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with all this talk about building equity, keep in mind you have to pay 5% in agents commission, realty tax, and various fees. and you cant move to your ideal home till the starter one gets sold....creates a burden and might lose out on chances of getting the ideal home.
and you cant move to your ideal home till the starter one gets sold....creates a burden and might lose out on chances of getting the ideal home.
Often a "starter" home IS your ideal home. At least it was for us, which is why I tend to think of it more like "first" home and "next" home. Every home has been ideal for me because it suited the different stages in my life.
By the way, one benefit of living in that first home for several years is I've never had to sell a house before being able to buy my next one. There are advantages and disadvantages to owning two homes for a short while, but we've always preferred that route.
Well, I would warn about the foolishness of trying to make general sweeping statements about something as specific and regional as the Real Estate market.
It assumes they can rent for much less then buying. That's not always true. It is true that a large percentage of their early mortgage payment is 'down the drain' in interest. Yes... but it's also true that 100% of their rent is down the drain.
If buying a starter home is such a bad idea, why are so many of our clients able to use the proceeds of their first home as a down payment on their next home?
I've always been baffled by how people manage this tight wire act. How exactly do you do that? So they list their home for sale, and try to have something in the contract where they don't have to move out / rent the home back until they find another home? I'd like to be able to do that, but as bad as it sounds, we simply don't like much on the market at any given time. The area where we're looking, I've probably seen 3 houses in 2 years that would fit my needs, the rest have a terrible layout, dated styling, or bad areas. I couldn't be sure that if I had 3 months to find a new house, I'd even find one as good as where I'm living now, so it would end up being a disaster.
Quote:
Originally Posted by Piney Creek
Often a "starter" home IS your ideal home. At least it was for us, which is why I tend to think of it more like "first" home and "next" home. Every home has been ideal for me because it suited the different stages in my life.
By the way, one benefit of living in that first home for several years is I've never had to sell a house before being able to buy my next one. There are advantages and disadvantages to owning two homes for a short while, but we've always preferred that route.
This is what I've always done too. I've always bought my next home before selling the last one. It got a bit tight last time around because the stupid thing sat on the market for 3.5 months, and I ended up taking a temporary loan, but it was literally for 30 days, then I was flush with cash again and no issues.
I posted earlier in this thread that I definitely felt that a starter home was a good way to go, and mentioned my success with owning several homes through the years. Now that I'm retired, I own my home and a vacation rental property and enjoy good profits on that. Without our starter homes, none of that would be possible at today's prices. BUT....someday we may find it to our advantage to rent. We are fairly young retirees and we are living in our happy place FOR NOW. In 5 to 10 years we may wish to have two small homes to travel between with the seasons, or just may want to be flexible enough to move when the urge strikes us, or when necessity rears it's head. At that point renting may be our solution. So starter homes were great, but owning your home is not always the answer. Early on in life renting may be necessary, and late in life, renting may be desirable. In some places where home prices are sky high, renting may be the only reasonable alternative, unless you are rich.
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