Before you buy a house

Many people buy a house based on how close it is to their work, how the house looks on the outside and the inside, how are the neighbors, etc. The one thing I realized is that many people don’t think about buying a house based on location.  It can make a difference.

If you buy a house right next to where you work, you can save money by not needing a car.  Based on the consumer reports website, an average person will spend:

  • $400/year on repairs
  • $1500/year on car insurance
  • $3000/year on gas
  • $20 000 to purchase the car.  If the car will be used for 20 years, that would be $1000/year.

If you do the calculations, you will notice that you will be spending $492/month on the car.

(400+1500+3000+1000)/12=$492

If you and your spouse both work close enough, so you can both walk to work, you will save in total about $1000 every month.  This is a lot of money.  Furthermore, if a grocery store is also within walking distance, you can buy groceries daily without needing a car.

Having a home near your work has other advantages.  Less time traveling to and from work.  Spend more time with the family.  No need to worry about traffic jams, road rage, car breaking down, etc.

Therefore, when choosing a home, I recommend something within walking distance of work.  If the place is more expensive, you should think about how much money, time and headache you will save by not driving to work and factor that into the price of the home. Renting a  suite or a room in your home is also much easier since it is within walking distance of work.  You can also charge more if the business is large and has well paid workers.  The workers can afford to pay higher rent.

The locations I recommend are heavily industrialized areas, large office buildings, colleges, universities and near government buildings.  Some large businesses can also be good locations.  If they have well paid workers, the house nearby will be a good moneymaker.

If the current owner is selling, he/she is probably going to sell it for much more than the market value.  Unless of course the owner is retired, or is working at another location which is too far to drive.  He/she may need to sell it, so he/she can buy a home closer to work.

If you see a house that seems like a bargain, you should look at the surrounding area and see if there is anything nearby.  Chances are good that it is too far from any well paying companies, colleges, or universities.  Bargains are good, but making smart investments are even better.

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