A fixer-upper with the right things wrong could spell instant equity for you.

 

 

In a sign of a robust housing market, existing-home prices are expected to rise 5.8% in 2017 over 2016, according to the NATIONAL ASSOCIATION OF REALTORS®. But rising prices, record-high levels of student loan debt, and stagnant wages make it more difficult for first-time buyers to save up what’s needed for a down payment.

 

 

Consider Nearby or Adjacent ZIP Codes

The old adage in real estate is “location, location, location,” but often the location is the very thing that makes certain ZIP codes so pricey. When looking into a desirable area, consider the nearby or adjacent neighborhoods to scout for more affordable finds. The good news is that if your house is near a pricer area, home prices are expected to remain strong or even rise as demand for the area increases.

 

 

Purchase a Foreclosure or Fixer-Upper

After my own disaster of a renovation, I know better than to think home makeover projects are as easy as they look on HGTV. Still, purchasing a foreclosure or home that needs a little work is a smart move if you want to buy into a more expensive neighborhood and stay in your price range. 

 

Fast Equity Can Help You Trade Up

A fixer-upper can earn “instant” equity, especially with these three projects: a new roof, refinishing hardwood floors (or adding new hardwood floors), and insulation.

Fixer-uppers  can yield significant discounts in major urban areas — as much as 40% to 50%, according to research conducted by realtor.com, but inventory may be low, and the competition may be fierce. 

 

 

Consider a Roommate

If you can afford a home but are concerned about what the monthly payment will do to your lifestyle (and budget) consider renting out rooms in your house to a long-term roommate or on housing-share apps. 

This way, your housing payment gets covered and any extra can go toward paying down the mortgage, paying off student loans, or maintaining your lifestyle.

 

Try a Starter Home Before Thinking of a Forever Home

Think about what you really need in a first-home purchase as opposed to what you fantasize about having. With so many first-time buyers now delaying home ownership until their early 30’s (when a family and kids comes along), many skip the notion of the starter home and leap right into the forever home - often at a cost.

Starting small allows buyers to start putting housing payments into equity, not rent. Should property values rise, after a few years a buyer would then be able to upgrade into something bigger or more practical for their lifestyle.

Also keep in mind that just because you qualify for a loan amount, it doesn’t mean you have to borrow the maximum. When shopping for homes, be sure to find something that sits comfortably in your budget once you factor in insurance, taxes, and home maintenance — and even discretionary funds.

While these tips may not land a first-time buyer in their ideal neighborhood straight away, equity (the amount of your house that you “own”)  builds over time and works in favor of the buyer. Remember: With time and patience, many may be able to cash in on the equity in their first home and move into their ideal square footage or location. 

 

 

Source: https://www.houselogic.com/buy/first-time-home-buyer/home-price-trends/

 

is the award-winning blogger and editor behind personal finance site “Financial Best Life” and author of “The Millennial Homeowner: A Guide to Successfully Navigating Your First Home Purchase.” She’s contributed to such financial sites as “CNNMoney” and “Forbes.”