Straight Talk from Al Jacobs

 

THREE TIPS FOR THE ASPIRING HOMEOWNER

 

Home ownership, a vital element in the American dream, is a blessing.  It also contains the seeds of financial misfortune. To help aspiring homeowners avoid a few common errors, I want to pass on three tips.

 

1.  Pick the right area. The most overused phrase in real estate is: “The three most important factors in real estate are location, location, and location,” but rarely does advice follow its utterance. This means, in practical terms, you select your home in an area exhibiting pride of ownership, few if any slum properties, an absence of nearby vacant commercial spaces, neighborhood schools with high performance ratings, and a community with a low crime rate. What you cannot note by inspection is available from many sources. And as to the house itself, though it’s nice to get a pretty one, location is the main concern. I’ve always operated on the premise the worst house in the best neighborhood beats the best house in the worst neighborhood.

 

2.  Don’t stretch beyond your means. Normally tenants tend to rent less expensive residences than they can afford, whereas homebuyers reach for the moon – and beyond. Perhaps it’s a psychological acknowledgement of intentions: temporary vs. permanent. I advocate you not commit to obligations which may strain your limits. It’s more sensible you obligate yourself to less than you think you can handle. Simply put: Choose a cheaper home than you can afford.

 

3.  Be slow to remodel.  Now that you’re in your home, you see the things you want to change.  To this I say, do what you must for simple habitability, but otherwise, go slowly.  It’s preferable you live in a structure awhile to get a feel of what you really want.  A home will grow on you with time, and ideas concocted during your first week of occupancy often seem outlandish by the third month.  It’s best you spend the first six months in planning, measuring, sketching, collecting prices, inspecting other homes and models, and enthusiastically fantasizing.  At the end of that time you may be ready to proceed.

 

A final thought: If you purchase your home in a favorable location, you may expect it to appreciate nicely over the years. For many persons this can be the basis of a prosperity which makes your senior years far more livable than otherwise.

 

 

Al Jacobs, a professional investor for nearly a half-

century, issues weekly financial articles in which he

shares his financial knowledge and experience.

You may view them on http://www.roadwaytoprosperity.com