First Time Home Buyers Should Avoid Money Pits

Example of a feature story aimed at first time home buyers for a realtor’s website.

Buying a new home is never a snap decision. Few of us have the resources to just pick out a home the day we finish school or get married.

For most of us, home ownership is a long-term goal we need to set and work toward for many years. When that fateful day comes when we qualify financially for our own cozy dream cottage, we need to make sure that the steps we take in choosing that first home don’t squander all those years of saving, planning and preparation.

First time buyers are usually shopping in the lower end of the market within their communities. Invariably, there will be a few properties in their price range that seem too good to be true. Either they’re in a location that should command a much higher price, or they offer far more house (square footage) than other homes available in their price range.

Realtors have listed these properties at those price points because there are substantial repair issues to be addressed. You or your spouse may be handy. You may be young and fit and not afraid to invest some sweat equity to turn a dilapidated old house into a home.

The issue with these properties is that it’s going to take more than elbow grease to make them livable. We’re not talking about places where the decor is a bit dated (“vintage”) or the present owner seems to have an aversion to paint.

We’re thinking about structures where it’s going to take tens, or even hundreds of thousands of dollars in specialized labour and materials to bring them up to code. The risk is that you’ll pour even more of your nest egg into reconstruction and never get it out again.

You may never succeed at raising the value of the property to a level where you recoup your hard work and hard-earned money. It takes a very experienced developer or contractor or both to know exactly how to take on a property like this.

They’ll work out how to solve the structural issues economically, stage the home and flip it at a profit. More often than not, they buy these properties for the location and land value.

Then, they simply tear the building down as cost effectively as they can. Voila!, They’ve found a vacant lot, which is hard to do with today’s zoning restrictions. In short, there’s a reason these ramshackle properties are going for that “too-good-to-be-true” price.

Money pits like these aren’t for beginners. At the very least, have a reputable home inspector tell you what you’re getting into and don’t hesitate to walk away.

Homes like this are hard to finance and hard to insure. You’ve worked for years to build up your down payment and qualify for your dream home. Don’t make a fool’s bargain and end up with a nightmare instead of a dream.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s