HOW TO AFFORD A BETTER LOCATION

Many buyers quickly learn that a house with ideal features in an ideal location is both hard to find and expensive to buy. Often, they must choose whether to put their money into features or location. They can’t afford both.

Location versus features

When faced with this choice, it is generally wiser to put your money into location and compromise on the features. Houses in poor locations are least likely to appreciate and most vulnerable to real estate downturns. These houses are located near busy streets, dangerous installations like electricity grids, commercial areas, sources of noise or smells, or areas of high crime. Even a house with ideal features will suffer from a poor location.

Real estate investors follow the rule: "Buy the worst house in the best neighborhood." The logic is simple. Land and location contribute the most to a house's appreciation. A fabulous house in a good neighborhood will sell for top dollar, while a neglected house on the same street might sell for considerably less. Both houses will continue to appreciate because of the location. However, the neglected house - once fixed up - will appreciate much more in relation to its purchase price.

Location is something you cannot change. The house however, can be renovated to bring it up to standards and to suit your needs. You can make improvements as you can afford them. In the long run, you will get a better home and you will have the extra security of real estate in a good location.

You don’t have to buy the worst house

If you're not into fix-ups, you don't have to buy the worst house but you should look for a bargain in a good neighborhood. Perhaps it just needs cleaning and paint, or perhaps the seller is desperate to sell.

The rule of "the worst house in the best location" also holds true for condominiums and townhouses. Look for the best condominium or townhouse addresses. Then find a unit that needs work or has been on the market for awhile by an anxious seller.

How to find the bargains in a good neighborhood

If you’re not familiar with them, a real estate agent can tell you which neighborhoods are the best locations. Then you can choose the ones that meet your needs and preferences. To learn more about what makes a great location, check out the article "Location: What’s Hot, What’s Not".

The next step is to decide what shortcomings you are willing to accept in a house. Can you live without certain features; (or add them later)? Could you move into a house that needs cleaning and painting? Could you handle extensive repairs and renovations? Make a list of the things that you can accept in return for a lower price in a good location.

When you know what you can accept, you can begin to look for those bargain houses in the good locations. One way to find them is to simply drive around your chosen neighborhoods and look for houses for sale. Spot those that seem to need work, are small, or are otherwise not up to the area’s standards. An even better way to find bargains is to ask a real estate agent to find them for you. He will know the buying opportunities that are not necessarily obvious to a casual drive-by.

The advantage of shopping for bargains in a good neighborhood

In better neighborhoods, most buyers are shopping for better houses. The price ranges of these neighborhoods attract buyers whose expectations are high – and rightfully so. They are shopping in a price range that leaves little room for compromise.

Therefore, when you shop for the houses that other buyers do not want, you will probably face little competition. This will give you an advantage when negotiating the price. Lack of buyer interest is one of the greatest motivators to reduce a home’s price. To learn more about how to negotiate price reductions, check out the article, "Buyers: How to Negotiate Price".

If you are determined to buy into a better neighborhood than you could otherwise afford, it pays to put your money into location instead of home features. Once you own property in a terrific location, you can - as money allows – improve the house. Over time, you could have your dream house.