Buying houses, First time homebuyer, Investments, Small living, Smart money

The power of starting small.

When purchasing your first home, or even subsequent homes, it’s tempting to buy the nicest, biggest house your budget can afford. A house you can grow into and raise your kids in for years to come. However, if you want to invest in real estate, the most affordable way to do that is buying a home as a primary residence (more on this in a later post). So when you purchase a home, making sure the home fits your current needs, along with the needs of the near future (1-2 years) is important, but being cautious of A. Your spending B. rentability and C. being motivated to move into another house sooner than later, is important.

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Our first home was a 1200sf townhouse. We knew that whatever we purchased, we would want to keep it and rent it out when we moved. For us, in our early 20’s, we wanted maintenance free living, and a future rental that would be the least amount of hassle. A townhouse fit our needs, no yard work, no exterior care needed, and it still had 3 beds, 2.5 baths. While this house really did have enough room to grow into for a while, it was also not our dream home and therefore it was easy to move out of it when the next opportunity presented itself.

 

The next house we bought was a 1200sf condo. Only 2 bedrooms, but still 2.5 bath. The condo was only 2 miles from Zach’s work so the lifestyle was what was so appealing. It was also located in a great spot in Boulder and we knew it would be a breeze to rent it out.

When we bought our 3rd house, 1500sf, it was finally a stand alone home that had a backyard… a backyard! I was so thrilled, and something as simple as outdoor living space felt like a major jackpot for our family. Had we started in a bigger stand alone home, this wouldn’t have made a big impact on us. Even though we finally had a yard, we moved into a 3 bedroom, 1 (yes, ONE) bath house. So again, we weren’t living in the lap of luxury. But moving up to a single family home and having a yard was definitely moving up!

Our 4th house was 1600sf (including the basement) had 4 beds and 2 baths. Even though 1600sf was our biggest house to date, it was a 800sf house and a 800sf basement. The main floor had the living room, eat in kitchen, a bathroom, and two bedrooms all in the small 800sf. While we fit in it ok… it was cramped living. We knew this was a temporary spot for us. But the right price, right location, and a house we could squeeze into made it worth the move!

Lastly, our current 1800sf house is 4 bed, 3 bath and we are very comfortable. Imagine that, a family of 6 living comfortably in 1800sf. So many people start off with their first house being a McMansion. Don’t get me wrong, this is OK. But if you want to invest in real estate on the cheap, and you don’t have unlimited funds, putting yourself through a little bit of un-comfort in the present will help you live more comfortably later on.

While we aren’t sure this is our forever house, we have no reason to move anytime soon. The only regret we have with our previous houses is that we didn’t ever purchase a duplex. When purchasing a duplex as a primary residence you can buy one with as little as 3% down (FHA loan) and that’s a steal. Two properties for one low downpayment (more on that later).  But once we went to a stand alone house and having our own yard, it was too hard to back track to a shared wall and yard. We wish we would have taken slower steps to get to our stand alone house. 🙂

Anyway, this long winded post was all to say, start small, you can always move up to something bigger and better later.

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