What to Look for When Buying a Home - Part 2

Continued from page 1

Editor's note: This is the second of a two-part series on house hunting. In the first part of this lesson, we talked about the price, resale value and overall condition of the property. Here are five more things you should look for when buying a home.

8. The Level of Maintenance

Some homes are high maintenance, while others are practically maintenance free. Your goal is to find a house that matches your maintenance capacity. We talked about the condition of the home already. You shouldn't buy a fixer-upper unless you have the skills, time and resources to actually fix it up.

The same goes for the outside of the house. What's the landscaping like? Does the home have a low-maintenance yard, or will it take several hours a week to maintain? Are you up for the challenge of a high-maintenance yard? Do you have the equipment needed? What about the added expense of garden tool, fertilizer, watering, etc?

I'd like to share a personal story with you, because it's entirely relevant to this topic. A few years back, my wife and I sold our house in Texas. We had originally purchased the home before we had kids. We both worked from home too, so we had plenty of time for landscaping and gardening. The yard had a lot of plant beds and other landscaping features. It was beautiful, but it was also a lot of work. We spent several hours every weekend to keep up with the maintenance.

So along comes this family with two young children. They fall in love with the house, the pool, and all of the beautiful plants surrounding it. So they end up buying the house. Now fast-forward six months. After speaking to an old friend from the neighborhood, I found out the new homeowners were in over their heads. He said the entire yard was overgrown by weeds, and he had heard the homeowners complain about the amount of work needed to maintain it.

These people obviously made a mistake when buying our house. They were so enamored by the home and the backyard pool that they didn't even think about the amount of work it would require.

This is another thing you need to look for when buying your first home. You need to choose a home that matches your lifestyle and maintenance capacity. If you don't spend hours on gardening work every weekend, then don't buy house with extensive landscaping. Your new home should improve your lifestyle–it shouldn't take away from it.

9. Neighborhood Restrictions and Taxes

If you're buying a house within a neighborhood or subdivision, you need to research the homeowners association (HOA). The purpose of an HOA is to maintain the appearance and integrity of the neighborhood. In order to accomplish this, certain rules and restrictions have to be imposed. You need to know what these rules are to make sure they don't conflict with your future plans for the house.

For example, maybe you plan to build a deck on the back someday. Does your HOA allow that? The same goes for landscaping, pets and vehicle parking. Some HOAs have very strict rules on these things, while others are much more flexible. This is something to look for when buying a house.

Some neighborhoods and subdivisions also have special taxes associated with them. For example, many states have something that's known as a municipal utility district (MUD). The homeowners in these neighborhoods often pay a higher tax rate than other neighborhoods that might be right across the street.

Here's another example. When I was buying a home in San Diego, we had to keep an eye out for Mello-Roos. This is another form of supplemental tax that can increase the cost of homeownership. Some neighborhoods had no Mello-Roos taxes, some had small ones, and others had very expensive Mello-Roos. This is something you need to research before buying a house in a neighborhood or subdivision.

10. Neighborhood Demographics

Speaking of neighborhoods, what's the demographic makeup in the area where you're planning to buy? My wife and I once lived in a small town called Yountville, which is located in the Wine Country part of California, near Napa. It's a beautiful town with great walk-ability. The only problem was we had a four-year-old daughter, and most of our neighbors were retirees. In fact, our daughter was one of the only kids within a 5-mile radius.

We didn't find this out until after we moved into the rental house. But with more research, we could've discovered this fact before choosing the location. Long story short, we ended up moving to a different city with a neighborhood full of kids. And my daughter was much happier for it. That's the hard way to learn about a neighborhood or town.

The point of the story is that you need to research the neighborhood as much as you do the house. This article includes plenty of things to look for when buying a home. But the surrounding area is equally important.

Learn from my past mistakes. Before deciding on a particular area, spend some time driving through it. Do some research online. Ask your agent about the neighborhood. You want to buy a house in a place that matches your lifestyle. Retirees who like their peace and quiet should not buy in a "starter home" neighborhood with tons of kids -- and vice versa.

11. Availability of Shopping and Other Amenities

How often do you shop for groceries? Maybe once or twice a week? Could you imagine driving 20 minutes both ways to accomplish this simple task? This is what can happen if you buy a home in the wrong area.

This is obviously a matter of convenience. But it also plays into the resale value we talked about in part one of this lesson. A home in close proximity to shopping will generally have a higher property value than one that's farther away (with all other things being equal).

As for the convenience factor, you need to think about your weekly routine. How often do you go shopping? What kinds of stores to you visit the most? Do you dine out frequently? The ideal scenario is to buy a house that makes these things easier to accomplish, not harder. This is something else to look for when buying a home for the first time.

12. Proximity to Work and/or School

Nobody likes a long commute. But sometimes it's necessary. This is one of the biggest trade-offs when buying a house. You may find yourself in a situation where you have to choose between the ideal home and the ideal commute.

For example, you might find a house that meets all of your needs and is well within your budget. But it nearly doubles your daily commute time. On the other hand, you might find a home that is slightly above your budget but closer to work.

This all comes down to your priorities. If you're trying to shorten your commute, you'll have to be more flexible with the type of house you buy. If you're willing to take on a longer commute in order to find the right house, you'll have many more homes to choose from. What's your top priority?

You need to think long and hard about the location of the home. I know it's easy to fall in love with a certain house, to the point of downplaying the disadvantages. But remember, you're going to be making this drive everyday. How is it going to affect your health and happiness if you take on a grueling commute? You should look for a house that will improve your overall quality of life -- not lessen it.

If you're serious about buying a particular home, but you're concerned about the commute, then give it a trial run. Get up early one morning and drive out to the home you're considering. From there, drive to your place of work during rush hour. You can do the same thing in reverse, by visiting the home after work. This is the only way to know what kind of drive you're facing. Could you do it every day? This is another important factor to look for when buying your first home.

13. Quality of Schools

Last but not least, we have the school situation. This is important to every home buyer, regardless of whether or not you have school-aged children.

• If you don't have kids, it's important for one reason -- property values. The quality of local schools has a tremendous impact on local home values. If you buy a house in an area with a desirable school district, you'll have a better chance for appreciation. And the opposite is true as well.
• If you do have school-aged children, this decision affects you in two ways. It affects your property values as well as the quality of your kids' education.

You can research schools online. But in my experience, there's a much better way to go about it. The best way to learn about the quality of local schools is to ask a parent who lives in the area. Better yet, ask several parents. They'll be able to tell you where the best schools are -- the kinds of schools where all the parents want to put their kids. They can also tell you where the less desirable districts are.

If you buy a house in one of the stronger districts, you will have one more factor supporting your property value. This also goes hand-in-hand with the future resale value of your home. But if you buy in an area with undesirable schools, you might see less appreciation -- or even some degree of depreciation.

This article explains what to look for when buying a home for the first time. These are obviously not the only things you need to consider when buying a home. But they are some of the most important factors. If you consider all 13 of these items before you make an offer on your house, you'll be more likely to make a smart decision.