Many people are pushing out their homeownership dreams given how quickly living expenses rise. The truth is that there will never be a perfect time to buy a house. Every year the cost of living rises, and so too do rents. If your salary isn’t keeping pace, you may find that you will no longer be able to afford the rental in which you currently live. You may struggle to find a similar property to rent in the same area, or have to move further away from the facilities and services that attracted you to the property in the first place.
Another reason to find your own home, if you are renting, is that rental properties are never guaranteed. The owner may choose to sell so you may find yourself having to move anyway. This can happen many times over a five-year period. And, if living in the family home, you may feel ready to become more independent.
This is why starter homes are such a good option, and if you choose carefully, you may find a property that is equal to, or just as affordable as renting.
What is a starter home
The main reason why people choose a starter home is the affordability aspect. They are usually small properties, for example with one or two bedrooms, and are often considered temporary, with the owner planning to move to something larger in time.
If buying in a new development, these types of properties are usually designed so that they can be extended in time, with the developers often providing building plans that show how and where extensions can be undertaken.
Starter homes don’t even need to be brand new. They might be small apartments in sectional title complexes or apartment blocks. Even some well-established estates include starter homes in their offerings.
Who is the ideal owner
Starter homes suit individuals, young professionals, and small single families whose budget is limited. They also suit retired singles or couples looking to downsize.
Most starter homeowners live on the property for between five and 10 years.
Key characteristics of starter homes
Size and amenities
They are usually one or two-bedroom properties that meet basic needs in the provision of a kitchen, bathroom, and living area, and perhaps a small garden or patio/balcony.
Affordability
As said, they are designed to be accessible to a wide range of buyers. They also often come with lower upfront costs and manageable monthly expenses, and no transfer fees if priced under R1.21-million.
Location
Starter homes are often found in neighbourhoods where residents earn similar incomes. This offers a sense of community, and because of the needs of a mass of residents, they are usually sited close to transport routes, retail, medical, and educational facilities.
Condition
If buying in a new development, or off-plan, you may be able to choose tiles, paint colours, and flooring for example. If an older unit, you may need to make a few cosmetic fixes, or upgrades, even minor repairs.
Investment potential
Property values tend to appreciate over time, which means starter homeowners can build equity in the property with the aim to one day move to a larger property. As the neighbourhood improves or demand for properties in the area increases, the value of your property may rise, meaning you can sell at a profit at a later date.
Maintenance
These types of homes usually require less maintenance when compared to larger homes. For example, you may not need to spend a fortune on garden landscaping.
How to choose the starter home
Area or location
It is always a good idea to do an internet search and establish what types of starter homes are available in your chosen area. Drive to those areas at different times and on different days. Get a sense of the community, and how near or far it is to the facilities you need.
Current and future needs
You should be factoring in your current needs and your long-term needs. For example, today you have one child but you may be planning on having more children. Or you may be single now, but hope to be married with a child in the next five years.
Budget
Always stay within your budget. Don’t overstretch by thinking that you may be able to afford a higher price if you have to make sacrifices that will be unhealthy or unreasonable. Bear in mind that homeownership comes with ongoing maintenance costs, insurance, and rates/services.
Resale value
Look at features on the property that may appeal to future starter home buyers. This may mean that an old kitchen or bathroom may need to be updated at some point. If a brand new property, choose fittings like tiles and floors that have a timeless quality. This will serve you well when the time comes to sell.
Condition
Unless you have the budget, do not buy a run-down property or one that needs major repairs. Small cosmetic changes may be necessary, which is acceptable. Pay attention to the roof, floors, electricity, and plumbing. Look for cracks, leaks, and mould, and if you find such problems, ask the estate agent or owner about fixing those before you consider making an offer.
Starter homes are considered an excellent way for those wanting to enter the housing market with a limited budget. They also help shape your dreams for a future bigger home. You’ll gain experience as a homeowner and have a better understanding of your needs from a property, and the lifestyle you want.
