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House - Buying Real Estate
Written by the frugal nomad   
Monday, 12 July 2010 03:30
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Size matters – especially when it comes to homes. The original purpose of housing was to provide a little privacy, give Condosyou shelter from the elements and a place to horde your food. I think we’ve all inherited a few territorial genes, but excess space can be a very expensive proposition. From a financial point of view, there’s no difference between having a room you never use, installing a second "decorative" dishwasher in your kitchen or keeping a few spare cars in your driveway "for emergencies."     

The benefits of living in a smaller space are obvious. You end up with a smaller mortgage payment and more affordable utility bills. The taxes and insurance are lower and you’ll spend less time and money on upkeep. Less space means fewer reasons to buy furniture. The best part is that smaller homes are easier to clean so you can do without a maid and clean up after yourself.

With what you sacrifice in space, you can live closer in and commute to work with public transportation or you can get an address in a better neighborhood with quality schools.

The best way to save on housing is to buy the home you want in the location you want the first time around so you don’t ever have to sell. Whether you’re upgrading or downsizing, the transaction cost of buying and selling can really take a huge slice of your appreciation. There’s another reason to buy a size appropriate home that you intend to stay in for a very long time. Interest rates are very low right now. A 30 year mortgage at 5% is a very attractive proposition but only if you stay in the house for thirty years. If you decide it’s not the right house five years later, you might have to finance your dream home at a higher rate.

Consider the advantages of condo living – especially if you don’t have children. You can just walk away and go to Paris for a month without worrying about the yard or the pipes. Your neighbors look out for your property because it will preserve the value of their property. You end up with a real tiny community of folks – sometimes it ends up being like a little village in an urban jungle. You watch out for their cat when they’re away and they keep an eye on your place when you take off.

If you’re buying a condo – buy in a self-managed complex with a maximum of 12 units. That’s where you’ll find the lowest fees and have a sense of community. Condo fees vary widely and small complexes usually end up being self-managed by the residents and that often results in lower fees.

When it comes to Condos – try to buy in newer developments built by experienced small developers with some kind of distinctive signature. As an alternative, go to the other extreme and buy a well maintained unit in a well managed smaller building that has distinctive and historically significant features. That’s where you are likely to get the best appreciation and that’s where you’re likely to stay for a long time.

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