Tag Archives: first time homebuyer

Questions to Ask Yourself Before Remodeling Your Home

24 Aug

My husband and I are currently in contract for our first home. As exciting as it is, it is also incredibly nerve-wrecking to watch money being pulled out of your bank account,  schedule and attend meetings and fret over renovations that need to be made. We are hoping that this is a property we can fix-up and enjoy for at least the next few years.  We were also okay with moving into places that may need some work, which is the type of co-op we ended up choosing. I have a dream that this will end up as a money-maker, but I am realistic and also would just love to break even at the end of it all.

When purchasing a home that needs repairs, you definitely need to consider how much you want to spend before you put an offer down on the property. Here are some important questions to keep in mind to determine whether or not you want to even take on a remodel:

1. Is it worth it? 

  • Do I plan on staying in the property long-term or do I plan on flipping the property?
  • Is the house listed at a lower price than comps that have already been updated?
  • Will renovations have any impact on the resale value of the home? Or will I out-price myself?
  • How many things need to be renovated and at what cost? Are they expensive renovations or not?

2. Can I afford it?

  • Do I have the money on-hand after purchasing the home? Or do I plan on taking out an additional loan?
  • Do I need to put any of my purchases on credit?
  • Are these renovations going to be upscale, middle of the line or a homeowner’s special?
  • Are any of these renovations or updates that I can do myself or will I require contractors, permits, etc?

3. Can I Live With It?

  • Will I be able to live in my home while renovations take place? Or do I need to stay elsewhere?
  • Am I prepared to go without certain things on certain days?

As for us, we will be paying for our renovations out of our own pockets once all is said and done—we are not taking out any additional loans or putting anything on credit. For me, this is the only way to go.

How do you feel about the costs related to renovating your home? Are there any other considerations future homeowners should think about?

So You Want to Buy a Co-Op—Or Do You?

12 Jun

Co-ops, or housing cooperatives, are one of the many housing options available to people looking to have their own home.  Many people don’t even know what they are, especially if you find yourself living outside of major cities. Where I live, cooperatives are everywhere and they can be highly sought-after.

If you don’t know what a co-op is, or if you’ve heard of it but don’t really understand the purpose, you might find it to be kind of bewildering.  Sarah Siddons sums it up:

When you acquire a home in a housing co-op, you don’t actually buy real estate — you buy shares in a corporation, whose only asset is the property. This corporation owns the home you live in; you own no greater part of it than any other member. You gain the right to occupy it through what’s called a proprietary lease or occupancy agreement.

Technically, unlike a house or condo, you do not actually own the piece of property you are paying for so you might be scratching your head and wondering why anyone would want a co-op in the first place.

Why would anyone want a co-op?

Even though some people might be put-off by the idea of cooperative units, they actually have quite a few benefits.

1. Co-ops are generally more affordable than houses or condos

Where I live, co-ops can be significantly cheaper than condos or houses. By significantly cheaper, I mean hundreds of thousands of dollars less for properties of comparable size. In my area, I could not afford a condo let alone a house. To be fair, I have seen a total of two condos in a year and a half of looking on Trulia that we could afford and both needed work, which is not even a problem for me.

2. Co-ops are good for people who aren’t good with maintenance or lack the funds for upkeep

Currently, I am a renter in a co-operative building. People who actually own units in my building pay maintenance fees somewhere between $500-$800/month depending on the size of their unit on top of their mortgage payment. Maintenance includes a lot of things, which I will discuss below, but it also includes contributing to the buildings finances. If the elevator breaks down or if the building needs a new roof, you are not suddenly finding yourself responsible for thousands of dollars in repairs.

3. Co-op maintenance fees may work in your favor

Maintenance fees in co-operative units can range quite drastically depending on the building you’re in and may benefit you in a number of ways. You may find that :

  • Some of these fees include certain utilities such as gas or electric
  • Some co-ops have additional things like gyms, doormen, storage units, maintained gardens and a live-in super
  • Taxes and other charges such as water and heat are often included
  • And the biggest factor— maintenance can be anywhere from 30%-70% tax deductible
Why would I avoid a co-op?

Just like anything else, co-ops can their disadvantages. Many of these are really off-putting to potential homeowners.

1. You never technically own your property and may not be able to make a profit

As mentioned above, you are just purchasing shares of a property so you do not technically own the property itself. On top of that, some co-ops have a flip tax which may take all or part of any money you would otherwise make from a sale. Additionally, because most co-ops do not allow subletting, it virtually eliminates the potential for an investment property.

2. Co-op boards can be a hassle

If you know anybody who owns a co-op, you might have heard about the infamous “board” that may be the bane of his or her existence. Depending on where you are looking for a home, co-op boards can be barely noticeable or a constant annoyance. Boards can be notoriously choosy as to the people they allow into their units and can reject people for a variety of reasons. On top of that, restrictions on what you can do to your unit can be placed at any time. For example, my uncle had a washer installed in co-op and not too long after that the board decided that people could no longer install them.

3. Maintenance can be awfully high for not very much

Maintenance can vary widely from co-op to co-op. In some buildings, you get a lot more for your money than in others. For example, a co-op that I looked at this past weekend had the maintenance listed at 32% tax deductible, which is far cry from the other co-op I looked at that had the maintenance listed at 50% tax deductible. While some will include certain utilities and other extras, others will include only the very basics. Many people will find that maintenance can be prohibitively expensive for people on-top of a mortgage payment.

How do you feel about co-ops? Would they be a viable option for you? For us, it’s currently the only option.

To Buy or Not to Buy – Our First Home

11 Jun

I am currently in the midst of freaking out and incessantly thinking about the possibility of purchasing a home.

I thought I had most of the figures down until I found myself on this link: Is It Better to Buy or Rent? According to the numbers that I put in, it would be better for us to rent for the time being, which makes me sad in a way.

Purchasing our first home is an incredibly scary thing for us. We have been saving up money for a few years now and we finally have enough to put 20% down on certain properties. In our area, a major city, we cannot afford anything but co-ops and the occasional condo. I have a feeling that when I ask for a cashier’s check of nearly $70,000 to put down as a down payment, I might throw up. Really.

Part of me feels conflicted because I want a place of my own. Part of me feels conflicted because a co-op is not my dream home. My dream home has space, a backyard and a pool. My dream home is not what I could only describe as “having that apartment feel.” By space, I don’t mean a huge house—I just mean something we could grow into together.

My husband and I have been pretty set on purchasing a two-bedroom co-op. Right now we rent a one-bedroom apartment for $1300.00/month. We actually live in a pretty nice building but it has a lot of things I don’t like such as:

  • The only thing the kitchen has going for it is the space—it’s actually a big kitchen for most apartments I have seen in the area and has a lot of cabinet space. The kitchen has an ugly laminate floor that is not only coming up in certain areas but is put on in such an incredibly lazy way that the second half of the kitchen “tiles” do not line up with the first half. The backboard is crooked and not even against the wall. There are holes/spaces near the floor.
  • The bathroom is disgusting. Both the pipes in the sink and tub seem to ALWAYS be clogged. For whatever reason the ventilation is awful and we always have mold growing. The stuff is coming up off of the tub floor.
  • Last year we had an awful storm and water started to leak through the brick. The building had to be repointed and the super said after it was finished, he would come in and paint over where the water leaked through and left yellow stains. Never happened. We have a live-in super and considering he had to do this on every floor for multiple sections of the building I find it hard to “forget.”
  • Awkward things like a door to the living room, a super dark hallway, small foyer that ends up being a haphazard desk area
  • Roaches!

At the same time there are things I do like:

  • Rooms are a nice size
  • Daytime doorman
  • Building, overall, is nice and has laundry downstairs; close to train
  • Rent is okay for us

WHAT WE WANTED FOR OUR HOME

  • Wanted a two-bedroom or a one-bedroom large enough to perhaps alter into a second room
  • Wanted a private outdoor space such as a terrace
  • Lower maintenance costs
  • Washer/dryer on-site

THE CONDO

There has only been one condo for sale that we could remotely afford. Crunching some numbers, paying the mortgage plus the maintenance would actually cost us either slightly less or slightly more than what we pay now. The taxes were relatively low and given the fact we could claim our mortgage interest, I think it would work out to our benefits.

PROS

  • Cheaper for us
  • Had a terrace
  • Had a W/D in the unit
  • Had a small storage space in the basement
  • Had a parking spot—extremely, extremely rare

CONS

  • My guy absolutely hated it
  • Definitely need a little work
  • Smaller than the place we’re in now

SUMMATION

I guess I have a little more vision but I saw some potential in there to really fix up some things and turn a profit on it. I liked the fact that we could rent it out in the future, unlike most co-ops, and I think we could actually turn a profit on the place either renting or selling. However, as much as I am willing to make an offer, my man is not and I’m not going to force him into something he doesn’t like even though I have really tried to sell it to him.

THE CO-OP

The very first co-op we saw is the one we keep coming back to. It’s approximately 280 square feet larger than the condo (880 square feet) and has two bedrooms.

PROS

  • Sick of living in big buildings and this is a very small co-operative unit that looks like a row of houses
  • Two bedrooms
  • Open feel
  • Terrace
  • Very low maintenance that is 50% tax deductible—the maintenance rate is unheard of in our area
  • Separate/private entrance
  • Private storage area in the basement
  • Doesn’t need a lot of work—mostly cosmetic stuff that we could live with for now

CONS

  • Kitchen is kind of small
  • Bedrooms are kind of small
  • Currently no W/D on site—we have to see if they’ll let us put one in the basement—additional expense
  • Eventually would like to add a dishwasher—another additional expense
  • Parking in that area is worse than where we are now and there might be three spots somewhere but they are wait list and I doubt we’re anywhere near the top
  • Would cost us more than our current rent
  • Cannot sublease in the future

SUMMATION

We are actually working on bidding for this place. We are going to bid quite a bit less than the asking. We’re still in the process of figuring out our loan stuff (trying to get a better rate) and obtaining a lawyer.

Although the money maintenance and mortgage would be more than our rent right now, our rent would eventually increase again. Additionally, the mortgage interest and half of the maintenance are tax deductible, so I think this will almost allow us to break even.

NOT FOR THE WEAK

Buying a house is emotionally draining. It really is. And as much as I try to stay logical about it, I still find it to be such an emotionally wrapped up decision. As much as I can make an argument for the condo, will we be happy in a place we don’t particularly like? I need my home to be a place I enjoy being in—not somewhere I want to run from.