Is buying a starter home still a wise investment?
Today’s article will guide you through the process of choosing between a starter home or a forever home.
Keep reading to learn more from this article on Zillow.
Should You Buy a Starter Home?
Your parents’ rite of passage may not make sense for you.
When the Baby Boomer generation was venturing into adulthood, it was common to buy a “starter home” — a modest, small dwelling. As their families grew and careers advanced, they moved into bigger or better homes.
Times have definitely changed from the 1940s and 1960s.
Back then, starter homes were considered the wise choice. Buying one was a stepping stone of adulthood. Your goals were to get married, buy a starter home, start a family, move out of the starter home and find a bigger place.
The question is, is that lifestyle still applicable to today’s generation?
Pros vs. Cons
One of the pros of having a starter home is the stability and leverage that comes with the property. Think of it as a final shove into adulthood.
These new investors are faced with homeownership and all its lessons and insights.
Another pro is the rise in equity. Should homeowners decide to buy another real estate property after 5-7 years, they can put their initial home up for rent. In turn, this provides a stream of passive income they can use to help pay off their new property.
Lastly, starter homeowners are equipped with a tax deductible. This leaves them with more money to spend in the long run.
On the other hand, looking at the cons of the argument, starter homes can be costly.
In the event that a homeowner first invests in a starter home and then buys a dream home years after, s/he will essentially pay for 2 properties.
Also, costs don’t just stop at the property leases.
There are still other factors such as added expenses for insurance, home inspections, as well as moving operators, which can all place a bulk of weight on the bill.
Aside from these, current times have also seen an increase in the number of divorces and location displacements.
Almost everything can change in an instant.
RELATED: Buying A Home in 10 Steps | Home Ownership Guide
A Personal Choice
At the heart of it all, being a homeowner is a personal choice.
There is no right or wrong answer to the question of whether starter homes are a good investment or not.
It simply depends on the investor himself/herself.
The trick is for the investor to think long term and have an idea of what s/he would want to accomplish in the next 5-10 years.
Regardless of the opportunities that pass by, s/he should stick to his/her goals — whether it’s a shot at passive income or a ‘Sold’ signage outside an expensive dream home.
Find out what to look for when buying a starter home by pressing play on the video below:
What are your thoughts when it comes to buying a starter home? Are you a yay or nay? Let us know in the comments below.
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