What are the pros and cons of adding on or buying new?
Before
making a choice between adding on to an existing home or buying a larger one,
consider these questions:
* How much money is available, either from cash
reserves or through a home improvement loan, to remodel your current house?
* How much additional space is required? Would the foundation support a
second floor or does the lot have room to expand on the ground level?
* What
do local zoning and building ordinances permit?
* How much equity already
exists in the property?
* Are there affordable properties for sale that
would satisfy your changing housing needs?
Do we dig deep and buy a dream home or settle for a starter
home?
Choosing between a smaller house in an affluent neighborhood, an
older, bigger house in a more working-class community or a brand-new home is not
easy. If you're in this situation, start by examining your priorities and asking
the following questions:
* Is the surrounding neighborhood or the home itself
the most important consideration?
* Is each of the neighborhoods safe?
*
Is quality of the schools an issue?
* Do any of the areas seem to attract
more families with children or adult residents? And where do you fit in?
As for the return on your investment, home-price appreciation is hard to
predict. In the late 1980s, and again 10 years later, the more expensive move-up
housing appreciated wildly. But during the recession that followed, smaller
homes tended to hold their value better than more expensive ones.
How
do you choose between buying and renting?
Home ownership offers tax
benefits as well as the freedom to make decisions about your home. An advantage
of renting is not worrying about maintenance and other financial obligations
associated with owning property. There also are a number of economic
considerations. Unlike renters, home owners who secure a fixed-rate loan can
lock in their monthly housing costs and make prudent investment plans knowing
these expenses will not increase substantially. Home ownership is a highly
leveraged investment that can yield substantial profit on a nominal front-end
investment. However, such returns depend on home-price appreciation.
As for evaluating the risk associated with home ownership, David T. Schumacher and Erik Page Bucy write in their book "The Buy & Hold Real Estate Strategy," John Wiley & Sons, New York; 1992, that "good property located in growth areas should be regarded as an investment as opposed to a speculation or gamble. Just because certain properties are high-priced doesn't necessarily mean they have some inherent advantage," the authors write. "One property may cost more than another today, but will it still be worth more down the line?"
What do all of those real estate acronyms in the ads mean?
If you
find yourself stumbling over weird acronyms in a real estate listing, don't be
alarmed. There is method to the madness of this shorthand (which is mostly
adopted by sellers to save money in advertising charges). Here are some
abbreviations and the meaning of each, taken from a recent newspaper classified
section:
* assum. fin. -- assumable financing
* dk -- deck
* gar --
garage (garden is usually abbreviated "gard")
* expansion pot'l -- may be
extra space on the lot, or possibly vertical potential for a top floor or room
addition. Verify actual potential by checking local zoning restrictions prior to
purchase.
* fab pentrm -- fabulous pentroom, a room on top, underneath the
roof, that sometimes has views
* FDR -- formal dining room (not the former
president)
* frplc, fplc, FP -- fireplace
* grmet kit -- gourmet
kitchen
* HDW, HWF, Hdwd -- hardwood floors
* hi ceils -- high
ceilings
* In-law potential -- potential for a separate apartment. Sometimes,
local zoning codes restrict rentals of such units so be sure the conversion is
legal first.
* large E-2 plan -- this is one of several floor plans available
in a specific building
* lsd pkg. -- leased parking area, may come with an
additional cost
* lo dues -- find out just how low these homeowner's dues
are, and in comparison to what?
* nr bst schls -- near the best schools
*
pvt -- private
* pwdr rm -- powder room, or half-bath
* upr- upper floor
* vw, vu, vws, vus -- view(s)
* Wow! -- better check this one
out.