Perhaps you’re thinking about buying an apartment but you don’t know where to begin. Maybe you have already started looking but you’re questioning whether or not it’s a good idea. There are many questions that can come up when deciding to make a big purchase like an apartment or a house, especially if it’s your first time buying. We’ve created this in-depth guide to help you work through many of those questions and give you confidence when you’re searching for your brand new space.
Are Apartments Good Investments?
One of the first things you may be wondering is whether purchasing an apartment is a good investment. Are apartments smart financial choices? How does renting stack up against purchasing, and why buy an apartment over a house?
Is It Better to Buy than to Rent?
Many financial experts will tell you that it’s better to buy than it is to rent. While you may be responsible for the upkeep of a home, the day you turn in your rental keys in you have absolutely nothing to show for it. You have zero equity and no money to put toward to another place to live.
There’s also a good chance that over coming years, your apartment will grow in value. Not only will you get a return on the amount you put into your home, but you will grow your ability to buy your next apartment our house.
There are a few exceptions to this rule that are worth mentioning. Should you plan on living in an apartment on a short-term basis, the financial side of things may not be a benefit. It usually takes time – several years – to build equity in an apartment. So if you have a job that requires you to move often, or you’re not expecting to be tied to a certain area for any length of time, buying is probably not your best option.
Apartment vs. House
While some people are primarily interested in buying a house, an apartment may be the best choice for you. Here are some reasons why buying an apartment may be a good choice for you.
Closer to the City
If you’re interested in living closer to or in a city, an apartment can be an excellent choice. Living in the city can cut down on commuting costs, and it can keep you in the midst of city life and activities.
Cheaper to Buy an Apartment
For the most, apartments are less expensive than houses or units/townhouses, particularly in close proximity to the city. Buying a house in a highly populated city would far exceed the cost of most apartments.
Climate control features like heating and air conditioning are usually cheaper and easier to afford with apartments.
Without having a lawn or large space to care for, you’ll have more time and money to spend on other things. You won’t need to worry about cutting the grass or keeping the hedges trimmed, and you won’t need to spend your money on them either.
Non-Financial Reasons to Buy
Not every reason to buy an apartment can be categorized as financial. Some of the reasons are personal or emotional, or because people want a sense of freedom in their home. Renting can often feel restrictive because of the terms that are put on an apartment. You may not be allowed to own a pet, or paint, or change decor. You may be concerned that you can’t really live in your apartment without being afraid that you, or a guest, may accidentally damage something.
Owning your own space offers a great deal of personal freedom and personal achievement.
Things to Consider When Buying an Apartment
Once you’ve decided that buying an apartment is a good financial investment for you, the next step is to make sure that what you buy is really what you want and need. Here are some things to consider before purchasing your apartment.
What to Ask When Buying an Apartment
When you’re looking for your apartment there are some questions that you should ask before purchasing. These are important considerations that you will want to be aware of before you sign for your loan.
Why is the owner selling? Should you be working with a developer, the reason is already known, but in the case where someone is selling their apartment, it would be helpful to know the reason. The more you know about the space, the more you’ll be able to negotiate a good price.
How long has it been on the market? Knowing how long an apartment has been listed is helpful for multiple reasons. If an apartment has been listed for a long time, it may be that the seller has listed the price too high. If you love the apartment, you’ll likely be able to negotiate a better deal than the price that they’ve listed.
Have there already been offers made? If you’re very interested in the apartment, it’s a good idea to find out if you’re the only one. Multiple offers on the apartment may mean that you could miss out on getting the place that you want.
How old is the apartment building? It’s nice to know how old a building is so you have an idea what kind of maintenance may be needed to upkeep the place. Unless the apartment has been refinished, there’s a good chance that an older apartment will need some extra work.
Has the property been sold frequently? A high turnover for an apartment might indicate that there’s something off about the apartment or the location.
Review the Sellers Disclosure – What a seller has to disclose depending on the location, but if available, some things to look for are the Energy Efficiency Rating which states the energy performance of a home, a Vendor’s Statement which discloses certain information like statutory warnings to the purchaser, an asbestos report, and a pest inspection report.
Ask in the community. Don’t be afraid to talk with neighbors or local shopkeepers about whether or not the apartment is a good place to live. They will have a good idea of the property and will likely give you a truthful answer.
Are there outside factors that are frustrating? It’s a good idea before purchasing a property to think about the immediate area where you’ll be living. Is it near a railroad track? Will there be a train that goes by that disrupts your sleep? Is it near a bar or club that will attract noisy travelers late at night?
Is it close to important locations? It’s important to find an apartment that’s close to the things you care about. How far away is it from your work? Is it close to the events and places that you like to go to? Is it close to facilities like public transport, the grocery store, or schools?
Do you enjoy the area? Not only should you consider how close it is to amenities, but can you see yourself living in this particular area for awhile? Do you like the feel of the area and the people that live there? Can you see yourself fitting into the community?
How good is the market in the area where you’re looking? Another important factor is deciding if it is a good investment property. If you’re not planning on ever selling it may be less important, but if you only plan to stay in the apartment for a few years before upgrading, it’s necessary to buy in an area and in a building that will be likely to resell for at least the amount that you purchased it for.
Price Range and Loan
When you begin looking for an apartment, it’s prudent to talk to your lender before you make any definitive offer on an apartment. You’ll need to find out if approval for your loan so you don’t make an offer that you can’t follow through with. Sometimes banks have special restrictions for apartments, so it’s important to be aware of those as well before you go out looking.
You should also be aware of what you’re willing to spend, and what you can feasibly offer. You should also have a price range in mind and stick to the budget that you know you can afford. Going beyond your budget may lead to a stressful financial situation.
On to Your Investment!
Buying your first apartment can be a very exciting and fun process. Make sure you do your homework before you begin your search, and don’t be afraid to ask lots of questions. Pretty soon you will be sitting back in your new home, enjoying the local city life, and inviting friends over to enjoy all your new apartment has to offer.
Original article available here.