Affordable Housing: How to Not Overpay for a Property

affordable housing

Affordable Housing: How to Not Overpay for a Property

There is no shortage of advice on how to purchase affordable housing, and for good reason. According to a report by Harvard researchers in 2017, 1 in 3 renters and buyers overpay for their housing. That figure represents about 39 million Americans!

Out of everyone, first-time homebuyers are the most likely demographic to overpay for a house. This makes sense—first-time homebuyers are some of the most eager, and they often believe the myth that they’re lucky to get into anything at all. So, they settle and don’t make the wisest financial choices. With that, here are five tips first-time homebuyers and investors alike can utilize to make sure they’re not overpaying for a property.


1. Check Comparable Property Prices


An easy way to make sure you’re not overpaying for a property is to examine what comparable houses sold for in the same area. Make sure you’re looking at what houses sold for—not just what they’re listed for. There are several online databases such as this one that provide that information.

Especially if you’re an investor, you want to make sure that the price of your property doesn’t exceed more than 2-3 times the median income. For example, let’s look at Portsmouth, Virginia. The median income was $48,000, and the median property price was $129,000. When you multiple $48,000 times three, you get $144,000. Based on this criterion, Portsmouth, Virginia, would be a good place to potentially purchase property because the median house price will eventually catch up to the median income. Your property will appreciate, which means you make more money!

[Related: How to Find Bargain Properties—Even in Hot Markets!]


2. Have Bidding Boundaries


If you’re in a hot market, it’s likely that you’ll get into a bidding war. In Denver, Colorado, properties were on the market for an average of just 5 days in July! Don’t let scarcity lead you into impulsive financial decisions. There will always be more properties, and you need to do your best to not get emotionally attached too early. Before you go to make an offer, create firm boundaries about how much you’re willing to spend and do not stray from them!


3. Reference Online Valuations


Online sites like and Zillow offer simple clues that can help you get into affordable housing. When you go to look at a property, check out what the estimated value is. If the listing price is too far above the estimated value, make sure you present a counter offer to the seller. In addition, check to see how long it’s been on the market. If it’s significantly longer than most properties in that area, chances are that there’s a catch.


4. Double-Check for Pricey Problems


If a house is cheap, there might be a reason. A good deal on a property might not actually be a good deal if you have to spend thousands on repairs. A wise rule of thumb to use, especially for investors, is to try not to offer more than 80% of the house’s estimated value AFTER repairs have been included.

I recommend downloading my property inspection checklist by clicking here. It details all of the hidden things you should look for before making a decision on a property.


5. Consider the Environment


The value of a house is dependent on far more than the house itself. It’s all about location. This shouldn’t come as a surprise—it’s the reason that properties on the beach or in the hub of major cities sell for more even if the materials to build them cost the exact same. Before you buy a home, consider the following:


  • The success of schools in the area
  • Nearby amenities
  • Population growth
  • Crime rate
  • Job growth


The environment affects how much your house will appreciate, and therefore how much you can sell or rent it out for in the future!


Bonus Tip: Know how much house you can afford!

Even if it’s cheap, it’s not affordable housing if you can’t, well, afford it. To avoid being house poor, make sure your mortgage payment won’t exceed 25% of your take home pay (that’s including principle, interest, taxes, insurance, and homeowner’s association fees!) There are several great mortgage calculators on the internet to help you ensure that you don’t bite off more than you can chew.

If you’re interested in learning more about home buying and/or investing tips, we want to invite you to our Real Estate Workshop October 15-17! Until the end of August, you can save $200 on your in-person or livestream ticket (plus a free gift). Just click here and use the code SUMMER21(or SUMMER21LIVE for livestream) at checkout.

Billy Epperhart
Billy Epperhart
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