To buy a starter home or not?

If you bought a starter home, why did you do it?

I know it could be a good investment for us & we are in a financial position to do it now.
We currently spent around $1600 per month to rent in a nice complex. Our rent increases every year & we could be putting that $$ into a house.

Our fears:
We will end up pouring money into said starter home & not able to save very much for dream home anymore. Im afraid to be stuck in starter home longer then planned.

We are happy in our apartment & not looking to start a family anytime soon. We could easily live here for another 4 years. Are we wasting money though?

Re: To buy a starter home or not?

Re: To buy a starter home or not?

My only advice is this ...

Buying a starter home is great IF it is in a good school district (In my opinion). I know many people who bought starter homes and regretted it BECAUSE they bought a house in a poor school district thinking that it didnt matter because they didnt have children yet. When the economy and housing market takes a hit, those houses with SDs that are not the best really take a hard hit!

I think that if you stay in your apartment right now and wait 4-5 years, the housing market COULD be way up again, like it was a couple of years ago.

I think 1600 is a lot for rent but if you are happy and feel like owning a home would not be afforable to you, I would stay put!

However, if you could afford to buy a home and you would be happy with that decision than I think a smaller home with a decent lot in a good school district is an excellent option!! Right now the interest rates are low, the market is pretty low, and you could get a good deal.

Then, in 5 years from now you could sell in and hopefully make a decent profit.

Thats my opinion!! =)

Re: To buy a starter home or not?

we looked in our price range on the hope of finding a forever home and if not then we would have settled on a starter home.....we lucked out and found a home we can grow in.....

maybe just start looking and see whats out there.....maybe a fixer upper dream home is out there and you could be spending the next 4 year making it your perfect dream home....

it cant hurt to look......

good luck

Re: To buy a starter home or not?

I would look at bank owned houses...with a little work you could get a great deal and be in a great position when the market changes

Everyone I have sold a bank owned house to so far is a first time home buyer

Did you know you could even borrow the money needed for the repairs thru a FHA loan? It's call a 203k and it's a great loan product

The bargins out there are amazing..fm if you want some more info!

Re: To buy a starter home or not?

I read an article when we were house shopping that coops/condos are the "new starter homes"

We had been looking at houses and frankly in our price range- they sucked- so we ended up getting a really nice coop for less money- we arent house poor at all- in fact our mortgage/maintenance is only $200 more than we were paying in rent

my only advice if you do this is to buy a 2-bedroom, they sell a lot easier- no one really wants 1-bedrooms

good luck and let me know if I can answer any questions for you

Re: To buy a starter home or not?

I personally would never buy a 2br house. It will be a difficult sell.

Re: To buy a starter home or not?

Re: To buy a starter home or not?

What IS considered a starter home? I have heard that my 3 bedroom-1 bath is one but my SIL who is in real estate said no.

Re: To buy a starter home or not?

well, our house is kind of a starter home b/c for us it wasn't necessarily our "dream home"....it's not a single family, we don't have a huge yard - those are the things that we had to give up by purchasing a townhome - but we still have 3 baths and 4 bedrooms so we can def grow here without feeling stuck....for us, we couldn't have it all in our price range but found almost everything we wanted in a townhouse - and we didn't want to continue living in NY in a tiny basement apartment....so we got what we could afford and we are very happy....after living here my husband feels like he could live here forever....i love our house but wouldn't mind getting a bigger single family home one day but i can see us growing here for sure (i can see living here with more than 1 kid - i would say we could fit 2-3)...

i'm not sure if we would have gotten a starter home that was only 2 bedrooms - part of the reason we left NY actually...but everyone wants different things and you have to be ok with it

Re: To buy a starter home or not?

Re: To buy a starter home or not?

Re: To buy a starter home or not?

Re: To buy a starter home or not?

we live in NC and bought a "starter home" for 100k (1300 sf ranch, 3 bedroom, 2 baths, HUGE master bedroom, TINY kitchen, fenced in yard, etc)...we are still here almost 4 years later but now with 2 kids it is getting tight

we are thinking of moving in 1-2 years and plan to list our house for 130ish (dh redid both bathrooms and put hardwoods throughout, except for the bedrooms (love having a handy hubby) and we plan to spruce up the kitchen before we sell)

I do not regret buying the house as we knew it was not going to be our forever home

Message edited 2/12/2010 5:02:27 PM.

Re: To buy a starter home or not?

Without knowing a lot of the details, I would say I'd stick it out. You're comfortable, you're paying for a place to live and there's no gamble involved with buying a home (and maintenance surprises, trying to sell, etc).

But it can't hurt to look and see what's out there. We ended up getting our non-starter home for starter home price (per LI standards anyway) because the estate wanted a quick sale.

Re: To buy a starter home or not?

Well really you have to decide what you are most comfortable with.

My DH and I were renting and our apartment was a GREAT deal and we were happy, so we just casually started looking. The market was in our favor so we hoped maybe we could find a "forever home" at a great price. What we wound up with COULD be a forever home, but we are looking at it as a starter home. We hadn't been looking long but this house came up with a great price - seller was going into a home and needed the money fast - and we jumped on it.

It only has 1 bathroom and no garage, but it has 3 bedrooms, a full unfinished basement with potential and is in a great location - so if we "have to" stay, we will make it work there. But I think the fact that we CAN stay (since we don't want more than two kids and we are happy with the school district) made it easier for us to make the decision to invest in what we - and some others - call a starter home.

It's a lot of stress and money - much more than the mortgage - so just mentally prepare yourself whether it is now or in a couple of years!!

Re: To buy a starter home or not?

DH and I bought a starter house back in 2004. But I refused to by anything less than 3 bd 1.5 bath because I felt like I wanted to be prepared for "what if" meaning my parents are still in their starter house 40+ years later.

Anyway for us the decision was easy. We were getting married and didnt want to rent. We knew we couldn't afford to live in the areas or in the type of house we wanted so we compromised. We moved to Centereach, which was a nice area but it just wasnt where we wanted long term (we wanted to be closer to his family). We bought on a somewhat busy road but our house was great. It was about 1400 sf witha finished basement 2 brand new baths, and "upgraded" kitchen (not high end) and professional landscaping. The cons it had a small property and was on a main-ish road. We put about $5K into the house.
Sold it 2.5 years later in 3 weeks for a $60K profit.

We moved to Smithtown and actually our house is the same model as our old, just larger in the type of community we wanted long term.

For us it worked out because we werent stretched financially, it was a great location for us at hte time, and we didnt have to do alot. But it was also a much different market than it is now.

You have to basically weigh the pros and cons and figure out what you are comfortable with. And as some PPs said, in this market there are some good deals out there so it may be something to consider.

Re: To buy a starter home or not?

We are currently in our starter home, which we closed on May 1, 2009. Similarly, we were living in an apartment with rent a little less than yours, but we had just gotten married and wanted someplace with a yard. With the housing market how it was, and the amount we had in savings, we decided to look at houses. We are not housepoor at all because we only spent what we were comfortable with and are still able to save a decent amount each month (basically our housing expenses are about 25% of our income only). We have put a little money into the house and are currently redoing the kitchen (DIY) but our plan is not to spend too much more than the $8K tax credit that we got as first time buyers.

For us, so far, it is great. In a little while when we go to sell I have confidence we will be able to at least make our money back, and we are growing our savings still. Also, we are in NJ, not that it's too different.

I think you should only do it if you can get something and still be living at a level where you can save a good amount each month towards your eventual forever home!

Re: To buy a starter home or not?

Re: To buy a starter home or not?

For me I looked at what my expenses would be. Buying a condo you can get a lot of nice features a single family couldn't offer inthe same area but is $400 a month worth it? (just going by a property I like) Figuring monthly mortgage, utilities, maintenance, taxes, the cost to move a few times etc... for us we want to continue to rent because we aren't ready to buy, we'd be house poor. And I liked my apartment complex a lot better than what I've seen out there so for now, this is home. Enough of my babble lol. My advice is to look into what your monthly payments will be and make sure you like where you live.

Re: To buy a starter home or not?

DH and I bought a starter home when the market was higher. The area we want to live in a house was not feasible so we bought a 2bdrm coop.

Granted if we went to sell now we would lose money.

However with amount of money we make we needed to own or we would get killed even worse in taxes.

Honestly we pay what we would pay to rent a 2bdrm in our area (we had a big downpayment) and last year we got 3-4times back what we had ever gotten back before in taxes--so from that angle it was worth it.

Re: To buy a starter home or not?

Thanks for all the great advice. DH & I have decided we want to buy something.

School district is very important to us. We are only open to certain areas.

As for fixer-uppers DH probably could not even identify a hammer (God love him). I am slightly handy. We need to consider that we can do 0% of the work ourselves.

Re: To buy a starter home or not?

Re: To buy a starter home or not?

we bought a "starter" home about 6 months before we got married. For us: we didn't plan on staying there more than a few years, but we wanted to make sure that it was one we COULD stay in longer if we HAD to. ( We looked at school district, expansion possibilites, neighborhood). we bought a 2 bedroom, one bathroom ranch in a good neighborhood. we knew that if we needed to we could add a second floor on later down the road.
i would start looking at houses- you might be really surprised at what you can actually afford right now with the market the way it is and with the tax credit. My cousin just bought a big split level house in NJ on a short sale for $210 K it has 3 bedrooms and the kitchen had been redone in the last couple years... so, ya never know- you might get lucky and be able to afford more than you think you can!

Re: To buy a starter home or not?

I consider my home to be a starter home, since it is not our dream home. However, we bought in a good school district. You can always change your home but not your neighborhood.