Alternative Real Estate Options for Buying a Single-Family Home in an Expensive Market
If your employer has transferred you to an area with an expensive housing market and you are struggling to find a single-family home you can afford to purchase for your family to live in, then there are some alternative options you may not have considered. Here are a couple of the top contenders:
Alternative Option: Consider a Lease-to-Own
If you've set a housing budget and know what you can realistically afford, it's important you don't let that number rise simply to match the real estate market around you. If your biggest struggle is getting enough cash piled up for a down payment on a home in an expensive market, then you might want to consider a lease-to-own option.
With a lease-to-own, you make a smaller down payment upfront and a small amount of your monthly lease payments is added to the down payment amount. After a set number of years, then you have the option of buying the single-family house at a pre-agreed upon price.
Alternative Option: Buy a Serious Fixer-Upper Property
If you are trying to buy in Boston, New York, or the San Francisco Bay Area where the price of homes is insane, then you might want to consider buying a serious fixer-upper property. Even the nicest neighborhoods in these areas have a few homes that have been excessively neglected or trashed by renters.
Though you may not want to live in a dumpy house or deal with renovations, buying a fixer-upper can be one alternative way to get into an otherwise unaffordable home market. You can use the house to learn all about home repairs and remodeling, and when the place is finished, then you can sell it and use all of your equity to go off and buy the house you really want to live in.
If you decide to go with this alternative, make sure you work with a buyer-specific real estate agent who understands renovations and has some ballpark estimation abilities. In addition, you absolutely must do your due diligence to ensure you don't get stuck with a home that needs serious foundation or roofing work that will be very expensive and where you won't see a financial return when it comes time to sell.
Lastly, you should be wary of properties that have sat on the market for too long. Since every area has someone who buys homes to quickly renovate and flip, you should be wary of homes lingering on the market where the local flippers have passed them by. Often, they have major problems and will end up being a money pit rather than a down payment on your next house.