Skip to main content

How does one leverage a starter home to eventually upgrade?

My partner and I are trying to find our first home to purchase. We see and hear a lot of advice to find and buy a starter home now and "use that to upgrade to a bigger and better home in the future" but we don't understand how that works. We're hoping someone here can offer something like an ELI5.

If we buy a starter home now, it'll most likely appreciate, but so would the more expensive homes to which we'd upgrade down the line. So how does the equity we would build in a starter home help us afford a more expensive home, moreso than say investing in the stock market?

EDIT: Maybe I can clarify and add some assumptions we have to hopefully get them confirmed or broken?

  • If our starter home appreciates at x%, wouldn't the more expensive homes also appreciate at x%? So, the price gap would actually grow between our starter home and our dream home so we're not sure how the equity in the starter home could actually help us land the dream home.
  • We want to buy in a very HCOL area where it's currently cheaper to rent than to own with the current interest rates coupled with the very high house prices. Are we better off continuing to invest in index funds and in a year or so, sell them to buy a nicer house than we're able to afford right now?
submitted by /u/cyclineer
[link] [comments]

source https://www.reddit.com/r/RealEstate/comments/1bo2twu/how_does_one_leverage_a_starter_home_to/
Labels:

Comments

Post a Comment

Popular posts from this blog

Aren't comps/CMAs useless with buyer credits at close happening now?

I'm looking into buying a new construction townhouse in my HCOL US city. I'm seeing builders offering interest rate buydowns worth $20k-$60k on $800k homes (rather than just lowering prices) in order to keep their comps high for their other units, now that buyer demand has been declining. I asked my agent about these, and he said these buydowns aren't even the full story: buyers can write all kinds of other credits into an offer, like their closing costs, prepaid sewer fees, etc. Apparently cash buyers can just write in a "buyer credit at close" for any amount in their offer. So a new townhouse that appeared to sell for $800k in the MLS might have actually been a cash offer with a $100k+ buyer credit at close, meaning the buyer only spent $700k or less in total, but to the rest of the world they can only see the $800k! So that made me realize I can't trust comps/CMAs for other new construction townhouses. The sales prices could be way lower than they appear...
1 comment
Read more

How to Avoid Property Scams in Delhi?

Here’s What You Should Know! Commercial Real Estate (Non-Residential) Buying a property in Delhi can be tricky, especially with all the stories about scams and shady deals. If you're in the market, here are some tips to keep yourself safe:Double-check the documents: Always verify ownership and approvals. Don’t just take someone’s word for it—look at the actual papers. Do your homework on prices: Compare similar properties to avoid overpaying. A little research can save you from a bad deal. Work with trustworthy people: Whether it's a seller or an agent, go for someone who's transparent about pricing and the process. If they’re dodging questions, that’s a red flag. Ask for reviews or references: If someone you’re dealing with has a good track record, they won’t hesitate to share testimonials or connect you with previous clients. I’ve noticed that some property services have started focusing on things like verified listings and clear communication, which makes the whole proc...
Post a Comment
Read more