We may not all have a 30-year plan, but there’s a good chance you have a general idea of how long you plan to be in the next house you buy. If you’re in the five- to seven-year category, you will want to approach both the homebuying and homeownership process differently than someone looking for their forever home. This purchase should provide a strong financial foundation and act as a springboard for increased homebuying power down the road.
So how exactly do you do that? First, you’ll need to choose a home that has a more visible potential for higher resale when the times comes. Then, while creating a personalized and homey feel, you’ll need to focus on projects sure to provide a high return on investment while finding the balance between profit and functionality. By following these simple guidelines you’ll better position yourself to enjoy your home while in it, and sell it for the highest possible amount without having to take on too many last-minute projects.
[See: 10 Ways Millennials Are Changing Homebuying.]
Choosing the Right Home
No matter how long you plan on staying in your house, you always want to make sure you make a strong investment. This not only applies to your monthly mortgage payments and other out-of-pocket expenses, but also to its future resale ability when it’s time to sell.
Everyone is different in their investment strategies and this post is not intended to aid in, or direct you towards, any of these. Whether you’re creating higher equity in your home through a 15-year mortgage or additional payments, or under-buying to allow yourself the ability to save and invest as much as possible. That said, have a plan. Don’t just wing it.
Location, location, location. To focus on investing in your resale ability, begin by concentrating on the one thing you can’t change — the location of the property. Gather as much information as possible by looking to a number of different sources.
Many towns and counties issue master plans which can be accessed online and give a broad view of upcoming projects, like new developments or road work. Be sure to consider not only the pros and cons of the finished product, but how long the project is expected to take and how it will impact your living situation while you are in the home. Fortunately, with a five- to seven-year plan, the scope of these master plans should cover the majority of potential projects that will impact you.
Drive through the surrounding area and check out how many new home communities are being built. While this might show the area to be up-and-coming, it will also bring an influx of both personal and construction traffic and you’ll need to get a feel for whether or not the current and proposed infrastructure is adequate. It also may benefit you to visit the new home sites to find out just how big the projects are — whether they are just building a small subdivision or a full-on planned community.
Investigate the neighborhood. If you’re out viewing the home in the day and feel comfortable enough, talk to a couple of the neighbors or go to the closest park and ask people how they like the neighborhood. Try to gauge whether it is on the up or downswing, and ask if there are any major upcoming changes.
If the house is part of a homeowners or condominium association, be sure to carefully review all associated documents, not only for their rules and regulations, but also for the financial strength of the association as this can impact both your current purchase and the resale down the road.
Know Your Limits. As for the house itself, you will need to ask yourself just how comfortable you are taking on projects. Keep this in mind: Smaller projects generally elicit a higher return on investment. They are less likely to lead to cost overruns and delays. You will have to evaluate both your willingness to put in sweat equity and hire a contractor, versus wanting a move-in ready house that you may have to pay more for.
[See: 10 Tips to Sell Your Home Fast.]
Return on Investment
No matter how much you have, throwing money away is never a good idea. But why should a stronger focus be placed on return of investment with a five- to seven-year home versus a forever home? For the simple reason that most projects will be one-and-done and should a project go south and need to be either fixed or completely redone, you have less time to recoup the cost.
Make wise choices. When you buy a house, you’ll undoubtedly have a long list of items to fix and personalize it so it truly feels like your home.
But how do you decide what and how to improve? Simply imagine you are any professional sports athlete deciding to send a tweet.
Is it going to send your own personal message (in this case, show off your personal tastes and fit your needs) while not coming back to bite you in the short or long term (improving the resale ability of your home)? Not sure whether to push Tweet or not? Just call up the coach (your trusted real estate agent) and get their opinion.
It’s all about the return. According to Remodeling Magazine’s 2015 Cost vs. Value Report, the highest return on investment is likely to be yielded through smaller projects which will enhance the curb appeal of the home, including replacing the front door (101.8 percent), the garage door (88.4 percent), and siding (80.7 percent).
Exterior projects have a great ROI, but simple projects such as painting, decorating, changing handles and fixtures can give the house a personalized facelift without labor costs if you choose to undertake the task yourself.
[See: The Best Apps for House Hunting.]
Find the sweet spot. While you want your house to be aesthetically pleasing inside and out to create both a homey environment while you’re living there and an easier house to sell when the time comes, you also don’t want to overimprove. Take time on the weekends to visit open houses in your neighborhood to see what improvements are generally being made, and then follow the sales online to better judge what is creating the best resale value.
By finding a home with the highest potential for a successful resale in the next five to seven years and creating a plan to complete projects with the highest return on investment, you are sure to enjoy the time you own your home while creating a smoother resale process in the future.
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Your Next Home Doesn’t Have to be Forever originally appeared on usnews.com
