Originally Posted By: lancerplayer
Once I am debt free, I can fully contribute to my retirement plan and look into purchasing a starter home. A home that I can purchases relatively under market value, live in it for 3-5 years, add some improvements, sell for a profit, and use the profits plus savings on a down payment for a nicer home.
I'm going to be the dissenter here but I'd think long and hard about a home. You almost never make money, even in the long term. Even though I have a house now I doubt I'd do it if it were not for the wife....
Here are real #'s - we bought our house in 2000 for $103k with about $20k down. Sold in Feb for $139k and we netted about $40k after all fees and commissions were paid. We were there 11.9 years. Our mortgage (ARM) was around $700/mo. In those 11 years we re-did the basement, kitchen, bathroom, and all the upkeep that a house needs. If you add up all that we spent along the way, we barely broke even, especially factoring in inflation. Tax breaks were practically nonexistant as our taxes were low and the past few years we were paying around 2% interest.
Had we rented instead of home-ownership again, apartments in the same neighborhood were around $1000 a month. Our new place has a $1200 mortgage. Right there I could invest the extra $200 a month and have maintenance of $0. Or at the end of those same 11.9 years have $28,560 invested. Add to that the $40k we netted and, well you get the picture....
So it may be advantageous to seriously run the #'s on home-ownership. It's not an "investment", but like a boat, RV, motorcycle, etc another pit you throw money at. Certainly not an investment especially when you add up all your time (cutting lawn, painting, landscaping, repairs, etc.) and money for the little things that will go wrong.
