Orange County California Real Estate 4 Easy Steps to Owning An Affordable
Orange County Home
Orange County real estate and its corresponding housing shortage has put up a daunting price barrier for many wishful home owners. Most homes for sale in Orange County demand that first-time buyers produce big down payments, large loan-to-value financing, higher than normal second loan interest rates, or all of the above. The resulting monthly payments can be very large and will shock most first-time buyers. Obviously, this is not for the faint of heart or the budget conscious home buyer. So what is Plan B for those people that still want to own a piece of real estate in Orange County?
Condos in Orange County, California, are a great solution in that they represent a practical way to enter the real estate market, especially for first-time buyers. However, there are a few issues, stereotypes, and mindsets that will need to be addressed first. Let’s start with the first step.
Step 1 – Realize That Home Buying Is A Process, Not An Event
One’s mind should consider home buying as a process, not an event, and come to the conclusion that the home of your dreams will probably not be your first Orange County real estate purchase. It may not even be your second or third, but rather, the home of your dreams will be what you trade up to over a period of time.
It is becoming very common for our clients to plan at 5-10 year intervals. They plan to buy a condo now, live in it for a few years, build some equity, and then trade up to their first “house” or single family residence (SFR). This is a very logical, savvy, and realistic in that it reflects our experience that very few people get their ideal house on the first purchase. That’s not to say that a less than ideal house will be unsatisfactory in meeting your needs. This next step will help to clarify these needs.
Step 2 - Differentiate Condo Living From Apartment Living
Many people are under the impression that living in a condominium is the same as living in an apartment and this is just not true. For starters, most of the occupants living in a condo community actually own the real estate. This translates into greater pride of ownership among neighbors, quieter communities, and a generally warmer feeling of home.
Also, condos in Orange County are more likely to have certain creature comforts that add to privacy, security, recreation, and convenience. It is not uncommon for Orange County condos to have private laundry hookups, attached garage parking, and guarded security gates. All of these are very hard to find in local apartments. In addition, almost all condo communities have some sort of pool, spa, recreation room, gym, tennis court, or clubhouse. And because the residents usually care about their community, most of these amenities are kept in superior condition.
There is another factor involved in the lifestyle of any tenant in Orange County. This factor centers around the freedom, peace of mind, and security that is usually lost when renting an O.C. home. By owning their own real estate, one no longer has to worry about interruptions from suspicious landlords, uncertainty as to whether you’ll be asked to leave, worry over unreturned security deposits, and irritation from having to ask for permission every time you want to do something trivial like hang a picture. Owning an Orange County condo will help one take back many of the freedoms that are lost when playing the role of an Orange County tenant.
Step 3 – Recognize The Financial Benefits of Home Ownership
It’s first worth noting the typical mindset of an apartment owner or landlord. From an investment standpoint, an apartment complex is only worth what it creates in income (rents) minus the cost it takes to maintain and manage the building. Since most landlords are interested in maximizing their investments, it should come as no surprise that they will always be looking to increase the rents while simultaneously cutting the costs of maintaining the property. This culminates into a lose-lose situation for most tenants. To add insult to injury, their prompt payment of rent is doing nothing to build anything for themselves, all the while steadily paying off the landlord’s mortgage! This may be fine for some altruists, but most would rather build some equity for themselves.
When one decides to own their own piece of Orange County real estate, they have effectively taken the first step in reversing the roles of their financial future. The cost difference between buying and renting varies with the real estate and rental markets but one thing most renters are unaware of is the profound tax advantages of owning their own condo in Orange County. The net effect is that while owning real estate will cost more per month, the difference is minimal when taking into consideration the other benefits that go along with home ownership. For this reason, many renters would be better served making the transition from real estate tenant to real estate owner.
Step 4 – Look At The Merits Of A Home Owners Association
One of the biggest hurdles we come across is the negative feelings misdirected at Home Owners Associations. A Home Owners Association (HOA) is a local governing entity responsible for enforcing rules and maintaining a specific piece or group of properties. HOA dues are often given a bad rap but they are usually not bad at all when one takes a closer look. Even with dues ranging from $50 to $400 per month, the total cost of these dues is usually less than it would cost the homeowner to buy utilities or hire maintenance contractors on their own.
Consider for a second these amenities and services that many HOA’s provide:
- HOA’s usually pay insurance on the building (you pay separately on a SFR), some even have earthquake protection.
- HOA’s usually maintain the exterior such as: roof, stucco, trim, driveways, stairs, and common areas.
- Some HOA’s pay part of your utilities such as: hot water, water, trash, sewer, and cable TV.
- HOA’s monitor actions and maintain appearance of complex which helps ensure the desirability and resale value for owners.
- HOA’s set up reserve monetary accounts for anticipated majors repairs or replacements to avoiding costly surprise.
Clearly there is a lot of potential value for an HOA to provide that many people do not ever recognize. Some will find the rules enforced by the Home Owners Association to be too restrictive while others see it as a community enhancement. Whatever one’s feelings, they need to keep the bigger picture in mind that this is just a stepping-stone towards their ideal Orange County home.
The Last Step – Moving Forward
Everybody renting a place in Orange County wants to eventually stop paying rent, pay their own mortgage (not the landlords), enjoy some appreciation (building equity), and earn some nice income tax benefits while living in the comfort of their own home.
Condos are a great entry-level method for doing just that! With good appreciation levels, easy financing, high demand due to relative affordability, and a sense of true home ownership within a community of other owners, Orange County condominiums are becoming the answer for a new generation of home buyers looking to own their own piece of Orange County real estate.
If your ready to find your own piece of the pie, see our Orange County Homes For Sale page for the most informative articles and the best tools on the net to help you find the perfect O.C. condominium for your needs.
About the Author:
Bob Foust is the chief executive for the FOUST Team at C21 Discovery; one of the top-selling real estate teams in Southern California. He specializes in Orange and Los Angeles Counties and operates one of the area’s most informative real estate websites. To contact him or learn more about Orange County real estate, please visit www.FOUSTonline.com.
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