What "Kind" of Property Do You Want to Buy?

I think this question is the hardest question for most first time home buyers to answer.

What is my advice? Try to answer the following questions.

First, What is my monthly cash flow? How much can I pay towards a mortgage payment? How much money will I need to improve a property? Do I have that money in the bank after I have paid for closing costs and moving costs to do the improvements I want to do? Can I live through the process of improvements? Do I even like to paint? Am I handy? Do I need to hire someone to do everything or can I do some things myself?

My suggestion is to consider location first. Perhaps, you want to pick a neighborhood, but pick a second neighborhood also where the properties may be a little less expensive. The result should be that when you are in your house in the first neighborhood, you could live relatively well in the better location, and in the secondary location, you could live even better. You have to carefully decide what you want outside your door. Do you want convenient public transportation? Do you want a corner store? How important is parking? What can you walk to?

In Philadelphia, the things that might sway me in the better location are the overall conditions. Is the plumbing, water heater, heater and electric up to date and show few problems? How are the walls, roof, kitchen and bathroom. If they are all without major issues, I would be satisfied. If the paint or wall paper is awful, I am not too concerned. I can live with it until I can do a fix. If there is wall to wall carpeting on the floor and I want hardwood, I am also not too concerned. To put down new hardwood floors in Philadelphia, is not that expensive.

I recently sold a house, which at the last sale was an "old house". The owners made good decisions. They replaced all but the big living room window. The kitchen was small, which they replaced. They put down beautiful hardwood floors. They put in a new sump pump and French drain. It was all money well spent, which added value to the house.

What I have left out is that they left a fake stone wall in the kitchen, paneling on the walls of the living room and dining room and flocked wall paper going up the wall where the steps rise. By the looks of it, the ceiling never had a drop ceiling, but instead acoustic tiles. The tiles, which they put up looked new and had an attractive pattern on them. They painted the flocked wallpaper white which gave a nicely patterned white wall, and imitated the treatments you can now buy at the big hardware chains. The paneling was painted a nice color and the fake stone wall was painted pink to match the trim of the kitchen counter tops.

To their credit, they also had very good taste. They had a very nice combination of modern and vintage, and everything just went together and worked. My client, who bought the house definitely did not want a house with paneling, but I think was struck with how the house just came together and visually worked. It had a nice feeling to it.

I sold another house recently where location and price were most important. Structurally, the house was good. But ultimately, the house needed new floor treatments, kitchen and bathroom, new stairs and painting throughout. The buyer had to go for an alternative form of financing, because the house could not be financed with a conventional mortgage, because of the bathroom. It did not have a sink. Now, if you are faced with this issue, there are mortgages you can get to buy the property in conjunction with a construction/improvement loan to make the repairs and improvements. The buyer, in question, had the cash in had to do the improvements and only had to do the first mortgage, but it is possible to do both.

Paneling and drop ceilings tend to be one of the biggest things that deters first time home buyers. I am deterred if it looks like the walls crumbled and ceilings leaked and they are covering up major sins rather than making repairs. But when you see a house that is covered with paneling and drop ceilings and it is clean and the basement is clean. The paneling was, generally, a decorating choice. Yes, it should be cheaper to buy this house. It should have a price differential with neighboring houses that allows you to hire someone to take down the walls and ceilings and put up new drywall and trim. You may find that you just need to make repairs to plaster. It is likely, however, that you will have to put up new drywall on the ceiling. Many of the old plaster ceilings are covered with wall paper, which was then painted. To try and take it down is a bigger job then gluing new drywall up and over it.

So, your first consideration should be location. Then, look at the major systems and roof . Then, look at the decor. There are lots of properties being sold as rehabs with 40-50 year old heaters. Be honest with yourself. Is it worth it to pay a little more each month to have a house in a certain location? Is it worth to to pay a little more each month to have a house, where I don't have to do a thing for a number of years? Is it worth it to have a house, where I don't have to do a thing and live in my second favorite location? Is it more important to keep the mortgage payment down and try to do things in the house a little at a time? If you begin to answer these questions honestly, you may have an easier time narrowing down the large lists of properties your Realtor sends to you. Hopefully, you will be able to make a decision in which you are more secure and happier in the long term.

VOTE IN! Should Foxwoods Casino Build on Market Street?

In today's Philadelphia Inquirer, there is a new proposal for the Philadelphia Slot Parlor slated to be on South Columbus Boulevard or for what us old school people still call Delaware Avenue. Instead of building on the South Philadelphia Waterfront, there is a new proposal to redevelop part of the Gallery and to move the Foxwoods Casino to Market Street.

I would love to know the opinion of my fellow Philadelphians. Please see the two polls at the right side of this page.

http://www.philly.com/inquirer/home_top_stories/20080911_Rendell__Nutter_hail_casino_plan.html