I am not sure what city/area of the country you are in, but for me, living near older apartments and fast food places is a no go. Mostly because I believe the economy is still on shaky grounds, and those two things to me, sound like potential for higher crime either currently or if things get worse. If you have a concern about it being near a less than desirable neighborhood now, my guess is that will only get worse over the next 5-10 years..not great for you living there or resale.

I'd go with #1, because the things you don't like about it (interior finishes) can all be changed. It has a better view, layout, and features that fit your family (beds/baths, 4-car garage). Since well and septic don't bother you, and the guest house doesn't give you a ton of utility, I don't see much to draw you to house #2 except the finishes. But 5-10 years from now those will be outdated too, so you'd have to update in either case. :-)

I also like the fact that house #1 is on the lower price range of the neighborhood instead of house #2 on the high side. That makes for better resale potential.

What sort of winter weather do you have? If you have a lot of ice and snow, I'd add in a consideration of where the driveway is situated and how much shoveling you would need to do.

Based on the given info, I'd choose option #2 or keep looking since Option #1 appears to be what you like better. Like the poster above, I would not buy near apartments or rentals. Areas like that tend to invite more drugs and crime. It might stay nice for a while, but then the crime rate goes up. You might get a police report for the two houses and see what has been happening in the area.

Funny how walking distance to food and shopping is seen as a positive thing for city dwellers and a negative for suburbanites.

I'd back up to the nature preserve purely so I would never have a backyard neighbor because I am all about seclusion and the outdoors.

House 2 sounds better to me, partly because I think you like it better if considering house alone, and partly because I like the sound of a good layout, lots of extra closet space, gated community, backs to nature preserve. A good view would not be enough to push me toward a house I liked less.

What about factors like energy features?
Taxes?
Schools?
City management?

How soon will your children be college age?
R they likely to live at home part do that time?
If so the guest house could be great option for that living at home but not at home situation
College costs are often contained by living at home for first two years...

Dated finishes would not kill a deal but I am not crazy about septic systems and wells ---suggest special inspection since home is older...

Views are great but if they are the front area where you don't spend much time vs back where people tend to socialize then might not be appreciated that much when new wears off
You are living IN the house after all...

Willmyoumwant to downsize again in few years when your kids are on their own?
Is this HOA run effectively by management?
Go to a meeting and see how it operates...
That is steep monthly charge that will only increase over time...

Thanks for the comments. I do consider walking distance to stores a plus, as long as they also feel far enough to be a quiet neighborhood. ( My current house is an hour walk from a restaurant, much farther to a store.) The views are the entire back of house number 1, so from the living, dining, kitchen, master as well as back porch and yard. One of those "oh wow" as you enter and see the amazing views with a solid wall of well placed windows. I thought 34$ was a low monthly fee? I agree HOA's can be difficult. Both feel like they back on open space due to the hill on #1 and no visible lower neighbors, but they are there. My current major draws to #1 are the bigger garage and views. It could be a forever house or we may downsize again. Both are one story and handicap accessible. Yes whichever way we go I would get all possible inspections. We don't get much snow here so that is not an issue. Energy wise, I hope both are well insulated, and they probably are compared to my current house. Both have radiant heat, one in floor the other baseboard. One is air conditioned, the other evaporative coolers so that is a big summer cost difference. We are still trying to figure out if a move is worth the hassle to get the benefits of a smaller yard and shorter commute once we are settled. Both kitchens are remodeled compared to my current 1984 tile kitchen. I am checking police reports/crime data to see if the crime rate is indeed higher . My dad is concerned that backing to open space negates the safety of a gated community. But, it would have to be a petty motivated burglar to traverse the open space and carry things out! We are going to go see the houses right after each other next weekend to get an immediate comparison. Youngest child is still in midschool. Both "new" houses will have less unused rooms once the kids go then our current house. We are looking at a 10 year old home next weekend as well. Views plus gated, backs on open space, safer neighborhood. But more $$ then the two I have described. (I have seen over 50 homes in the past few years, so this has been a move "in process" for some time)

I misread the HOA charge but at 34 a month it is 400 a year and you must admit more likely to increase than decrease

Views in back are definitely worth more than those to front

Our current home was chosen with the "no neighbors" in the back
Part of city park and then open land past it zoned for retail/commercial but unlikely to be built on because of need for FEMA watershed/drainage infrastructure that would be cost prohibitive based on two projects that fell through already
So understand your desire for privacy
We are in city close to very busy intersection and large school athletic stadium so we do have noise but that is ambient --not having house looking over our fence is great...

I would probably be more inclined to go for house 2. The location of house 1 doesn't seem ideal. I would also be wary of a house on a hill. How steep is the hill? How easy is it to back out of the garage with the hill? How is drainage? Sometimes houses on hills can have low spots where water tends to stand when it rains.

We did own a house with a guest house. We did use it for guests of course but it was able to double for use as another TV area for teenagers. It also meant one less room we had to routinely clean since it was less used.

I've lived in a house on a hill with distant views for almost 20 years, and I STILL take pleasure in that view. Since snow and ice are not a problem in your area, just be aware that being on top of a hill can be quite WINDY, which might impact your heating bills. Even so, DH and I prefer to live above the tree tops ---- an elevated fortress away from the rabble below (only having a bit of literary fun...we love our neighbors at the foot of the hill, truly).

I would go for house 1, being able to walk to places is such a plus for me. Where we are now I can walk to the library in about 30 min (40 if the dog gets to sniff and pee on everything). It's another 10 min to get coffee and a donut (since I walked all that way) and too often our dog just isn't up for it. I wish we were a little closer to everything, about 1 mile closer and I'd walk for coffee every Saturday and Sunday.

When I was in my 20's I wanted to live on acreage away from everything. Now that I'm in my 40's I like being near people and things. I love sitting on the porch for an hour and seeing 4 or more people/couples walking their dogs, kids, or just themselves. I don't know why, either :)

Also, I would get more use out of a bigger garage than a guest house :). I have more toys and tools than out of town guests, and a separate structure is another thing to maintain. Bear in mind that I'm also anti-vacation-home (for us, not for everyone else). And a view is something you enjoy all the time. We aren't even on a hill and we have a view of woods and distant farmland off our back deck. There is something restful and enriching about a view you like (or love).

So I would buy house number 1.

I would buy House Number 1.

1. It is easier to find a good house in a gated community, but not so easy to find one with great view.

2. The house Number 2 is at the top of the neighborhood price, it has less potential for future price increase.

3. Your teenagers will want to have their own cars when they are older. You would park 4 cars outside, is it allowable by HOA?

4. HOA fee will only increase.

5. Once you replace items in House Number 1, you have a more updated house suits your own taste.

Definitely house #2. It is situated in a better location/area. Being near old apartment buildings, fast food restaurants, and crime areas in not a plus no matter what the view. House #2 offers more then house #1 in that no one can build behind you, nature trails for exercise, guest house for your teens or guests. We have a 3 bay garage and I think I used it for the 1st year we lived here and now no one parks in the garage. Not even in winter. Go figure! So having more garage space would not be a selling point in the future to me. We come and go so many times that opening the garage door and backing out is a pain. We just get in the car and go out the driveway now. NancyLouise

Who owns 'the view'?

Remember if it is NOT YOUR property it can be altered by the owner as they see fit.

Everyone's comments are helping me put it in perspective. It is interesting how I find myself debating or agreeing with all of your points, in my own mind! And that helps me think about it. House number one is on the top flat portion of a hill. The land below is already built with a one story house. So unless they build a many story addition, the lots that could block the view are built. House 1 is an easy walk to a bus line too. Funny how a walk with a dog can be very slow, that made me laugh. I will have to look for a donut place! I saw a Wendys and a Subway and Arbys so far. My friend built a house with a great view. A few years later a new house was built exactly blocking most of her view. I will never forget to pay attention to that detail and chance of blocked view! Hmmm, still undecided. But I am doing miscellaneous repairs and clean up to get my current home ready to sell just in case we decide to go for it. I considered designing and building. But I have a hard enough time choosing a new ceiling fan or paint color. An entire house of choices would be too much for me. At least an existing house just is what it is and little things can be changed over time.

Walking distance to a nice commercial area, great downtown amenities or public recreation (parks, museums) is one thing. Walking distance to Arby's and Wendy's and subway is quite another. I would not want to be a short walk from fast food restaurants in the suburbs, or outskirts of a town, which is where you seem to live.. Older apartments in the same area would make house #1 a huge no. Otoh, a house in the high range of a neighborhood is usually never where you want to be for eventual resale. And your HOA association seems bizarrely ow, so I assume the ONLY amenity in the gated neighborhood is the gate? In some areas, that is a plus. In others it would be a drawback. Local attitudes and custom are what confer desirability in that respect, and only you know what those are.

It sounds like you are looking for the "perfect" house and that you have not yet found it.

Location, location, location............I would choose House #2.

House #1 can only go downhill with the wrong neighborhood creeping ever closer to your house as time goes by. I have seen that happen, including getting the zoning changed. I would not consider house #1 at all. It is cheaper for a reason.