The Case for a Starter Home

4.5 years ago, the Martinez family wanted to buy a house. At the time, the number one thing for this family of four was sticking to their set budget. They qualified for $150,000 however, to stick to their budget they had to be under $120,000. They were determined to stick to their budget.

They finalized their first purchase in June of 2015 for 1,080 sq. ft. three-bedroom, one bath for $115,000. Things they did not like about this house was that it only had one bathroom, it did not have a garage, and the city wasn’t an ideal location for them. But they loved yard and the budget worked, so they decided to make this their starter home.

Four years later they took out a HELOC and completely remodeled the house. It was now nicely updated, but still only 1,080 sq. ft. with one bathroom. Despite their home not growing, their family sure did. Today they have three kids and one on the way which means it is time for a change.

Through appreciation over the last 4.5 years and with the remodel, their home is now worth $250,000. They gained over $100,000 in equity.

We are now searching to buy their forever home with a $350,000 to $400,000 price range which fits nicely inside their new budget as they have progressed in their careers and are now making more money.

Had they rented the last 4.5 years they would not have a large down payment and they would be looking to buy a $250,000 to $300,000 house which would not get them exactly what they want in terms of space.

They did not get what they wanted when they originally bought 4.5 years ago. But by buying then, they set themselves up to get what they really want today.

Too often I have clients who tell me they can’t afford what they want so they are just going to rent. This is a huge mistake! Home prices keep going up and often times it is the appreciation from the first house you don’t love that allows you to get into a house you do love further down the road.

If you are interested let me run a rent vs buy scenario for you to help show you how much you could be losing by not buying now.