Did you get stuck in your starter house?

amother

Goldenrod

Sun, Nov 12 2017, 1:50 pm

We bought a 3 bedroom when we had four kids. Eventually added a bed & bath in basement. And then another bed, bath & playroom.

Of course not every starter home has room for expansion, whether up or out. Up can be expensive because you will usually need to move out & rent for several months. Out is costly if you dig a foundation (and I regret very much we did not, we could have had more space in the basement.) But an unfinished basement or attic that can later be finished is very valuable.

amother

Oak

Sun, Nov 12 2017, 3:29 pm

Usually the best thing to do is

-buy as soon as you can,as rent is wasted $
-buy in the best location / position (neighborhood / street) that you can
-buy the biggest block you can
-when I say "can" I mean stretch yourself w/o being stupid
-buy a livable tiny dump if necessary

Long term you can renovate and end up with the best house and location in he long term, but it can be hard in the beginning. We lived for two years with basically no kitchen (cupboards falling off, appliances didn't work ( I used a cheap toaster oven) only one bathroom which had all the tiles fallen off, and the whole ceiling was covered in mold that gave me and my kids asthma, four kids in one bedroom, floor not properly finishes (bare unsanded boards because we had to pull up the carpet the day we moved in because it was full of spiders), nowhere to park the car ). But then we renovated and now we have a great place, because the location was good and the land size large.

amother

Crimson

Sun, Nov 12 2017, 3:52 pm

I’m stuck in my starter house. Bought it when we had 2 kids, both little. Now 12 years later we have 5 and 2 are teenagers. We did minor renovations to try to get more space, because that was all we could afford. The value of our house hasn’t gone up either even though we bought it as Pioneers and the whole block is now Frum. For some reason the area prices just never went up. We do feel stuck, and wish we had something bigger. But this is life! You don’t always make tons of money to buy a bigger house and the value doesn’t always go up!

amother

Khaki

Sun, Nov 12 2017, 5:59 pm

We bought a very small starter house shortly after we got married and it was a huge mistake. We were stuck there for ten years. We finally moved out recently but we lost money on the house and had to borrow a lot for the new house. But we desperately needed to move. I don’t recommend it. However it really depends what you mean by starter home. Ours was a very small attached two bedroom townhouse. If you mean a regular colonial with property that’s on the small side then go for it!

amother

Purple

Sun, Nov 12 2017, 6:06 pm

amother wrote:

How did you lose money on your house?

doodlesmom

Sun, Nov 12 2017, 6:21 pm

amother wrote:

We bought at peak I think in 2005 and it never went back up

BUT isn't the fact that you paid a mortgage rather than rent where you made up for the difference? I.e. $12,000 approx for ten years would have been $120,000 in the garbage anyway.

amother

Khaki

Sun, Nov 12 2017, 6:26 pm

We actually lost money on the house. So 120k rent would have not made us actually lose money. And when you pay a mortgage you mostly pay back interest at the beginning. So we were not paid off 120k of mortgage or anywhere near there. We did a loan mod, killed my husbands credit and therefore have higher interest on our new mortgage.

amother

Cyan

Sun, Nov 12 2017, 7:29 pm

I dont understand how someone lost money on the starter home bc the way I see it is that 1) if you are able to move to a bigger or better home, you can sell the starter home to use as a down payment while if you rented, would you have as large a downpayment?

2) is nt it true that anyone who is stuck"" in their starter home bc of money probably wouldve had a financial choice of an apartment or starter home. The reason a lot of ppl. Get stuck in the starter home is bc financially they cant buy the "next home up" which usually means they would not have been able to ever buy a home except for a starter home!! Unless im missing something.??? I have a relative who could only afford a starter home and is stuck there bc she is not earning enough to be able to afford a better home but she is happy knowing that it is better to own the small "squishy" starter home rather than rent in a smaller apartment and be paying higher rent!!!

The only time I see this idea backfiring is if the starter home is really so small such that renting a bigger apartment wouldve been possible but then some ppl wouldnt own a home. My relative is glad she didnt buy the "bigger better house" bc she might have had foreclosure in which case everything is lost. She knows someone whose house got foreclosed..

amother

Khaki

Sun, Nov 12 2017, 7:38 pm

You are assuming the mortgage is cheaper than the rent. Not necessarily the case. And if someone overpays for a house and then sells at a loss they can actually end up owing the bank money. Which is one of the reasons we did a loan mod.

Ruchel

Mon, Nov 13 2017, 3:36 am

Ok, got hold of my relative: so no. Don't. You will slack or mess up the embetterments, or spend a ton of them, for a house that may or not become expensive enough to cover it. You may just give up and sell it for a loss. He said he made the mistake in another country, where it was recommended to him! Now the house stands there, no one will buy it, and he still has to pay the tax and all on it.

amother

Papaya

Mon, Nov 13 2017, 4:49 am

Of course buy the starter house. There is no point in the last 30 years in Jewish areas, (except 2009) where a person's house wasn't worth more than 5 years earlier. So in all likelihood, the 500k house you are able to afford today, will cost 550k in a few years. All the while you're throwing rent in the garbage buy not buying. I don't see any upside in renting if you can afford a starter home now.

amother

Hotpink

Mon, Nov 13 2017, 5:03 am

amother wrote:

Yes and no. While the price of small houses goes up, the price of large houses tends to go up proportionately more. If the stock market is rising at the same time, you might do better putting the money into an index fund.

Also, there's a ceiling on starter houses. The value might rise to 550k, but few will pay 900k for a tiny place even if big houses have doubled in value over the same period.

Lastly, a house is not a liquid asset. You can't convert it to cash the day you find your dream house.

amother

Papaya

Mon, Nov 13 2017, 5:59 am

amother wrote:

All true, but at the end of the day, a couple that has saved 150k (more likely gifted) as a down payment on a 600k starter house, should buy the starter house. Of course the stock market might go up another 20% next year while the housing market is stagnant, but would you seriously advise a young couple to put their down payment money in the stock market in the hopes of making a quick buck? I doubt it. And while it's true that there is a ceiling on starter houses, if that's all someone can afford at the present time, it still makes sense to grab it, as opposed to hoping the housing market stays flat or goes lower (both unlikely) while saving more money (who says they can) for the bigger house.

amother

Indigo

Mon, Nov 13 2017, 6:04 am

amother wrote:

there is no 'shoulds' with this stuff unless there is no alternatives available - like all the rentals are unsuitable. There are people who never own their home - and have nice lives.

amother

Mint

Mon, Nov 13 2017, 6:17 am

What area are we talking abt? It makes a diff. I live in Flatbush. Bought 3 yrs ago and house went up at least 150k. (I did finish the basement that was unfinished...) I do have an attic with a 4th bedroom which to me was a big deal as for a frum family you cant compare 3 bedrooms and 4. When I was looking I realistically assumed there is a great chance I will never be able to buy a bigger house so was looking for a house at least with the 4 th bedroom. the lot size is 20x100 just for reference. so we not talking about a big lot but having the attic with extra bedroom is major. Also since I have an attic I have the option to down the road extend the attic to add bedrooms... My husband was talking abt this being a starter house and moving on but he isn't really being realistic. I also have a sil who bought 3.5 yrs before me a very small 3 bedroom house, attached on both sides. At the time she had 1 kid but now she has 4 and it doesnt look like she will ever be able to buy bigger as she working less now and her husband is in kollel but she is thrilled that she has a house. I would def say go for it in Brooklyn as the prices are going up like crazy dont know abt other areas. Good Luck.

amother

Powderblue

Mon, Nov 13 2017, 6:20 am

amother wrote:

Yes and no. As prices rise, the houses become worthless but they get snatched up for their property. I've seen houses that weren't worth more than 200k sell for 500k because 6 condos were built on that space.