Research Before You Buy
You’d think it was easy right? You have your deposit, you buy your house, you go to work and you pay the mortgage, just like when you were paying rent. No big deal.
But there are other costs you need to think about, like taxes, maintenance, insurance and all those little things that you didn’t take into account when you budgeted for your first home, like appliances that break down at the worst possible time.
When the Real Estate Agent is trying to upsell you to a slightly more expensive home, you are going to have to trade off not just what you emotionally want, but also be able to put aside extra money for what could go wrong and allowing some back up for when it does, because it will.
Getting to work has suddenly become, not just what you do, but something you have to be able to do, because you have so much to lose if you don’t make it reliably on time.
A common thread you will find in my blogs is that you should and can do a lot of research before you start thinking about making an offer on a property. I’m not trying to put you off, just trying to help you buy the right one for your current circumstances.
It’s not hard, it’s just there is so much to think about and most of what you are likely to be thinkin about is emotional more than practical. It’s not just about the nice outlook, the kitchen, the perfect room that might become the nursery, the garden and being close to the beach.
Location, Location, Location
It doesn’t matter whether you live in the city or rural, chances are very high with your first home that you won’t be able to afford to buy a house close to work, or necessarily want to.
On top of that, you are now carrying a lot of risk. When we bought our first house, our interest rate was 18% (at one stage it went up to 21% and we were sweating i can tell you!). That had a huge impact on our options of suburbs we could buy in.
If we were to miss any payments, we would have really struggled to catch up AND we wanted to start a family which meant going down to one income.
We didn’t have family who could back us up financially if things turned sour, neither side of our parents owned their own homes. The bank made us get mortgage insurance, which gave us a little security, but also added to our costs.
If you’re like us, your first home will be in a residential area where the only paid work available locally is the corner retail store, which is mostly family owned and run. Any jobs are more likely to be after school jobs for teenagers. You are going to have to commute.
You’re all in, you can’t just go home when times get tough
Renting and owning are very different. Sometimes you can can get a rental close to work, especially if you a single and renting a room rather than buying a house. That’s one of the challenges when we start out. You can’t just go home to your parents if your money runs out either. You’re tied to that ground you so desperately wanted.
If you were to draw a bullseye and circles radiating out from the central area of your city or town, you will probably find that the most expensive property is near the middle and the farther out you go, the closer you get to what you can afford to buy. It’s pretty rare to be able to work close to where you live in those early days.
Companies aren’t located to suit first home buyers.
Companies are cost conscious too and just like buying a house, they have their own factors they base their location on. Where their staff live is pretty low on that list.
For me, work was about 15 km away from our first home. That’s pretty close really. I know people who regularly commute 30-80 km each way. It’s no longer unusual for people to travel 1-2 hours to work and the same back again. I’ve been there and I hated it.
I was really lucky that I had decided to get into a sales role where I had the use of a company car, because my previous job was working for a Government Department in the city and I had to get up at 05:20 to get to work by 8:30 AM by bus. A 2-hour trip on a typical day.
When I say lucky, include 2 nights a week at night school for 3 years to get a Diploma in Sales and Marketing Management to get a job as a sales cadet to prove I was serious and to become capable.
Fortunately my new boss believed in me, gave me a chance and I proved myself by getting loads of sales out of the worst territories, working my butt off, using everything I had learned and surrounding myself with positive, helpful people. This was really important because as a sales rep half of my income was at risk, paid by commission. We didn’t buy until I had worked my way up into a more lucrative sales territory with some major accounts.
My wife worked in an industrial zone and was lucky that her father had ‘done up’ a Ford Anglia for her to drive to and from work, because it would have taken 3 buses each way and been a nightmare commute. Of course cheap cars break down and these days they are too complex for people to fix themselves, so if your car fails, you have to have a back-up plan because you still need to get to work.
Cities tend to have clusters of different types of business. Corporate, retail and hospitality in in the city, the latter two don’t pay well and also have unfriendly hours when public transport is less frequent. I wonder how some of those people cope. Many of them do it by having multiple jobs.
Then you have locations common for businesses in the industrial and commercial sectors which generally don’t feature much residential property nearby and you probably wouldn’t want to live in those neighborhoods, even if you could.
Plus, at that point in your career you may not spend more than a couple of years with each employer, so you can’t base a home buying decision on where your job is. In fact most young people these days mostly move from one job to another as they gain experience. It’s highly likely that within a couple of years of buying, you could be working in a totally different area.
So now what?
Remember that research I started off writing about? Now it’s time to do it.
You have options. Start by looking at the suburbs or towns you can afford to buy in and do your homework. Get a map or print off a page of a Google Map and mark off the areas where you can afford to buy with a highlighter.
Then work out what your transport options are. Is there good public transport? Bus, train, ferry or maybe a combination? Can you access it easily? Do you need to get to a station? Is there parking? How far to a bus stop? What if its raining? How long does the journey take? This will give you some starting options.
Then I recommend you talk to people who live in the area, maybe friends, colleagues, or go onto the local Facebook community page and ask members about their journeys. They will tell it to you like it is. I find those pages really useful to learn about a locality.
Google has a Journey Planner. You can enter your journey details, set the day of week and time of day and it will tell you how long you should expect to take on your commute. In some cases it even includes public transport times.
Keep in mind though that traffic varies by time of day and day of the week. More people drive on rainy days and patterns vary based on other factors as well. For example I live near two schools. That has a significant impact at pick up and drop off times, another reason why you need to try and drive or commute for yourself.
Are you still keen on the property you’re looking at? You’re going to do that commute 400 times a year!
If you’re still serious about the property, go and commute from it before you make a decision. Drive there on a work morning and see how long it takes to drive to and get to work on time.
Another day, leave your car there and try the public transport. It might be a pain, but if you’re serious, remember you are going to be doing this about 400 times a year if you count traveling in both directions.
I work 12 km from my current home. The council transport page says that to get a bus directly to work involves a 15 minute walk to the bus stop, through a bush track in a park which would not be ideal in the winter when it is dark or wet.
The bus stop doesn’t have a shelter and I live in a rainy city. If I get there exactly on time, the journey is 55 minutes. I didn’t look at how frequent the buses are, so I don’t know how long I would have to wait if I missed the bus, or how early I have to be to make sure it doesn’t leave before I get there but you can add maybe another 10 minutes to the journey to be safe.
If I take the motorway, the drive is also about an hour, because the traffic is so heavy during the morning peak. Crazy isn’t it? That’s an hour to drive 12 km, mostly by freeway!
I choose to leave early and drive via local arterial roads. If I leave by 7 AM I can get to work in 30-40 minutes and it’s a nice drive.
In theory I can work flexi-time, it’s in my contract, but often meetings are scheduled that mean I’m still at work at 5 PM even if I got there at 7:30 AM. The good news is I love where I live and work and of course this isn’t my first home.
So how did it stack up?
The challenge is finding the balance between the emotional decision and what’s actually practical.
As I said at the beginning. You are going to commute at least 400 times a year. That’s a lot of time on the road.
Will the gloss of the first property wear off during that time? Only you can answer that.
If you do your research, at least you will be able to add your commute to the balance sheet as you decide on your new home, both the time you get to spend at home with your family as opposed to travel time and the cost to get there and back each day.