to me. I’d be happy to use my wealth of knowledge to educate you about what would be the best path for you.
