How To Find a First Home That’ll Actually Make Money When You Sell
For most of us, buying a first home is a pretty big deal. We’re all indoctrinated from a young age with the more romantic aspects of becoming homeowners, making it hard to imagine when we purchase that first abode that we’ll ever live anywhere else.
But think of it this way: Wouldn’t it be nice to know that when it does come time to sell your beloved first home, you’ll be walking away with a nice chunk of change to put toward your next dream house? My husband and I are in the process of selling our first home, and we’ll be pocketing roughly $100,000 after paying off our mortgage. While it wasn’t something we necessarily planned going into this process, it’s certainly a lovely byproduct.
If that sounds appealing to you as well, here are seven tips for finding a first home that will actually make you money when you sell.
Find a good floor plan
Obviously you want your first home to be livable since, you know, you’ll be living in it. Aside from the functionality for you, though, consider how future buyers might feel about the layout. You can’t really fake a good floor plan; either your home has one, or it doesn’t. You want to avoid having to do any major structural changes (like removing load-bearing walls) if possible, because you’ll have to subtract the renovation loan from your potential profit margin.
Admittedly, this is the one thing we struggled with in selling our home. Because the previous owners added a huge new addition onto the back of a small, older home, there’s tons of space — but it’s an awkward configuration of space. If you find yourself in a similar situation, know this: staging helps.
Insist on an inspection
If you’ve ever tuned into HGTV’s Flip or Flop, you’re already aware that professional property flippers often buy a home sight unseen or sans inspection. It’s a competitive market, the homes they are typically buying are total overhauls and they’re paying in cash: all reasons they have to move fast. Of course, they don’t intend to actually live in the home they’re purchasing to flip.
Since this will be your primary residence, a home inspection is of the utmost importance. Looking for a sweet deal might lead you to houses listed “as-is,” which is fine — it doesn’t mean those houses are off the docket. What it does mean is you should always, always insist on a home inspection to alert you of any issues that may lead to your first home becoming a money pit in the long run.
Check the most desirable school districts
Before we had kids, my husband and I gave alarmingly little thought to buying a home in a good school district. Since we had a daughter who would be entering kindergarten when we were finally ready to plant roots, we quickly realized the saliency of the advice we’d been given by so many parents over the years: “Buy in a good school district.”
Homes in good school districts simply sell faster. If you happen to live in a state with a relatively small number of top-rated schools and you manage to find an affordable house in one of the best districts, you’ll find that in and of itself makes your home a hot commodity.
Many school districts have an online zoning map that delineates which neighborhoods are assigned to certain school districts. You can usually also plug any specific address you’re interested in into that database, and it will tell you what schools that home is zoned for. Once you have a solid idea of the areas in the best school district, spend some time exploring the neighborhoods that are less established.
Be open to different neighborhoods
This brings us to our next point, though. Since homes in good school districts are highly coveted, it can be difficult to find one in the more established neighborhoods (without having to barter your firstborn to afford it). The same goes for finding a home near the city center or historic areas. But if you’re willing to look beyond the white pickets fences and consider a more up-and-coming neighborhood, your options expand considerably.
When we bought our home nearly three years ago, the area was billed as transitional. Now it is one of the trendiest spots, which has certainly worked in our favor throughout the home-selling process. Just remember to follow the market: pay attention to areas with rising real estate sales and solid employment growth, and expand your search outward from there.
Keep an eye out for unique features
If you’re lucky and/or played it right, you may find that the area you live in is a white-hot market. The good news here is that you stand to make a considerable profit, because home values in the area will have inevitably risen. The not-as-good news is that you could have more competition, because everyone who has a home to sell could be looking to capitalize on those higher home values.
So, in the beginning, think about future selling points. What drew you to the house? What does your house have that other houses in the area don’t? For us, there were a few: our home is hugged on two sides by a recently renovated park, it’s only five minutes to a favorite local beach, we only have one neighbor and the original portion of the home had plenty of historic ranch characteristics we found charming. These are all aspects we played up to potential sellers when we put our home on the market.
Envision the curb appeal
“Curb appeal” isn’t just a buzz-phrase. Here’s the cold, hard truth — people absolutely judge the proverbial book by its cover when buying a home. If your first home looks it could use some TLC on the exterior, buyers will notice. They will use it to haggle. Still, it’s relatively easy to spruce up your home’s curb appeal with a pressure washer and nice landscaping.
What is much trickier to overcome is the surrounding curb appeal. As in, if the house next or across from you has a major curb appeal problem. Unfortunately, that’s not something you can fix with gardening supplies and a can-do attitude. Even if your house is pretty as a picture, your curb appeal will be greatly impacted by the eyesore next door.
Think of it as a really slow flip
The whole idea here is that the house you are buying isn’t a flip. It should be livable—enough that you can get away with minimal repairs and renovations, thus maximizing your profit (while being comfortable, too!). It will be your primary residence — and, coupled with an extended time frame, that’s a very important distinction.
Why? You may be wondering how taxes work when you sell a house, and for good reason. If you sell a home that you haven’t lived in as your primary residence for at least two of the last five years, you will be taxed on the capital gain. However, if you’ve lived in the house for at least two of the last five years, it’s far less likely you’ll have to pony up. For a single home-seller, you don’t have to pay taxes on the sale of your primary residence unless the capital gains exceed $250,000. For a married couple, that amount doubles to $500,000.
First homes typically aren’t last homes, so it makes sense to go into the home-buying process with the end game in mind. But by all means, buy the home you love — you’re the one who has to live in it, after all!