7 Reasons Why I Love Starter Homes
I believe in always dreaming and thinking big. After reading Pam Gout’s book “E-Squared,” I believe you can manifest anything you want - it just doesn’t happen overnight. If a person were to see all the goals they want to accomplish as a brick wall, they would get frustrated because they have no idea how to begin building this wall. Will Smith said in an interview, “it starts with one brick. If you lay each brick as perfectly as it can be laid, soon you will have a wall - but it starts with one brick.” This is how I view achieving wealth. Real estate is your foundation to wealth, and it starts with your 1st property - your starter home.
Reasons why I love starter homes:
1. It’s a great reason for buyers to be as cheap as they want to be.
If you have heard of the phrase “buy the ugliest house in the neighborhood,” I definitely recommend this advice for a starter. Statistics show the average person moves 8 times in their life span. Since you know this secret, the pressure is off to find the perfect home. You no longer have to buy all the bells and whistles, because you know you will not be there forever. You can now use the money you were going to spend to save and invest.
2. You can create a plan for passive income with your starter home.
Warren Buffet believes if you don’t make money in your sleep, you will work until you die. This a quick and easy way to make it. By either being a landlord and having tenants or turning your home into an Airbnb, it is a win-win situation. This is an opportunity for someone else to give you another source of income when you are ready to upgrade to a larger home or another starter.
3. Since this is your starter home, you are at or below your budget.
This is an opportunity to put more money down and to have a lower mortgage payment. Plus you can still maintain the lifestyle you had before buying the house.
4. Since this home is an asset (increasing in value), it will be in your retirement portfolio.
If you buy a home for $150K and hold it for 30 years, the mortgage will be paid off by the time you retire (depending on your age). So not only will you have $150k in the sale of the home, you will also receive the difference in the current price of your home. This money is all yours…but you will need to share a little with Uncle Sam.
5. A starter home is a good reason and option to borrow from your 401K for any closing cost or down payment.
Your mortgage payment will be so low it will not take you long to replace the money withdrawn from your account. You can borrow up to $10,000 without paying a penalty.
6. By owning starter home young, you can take advantage of pay raises, advanced degrees, and inflation.
While your money and home values are increasing your mortgage remains low - so will your utility bills. This also gives you another opportunity to max out your retirement accounts, increase savings, and invest in other areas to make your money grow. If you are afraid to get into the stock market, pay down on the principal of your mortgage. By doing this, you are turning your liability into an asset faster. If you are paying PMI (private mortgage insurance), it can be eliminated once you have paid down your mortgage balance to 80% of your home’s value.(Check with your lender to make sure your loan qualifies.)
7. The most desired home is a starter. If you ever need to sell your starter home, it will always be in demand.
In any market, housing inventory in the price point for a starter home is low. This can work in your advantage. You will not only have 1st time buyers wanting your home but also investors vying to purchase.
Now that I have you sold on buying a starter home, now create a plan to purchase. If you are not sure how to start, read my post “How to Buy Your 1st Home Like a Boss.”