Finding Your Ideal Neighborhood

Buy the Neighborhood
By Elizabeth Brokamp


Provided By Motley Fool Green Light
 
If you're in the market for a home this year, look beyond its four walls and directly at your neighbors. No, I'm not advocating spying (violating "peeping Tom" laws doesn't create a great first impression), but do thoroughly check out a prospective neighborhood before plunking down hundreds of thousands of your hard-earned dollars.


Learning the hard way

A few years back when my husband and I were house-hunting, we looked at a home in what we christened "the hot dog neighborhood." On Halloween night each year, this particular neighborhood blocks off one of its streets, holds a parade, and then grills hot dogs for the neighborhood kids. That was enchanting -- a real neighborhood party in which everyone seemed to know and like one another, welcomed children, and celebrated holidays with zest. The problem? We weren't nearly so fond of the house -- its exterior was clearly a 1960s experiment gone awry and the interior was just plain odd. We passed on it, despite the warm-fuzzy neighborhood feel.

Many years and a couple more children later, we wish we'd gone for the hot dog house. Why? Because now we live in a neighborhood that just doesn't suit our personalities, our family's needs for socialization, or even our politics, if you get down to it.

We didn't know all of that when we purchased the sturdy five-bedroom with a pleasant layout and a big yard. We just knew it was a "nice" neighborhood in which we could afford a home. Sure, we'd driven around the neighborhood and chatted briefly with the folks next door before we made an offer. But our research went something like this: "So how do you like living here?" Having conducted this sort of research in all of the neighborhoods in which we've lived, I will tell you: We have never talked with people who spoke badly about their own neighborhood. Occasionally, they will add helpful tidbits about specific neighbors ("We've been trying to get the guy in that house to clean up his yard for years!"), but seldom do they say anything nasty about the larger area. It seems that people, like dogs, don't sully the place in which they sleep.

If you want to get the real dirt on your neighborhood, you're going to have to do some digging. So dust off your trench coat and dark glasses, and get ready to go on a sleuthing expedition.

Tips for finding your ideal neighborhood

• Contact the community association for the neighborhood you are considering. Often, it publishes newsletters, holds meetings, or sponsors community activities, all of which hold potentially useful bits of information about your neighborhood.

• Subscribe to the local paper or call and ask for a sample of back issues.

• Locate the community hang-outs. Is there a neighborhood pool or community center? If so, try and visit so you can get a sense of who lives in the area and whether there is a strong community feel.

• Look for sidewalks. For us, living in a part of the neighborhood with no sidewalks means many things -- we don't go for as many walks (and therefore don't meet and greet the neighbors as much as we'd like), our young kids have fewer safe places to ride their bikes, and it seems to prevent other folks from walking our way much, too.

• Visit the neighborhood at different times of the day and at least once on a weekend rather than a weekday. Are most of the folks working out of the home? Is the neighborhood composed of retirees? Are there loads of school-aged children? Are there many young mothers with babies and toddlers?

• Study a map of your neighborhood to see the proximity of parks, libraries, the nearest hospital, and other amenities. Likewise, try driving different routes to the home so you can see the good, the bad, and the ugly in the surrounding area.

• Arrange a visit to the school your children would attend, check out the school's test scores, and find out how many veteran teachers are on staff.

• Talk to the neighbors and ask them very specific questions. For example, you may want to ask about their perceptions of crime, location, noise, traffic, and community feeling. Is the neighborhood changing? If so, how?

• Head down to city hall to check on issues with zoning or find out about any projects in the works. You should be able to find out if there are any major road or construction projects planned for the next few years.

• Pump your real estate agent for information. How long do homes in this area stay on the market? What's their resale potential?

• Check your town or city's website for real estate tax assessment information. By looking at our local real estate tax office website, I can see the value of the assessment, how much of that total is land versus the structure, how the assessor rated the structure's condition, and recent home sales in the area.

• Head to the nearest police station to ask for crime rate information. Be sure to ask about the typical response time for emergencies.

• Check the national registry for sex offenders.

Once you've gathered as much information as you can, review it. Does the neighborhood seem to meet your needs? Did you find any information that's a deal breaker? Can you picture yourself living here happily? Be as picky as you can afford to be; no returns or exchanges are offered on neighborhoods.

Copyrighted, The Motley Fool. All rights reserved.

Rent or Buy?

By Mary Dalrymple
Provided By The Motley Fool Green Light


Home prices, mortgage rates, and housing bubbles have gotten their fair share of print in the news lately. If you're a renter wondering whether to take the leap into homeownership, it may all seem a little overwhelming.


When considering whether it's better to remain a renter and let your landlord fix the plumbing leaks, your area's real estate market should be one consideration. But it's not the only one, and it may not be the most important one. Here are some things to ask yourself when considering whether to become a homeowner.

Will you remain in the house for more than a few years?

Housing prices have definitely skyrocketed in many regions, but that doesn't mean they'll stay on that path forever. A few areas have seen prices starting to decline. That can be great when you're the buyer, but not necessarily when you're the owner.

You'll want to stay in your home long enough to at least recoup your buying costs. If you know you'll move in fewer than three years, your house may not have appreciated enough to cover those expenses. You may want to plan on staying at least three to five years to give yourself more time to cover your costs.

How does it compare with renting?

When renting, it's easy to calculate whether a new apartment will fit in your budget. Just ask about the monthly rent and the average utilities. Once you start thinking about buying a home, this calculation gets a lot more complicated.

Luckily, there's a handy Motley Fool calculator that will tell you whether you're better off renting. As you'll see from the questions the calculator asks, this equation depends on the expected appreciation of your home, your tax rate, your mortgage interest rate, your homeowners' insurance, and your property taxes, to name a few things.

What else would you do with the money?

If you purchase a home, you may shell out more each month for your housing costs. That doesn't mean it's better to remain a renter. You're likely to get a discount on some of those costs, including mortgage interest and property taxes, through various tax deductions.

Also, your mortgage payments won't climb every year with inflation, the way your rent can. (Unfortunately, the same can't always be said of your property taxes.) When you pay your mortgage each month, you're building equity in your house. When you pay your landlord each month -- and he keeps raising the rent -- you're not gaining anything but the same old apartment, for more money.

On the other hand, homes require some upkeep and maintenance, which can get expensive. Depending on the real estate market in your area, you may find no advantages to buying a house. Maybe you're better off investing your money and improving your financial situation through stock ownership, instead of real estate.

Can you place a down payment?

To get the best mortgage arrangement, you'll want to be able to put down 20% of the purchase price of the home. You can get a multitude of arrangements that let you avoid that down payment, but some can be costly. You'll either have to pay private mortgage insurance to protect the lender in the event that you default, or you'll need a second loan that will probably come at a higher interest rate.

There are many programs around to help people, especially first-time homebuyers, who cannot put down the traditional 20% down payment. You may qualify for one of these arrangements. In the meantime, consider whether you'd rather rent longer and save more money toward a down payment.

How do you feel about homeownership?

Some people cannot wait to paint the white picket fence and plant daisies, while others dread the idea of doing their own maintenance chores. If you know exactly where you stand on that question, there may be no debate about whether you should keep renting or start home-hunting.

Copyrighted, The Motley Fool. All rights reserved.