First time Buyer on a Budget?

Ryan Coffey
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Many of us have grown up with the idea that our first home will be a modest house that needs a little TLC. For a first time buyer, this turns out to be especially true and as populations increase, so do the costs of land and many other resources associated with building a home.

first time buyer

There is also the economic climate to consider. Nanaimo still has some houses under 230k, sure, but every one of them is very small and/or in need of lots of work or has some other thing about it that involves a compromise that is too much for most people. Under 260k is where I am currently telling people to expect fixer uppers in a medium/small sized home. For some, swinging this financially in hopes of getting their foot in the door of home ownership is viable for others they have to look at other options to get out of the rut that is long term renting.

Your best first step in Buying whether you’ve done it many times before or not is to speak to a Mortgage Broker. If after speaking to a Mortgage Broker you find out that houses are out of your price range, there are of course other options. There are a few decent small houses under 250k in Nanaimo, but if you have a family,  want a quiet location, and are not especially handy, the pickings are slim. The other options are condos, townhomes and mobile homes.

Mobiles have a bad rep for being a neighbourhood of debauchery, but this isn’t typically the case in the Nanaimo area. In fact, most of the mobile home parks in this area are actually pretty pleasant neighbourhoods and the mobiles themselves are typically surprisingly roomy, clean, and comfortable.  That said, it is not what I would recommend to most first time Buyers because of pad fee costs and my belief in the concept of building equity. With a mobile you get a low monthly payment for the ownership of the mobile itself but you don’t own the land. You are going to have to pay a pad rent of about $350-400/month. because the land is not yours. The value of the mobile depreciates over time but the land’s value (which you have no stake in) increases . The name of the game is ultimately ‘equity building’ and mobiles are not so good for doing that. Having a stake in land is key.

Remember that you’re probably going to sell or rent your real estate one day. The more your money goes into the mortgage rather than a monthly fee plus the amount the property goes up over time, the more you’ll get back when you sell the place and use that money to buy something else. If you hold on to it long enough it will go up. Real estate is a long term game so be patient and my advice is to expect to hold on to a place for 5-10 years if or more if you can swing it.

With townhomes and condos most people would probably overlook the fact that they come with a stake in the land they are on. The strata fee vary wildly on them depending on a variety of factors, but in terms of the cheaper than a basic house price range, most of the monthly fees are between $150 and $200 per month. The good news about these fees, is that part of that money goes towards maintenance of the exterior of the complex. If the complex is well managed, this makes looking after the property easier for the would be owner as they don’t have to consider the outside maintenance directly but instead it is done via the mini democracy of strata owners, council and usually a management company. The bad news is that once in a while, extra fees are charged when it turns out that the complex has a leak or some other big project that wasn’t foreseen in the budget. Keep in mind that this happens in houses too in its own way. Typically, that extra fee can be gotten back in the resale value once the work has been done.

The world is changing. It always has been. Those who live gracefully in it are the one who are able and willing to change with it whatever direction it may take. Others wait for the world to go their way, which it may, or it may not. In a world that is approaching a population of seven billion people, space is becoming an ever precious thing. And that’s something they say often about real estate, “Land is the one thing they’re not making more of.”

Ryan Coffey