Money Rehab with Nicole Lapin - How to Find a House That Is a Good Investment

Episode Date: January 6, 2022

If buying a house is the right move for you, you’ll want to make sure to buy a house that is a good investment. In this episode, Nicole shares five things you should look for to find an appreciating property that your future self will appreciate. Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

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Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. One of my financial hot takes is that buying a house isn't for everyone.

Sure, there are some cases where it makes all the financial sense in the world to buy a house. But there sure as hell are some situations where it's a bad idea to buy a house. But there sure as hell are some situations where it's a bad idea to buy a house. Truthfully, there is virtually nothing in finance that is a one-size-fits-all answer. Earlier in the season, I put together an episode called, Is Buying a House Actually a Bad Idea? It was episode number eight, if you want to go back and search the archives. Today's Money Rehabber listened to that episode and decided that buying a house was right for her. Exciting! But that's one decision in a long chain of other decisions. Once you decide that you do want to buy a house, you have to decide

which house. Here's Money Rehabber Katie, who's grappling with that question now. Here she is. Hey, Nicole. My name is Katie and I live in Durham, New Hampshire. I went through your checklist and I am a good candidate for buying a house. How should I make sure I buy the right house? I know that you've said to only buy a house if you know you'll live there a long time. And I do think that's the case, but I do want to try find a house that will appreciate in value. What tips do you have for pulling that off? So Katie, if you decided that buying a house is right for you, then here comes the fun part, house tours. Seeing houses can be a wonderfully fun way to spend an afternoon, which is so well deserved after all of that

paperwork and number crunching you just did to figure out your housing budget. When you do go to hit the open house circuits and you're looking for houses that will grow in value, here are five things you should keep in mind. Number one, look up. I got this piece of advice from an entrepreneur I met who owned a wood shop in Philadelphia. This was the simplest piece of real from an entrepreneur I met who owned a wood shop in Philadelphia. This was the simplest piece of real estate advice I have ever received. Just those two words. Look up.

But I swear it's been the suggestion I reference most when I tour houses. What I learned from him is that you can tell an awful lot about a house just by looking up at the ceiling and the tippity top parts of the walls. The ceiling may reveal cracks or water damage that suggest issues with the roof or frame of the house. This is super useful information to have as a prospective home buyer because roofs are freaking expensive to repair. In fact, the only repair that's more expensive when it comes to housing headaches is fixing issues with the house's foundation. This woodworker told me about an experience he had when looking to buy a studio space in Philly. He said he had made an appointment to look at a new building he was really excited about. On the day of his appointment, it was raining. At the time,

he thought it was a drag to schlep out of his way to get to the appointment in a downpour, but it ended up being a huge blessing in disguise. When he and the real estate agent walked into the building, they saw that water was pouring from the ceiling. I'm talking flash dance status. So in addition to looking up, I also learned from him to try to see any prospective properties in various weather conditions, even if it's just driving by in your car. Ultimately, you want to be able to answer, want to be able to answer, when it rains, does it pour inside? Number two, only see houses in your budget. No matter how many times you tell a real estate agent what your budget is, they are going to show you a reach option. Maybe you'll agree to see it just for funsies or because it feels too awkward to have to say out loud that

you can't afford what they're pushing. Here's the thing. If you see a house that is out of your budget, you are going to try to make it work. No, I am not a psychic. I don't see the future, but I do see the past pretty damn clearly, and I'm here to tell you that a ton of money rehabbers have come before you and have made this very same mistake. It reminds me of this friend of mine. She's lactose intolerant, and yet every so often she slips up and has mac and cheese. If you try to go to an open house that's out of your budget, I'm going to say the same thing to you that I say to my lactose intolerant friend. Don't sign up for things that you know are bad for you. Number three. Does the neighborhood have bad signs? I know no one wants to think about natural disasters, but we have to face reality. Floods, fires, hurricanes, and tornadoes can take your home in an instant. I mentioned this

in my episode about budgeting for a natural disaster. That's episode 116, by the way. But it deserves to be repeated. In 2021, the federal government recognized over 83 events as disasters deserving of federal aid. And to be honest with you, these natural disasters will likely only get worse and more frequent as we feel the effects of climate change. In 2019, natural disasters caused home damages totaling $24.4 billion of insured losses. I wish the financial world was just rainbows and butterflies and free money all the time, but it isn't. And it's my job to tell it like it is so that you can tackle any challenge thrown your way. When you visit houses, do some research on the environmental risk factors of the county and state. I know this is a bummer, but I highly, highly recommend to do this. FEMA has a website on your state's disaster history,

which you can view at the link I'm including in the show notes. Number four. Does the neighborhood have good signs? Now for the fun part. When you go see a house, make sure you're budgeting some extra time to explore the neighborhood. Again, I don't think you should bank on your house as a money-making opportunity, but I won't argue that it benefits you to try and find a house that will be the best bet in the future. The best indicator of a house's chance at appreciating is the neighborhood. Does the neighborhood have plans to open new grocery stores, schools, or public transportation stops? Is the local government engaged? Does the town have a healthy budget? Like, are they going

to be able to fill a pothole or add a stop sign, if you ask? All of these signs are indicators that the neighborhood might be up and coming. Number five. Newer isn't always better. And now for some story time. One of our amazing money rehab producers, Morgan, is a self-described cautionary tale for moving into a new house. She and her boyfriend Jack found a brand new apartment in Brooklyn that they just fell in love with. And when I say brand new, I mean it. It was brand spanking new. They were the first people to move into the building, much less their specific unit. Everything was shiny and new and had a fresh coat of paint on it and no one had taken a shower in their shower or sat on their toilet. I mean, everything seemed picture perfect.

But then I tried to send them housewarming flowers. They're the cutest couple in the history of the world and I love gift giving. And sending orchids. Who doesn't love an orchid? It was the first time they had tried to receive a package in the mail, and they discovered that their apartment wasn't on the map. And no, I'm not speaking metaphorically. Their house literally wasn't on the map yet. When you looked up their address on Google Maps, it came up as the middle of a four-way intersection on a busy Brooklyn street. It was essentially the Bermuda, Brooklyn, triangle. It took them months before they could receive mail, and God only knows where my flowers ended up.

It just goes to show us that, unfortunately, no housing story is as simple as we hope or are told it will be. Even brand new apartments can have their own charming headaches. So be equal opportunity thorough when you're researching possible nests. For today's tip, you can take straight to the bank. Don't let your real estate agent talk you into overlooking the tips we went over today. Real estate agents only get paid when you buy a house. When you do, they get a commission that's typically between 5 and 6% of the value of the house. So, real estate agents are incentivized to get you to buy a house, regardless of whether it's within your budget or if the roof has created a DIY shower in the kitchen.

It doesn't mean that your real estate agent doesn't want what's best for you. But just remember that you are the customer. And you know what they say, the customer is always right. We spend our money, money, money. And you know what they say, the customer is always right. are Penny and Mimsy. Huge thanks to OG Money Rehab team, Michelle Lanz for her development work, Catherine Law for her production and writing magic, and Brandon Dickert for his editing, engineering, and sound design. And as always, thanks to you for finally investing in yourself

so that you can get it together and get it all.