5. The Home You Purchase

There’s one aspect of house hunting that tends to surprise people. Let’s say you’ve narrowed your choices to two homes that stand side by side in a great neighborhood. One needs repairs and updates but has a huge lot. The other is in tip-top shape but sits on a lot half the size of the fixer-upper. The prices of the two homes are similar. Which do you choose? In most cases, the house in need of repairs is the better investment.

The reason: your house is a depreciating asset. On the other hand, the lot will maintain its value (or likely appreciate) relative to the house. If you bulldozed both houses, the larger lot would sell for more. So, if you can, choose a bigger, better-shaped, or better-situated lot over a nicer house. A less attractive house can always be updated, added on to, or replaced altogether, but the lot can’t change.

Buying a fixer-upper home in a popular or up-and-coming neighborhood can be a good investment if you have the time and money to improve the home.

A good neighborhood often has indicators of its stability from well-kept homes and yards, convenience to amenities, low crime rates, public transportation, public schools, and paved roads.

You don’t have to use a realtor to buy a home. However, a good local realtor can help you learn more about the neighborhoods, if you are moving to a new location. They can also answer questions about schools, local events, and the community. If you are buying a new house in your own hometown, you may be able to skip this step, but realtors may have insider knowledge of home sales and they may be able to negotiate on your behalf for a better sale price. That being said, it is possible to a home without one, just be prepared to the all the research, paperwork, and negotiating with the seller or the seller’s realtor.