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How I Figured Out Houses – Growthfolio – Medium

Figuring out where to live is huge, especially if it’s going to be long term. Not only is owning or leasing a house long term a big financial decision, where you live can change your entire lifestyle.

After finding my housing this summer, I decided it was time to figure out how to actually go about making long term housing decisions. I may have a few years before I actually face that decision, but I’m sure they’ll pass by before I even realize.

What I did first was to make a list of all the questions I needed to answer before being able to find a suitable house.

  1. How to evaluate a house?
  2. Should I rent or buy?
  3. How much should a house cost?
  4. What does a good neighborhood look like?
  5. What needs to be near it?
  6. How to evaluate parking/public transportation?

How to evaluate a house

Gustavo Zambelli — Unsplash

I was lucky to stumble across my first resource here on accident. Browsing through Reddit, I found a comment on a post detailing dozens of red flags and flaws sellers will try to conceal, buying a house (Linked Here).

My main takeaway from this comment is to carry a checklist when looking at perspective houses. There are so many details I wouldn’t have thought about I would never be able to remember it all. Most of what this post covers is looking for warning signs. What are tells that a house may not be structurally sound, or have mold, termites, or be at a risk of flood. From only visiting a house a few times, how can you be sure that it won’t fall apart 5 years from now?

I would encourage anyone considering buying a house or entering a long term lease to read this comment, and everyone else should bookmark it for when the time comes.

Should I rent or buy?

To answer this question, I simple started by searching “Should I rent or buy” on Google, and came across an interesting article by the Motley Fool. What I learned here is that the rent vs. buy battle really depends on how long I’m planning on staying. Here’s a chart of the prices of an example home depending on how long I stay.

Renting vs Buying

This chart used the rent vs buy calculator found here, as well as adding an additional $3,700 (maintanance fees — tax deductions) when buying a home. While this is an estimate, it’s not that far from actuality. In this case, I would need to stay in my house for 5 years before buying a house would be more effective than renting. So while buying a house could save me long term money, it would also restrict my mobility.

For more discussion on renting vs buying, here’s another one of our posts on the subject.

How much should a house cost?

Didier Weemaels — Unsplash

I’ve found a few handy rules of thumb online for figuring out house costs. According to this article, the ideal price for a home is between 3 and 4 times your annual income. One way of calculating how much you want mortgage payments to be, is to take after tax income, subtract all other debt payments, then multiply the remaining amount by .25. This makes sure that it remains possible to comfortably cover mortgage payments while still saving.

Another approach detailed here, is to calculate monthly mortgage by multiplying your monthly income by .28.

What does a good neighborhood look like?

This is the question that confused me the most. To me the concept of a good neighborhood entails safety, nice people, and public services, but these features can be difficult to properly quantify. This website here, helped me figure out how to find a safe neighborhood, and to figure out what services are available. I just googled a location with the keywords “available public services” next to it.

But how do you figure out if you like the people in your neighborhood? I found this article here, which covers some of the main ways to spot a bad or obnoxious neighbor, but is still says nothing about if I’ll actually be able to get along. From what I’ve seen in these two articles, https://www.hgtv.com/design/real-estate/5-types-of-neighbors-and-how-to-handle-them and https://www.moving.com/tips/7-bad-neighbors-to-avoid-when-buying-a-home/, I’ve come up with my own untested hypothesis:

A neighborhood without any objectively irritating/dangerous neighbors will do just fine as most people don’t interact with neighbors on a regular basis. However, if you can talk to people before buying a house and find at least one friend, or find one family whose presence you enjoy, it will be a much better experience

What needs to be near it?

Mike Petrucci — Unsplash

Again, I worked through this question with one of my favorite tools, lists. I made a list of what I want to be able to get to and ordered it based on how important it would be to me.

  1. Work location
  2. Grocery store
  3. Clothing store
  4. Hospital
  5. Movie theater
  6. Dry cleaning
  7. Gym/rec center

Next I need to define what close enough means to me. I don’t particularly mind driving/transportation, but I’d rather not spend all my day going to and from work. I’d want to live at most a 40 minute transit from my work, and 30 minutes from a grocery store, the two locations most important to me. I decided that I would be satisfied with a house close to my first two most important location, then close to 3 out of the remaining 5 locations.

How do I evaluate housing/public transportation?

This question ties into the previous one where, if I was living in a city where public transportation was the best way to get around, I would want to be able to access my most important destinations in under 30 minutes. Outside of a city, I would most likely need a car to get around, making public transportation more of a way to access a city, rather than to be used for everyday shopping.

In terms of parking, I would need to have an accessible space in front of where I lived. Even if I don’t have a car now, I’ll have one in the future, and when that time comes, I’ll be glad to have my own parking space in front of my house. In terms of parking in the area I live, I can use the apps mentioned in this article to be able to consistently find parking, even in a city.

There you have it, my story on how I figured out what I wanted in a house, and the resources I used. I hope that you find this story and these resources useful. Share in the responses what you found helpful, or what you see is missing! Feel free to contact me with questions and ideas for future articles and cedrib@umich.edu.


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