Janet Cramb & Company/LAER Realty Partners



Posted by Janet Cramb on 4/28/2021


Photo by Scott Webb from Pexels

Potential new homebuyers have the choice of buying a starter home or a forever home. The details mean something different to everybody, but a starter home is usually regarded as a short-term living situation if you canít afford your dream home yet. Some choose to wait until they can afford their forever homeóthe home they imagine living in for the rest of their lives. How do you know which option is best for you? Here weíve put together some pros and cons of buying a starter home so you can contemplate the choice.

Pros of Buying a Starter Home

Affordable - Price is among the most common reasons new homebuyers go with a starter home. These homes are lower priced, which allows you to purchase right away instead of saving up for a much more expensive home. Depending on the area a starter home might have lower property taxes.

Lower Commitment - The whole idea of a starter home is to only live in it temporarily, which takes some of the pressure out of the decision for first-time homebuyers. Homeownership is a big change from renting and it can be a hard change. A starter home can provide a sense of easeóafter all, you can always move somewhere else in a few years. Thatís the whole idea!

Potential Future Investment - If you buy a starter home, you can keep it as an investment property even after you move out into a larger forever home. You can rent out the property to generate extra side income and potentially help the home appreciate in value.

Cons of Buying a Starter Home

Smaller - Starter homes are smaller than forever homes. This is related to the lower price, but also the idea that the homeowner might just be starting a new life. Maybe you donít have any kids but are planning on it far enough in the future that you donít need multiple bedrooms. Maybe you are buying a home to share with housemates for a shorter time due to work opportunities. Whatever the reasons may be, the smaller size of a starter home will make it difficult to grow your family or for situations where you might need more space down the road.

More Work - Starter homes are often older and in need of some maintenance. This also contributes to a lower price. You might find that buying a starter home also means buying a lot of home improvement projects. This can be expensive, time-consuming and stressful for new homebuyers. Itís important to get an inspection before making the purchase so that you can identify any serious maintenance red flags.

Hard to Sell - Some starter homes can be a challenge to sell when youíre ready to move. Whether itís because of the condition of the home or because itís in a less than desirable location, thereís a chance it might take some effort (and some money put into improvements) to sell.

If youíre not sure about whether to go for a starter home or wait for a forever home, consider your future and priorities. You canít plan for everything, but the more you look ahead the better decisions you can make for your first home.





Posted by Janet Cramb on 10/14/2020

With rent prices shooting soaring across the country, many young Americans who were previously happy renting while they saved for a home are now turning to other options.

One common solution is a starter home. If you want to keep your monthly mortgage prices low while being able to build equity and slowly save for your ďforever home.Ē a starter home can be a great option for first-time buyers.

When does it make sense to buy a starter home?

Buying a home means mortgage payments, home maintenance and repairs, and closing costs. However, they can also be a great introduction to the responsibilities of homeownership.

Better yet, starter homes allow you to build equity that can be used toward the down payment of your next home, something that first-time buyers often struggle with. This could help you secure a lower interest rate and avoid costly private mortgage insurance (PMI).

Sounds great, right? But when shouldnít you buy a starter home?

It might not make sense to buy a starter home if you donít plan on living in it at least 3-4 years. You might find that the cost of renting is less than that of your mortgage payments and closing costs if you donít live in the home long enough to reap the rewards.

It also might not be a good idea if your family is going to outgrow a small home in the next few years for the same reasons mentioned above. That makes it all the more important to discuss your long term plans with your spouse before considering a home.

Things to look for in a starter home

1. Resale value

One of the most important aspects of your starter home should be the ability to resell it in the future. Now, there is an endless number of factors that go into the marketability of a home. Key factors include the condition of the home and keeping it well-maintained, as well as the location of the home. Buying a starter home in an area that will attract young professionals down the road is typically a good investment.

2. Small size = low price

It probably goes without saying, but finding a home with a low price, at the expense of square-footage, is most often a smart choice when it comes to starter homes.

Small homes are cheaper to buy, cheaper to heat, and cheaper to maintain. However, since housing prices are trending upward, youíll likely still see a positive return on your investment in ~5 years time when youíre hoping to buy again.

3. Reasonable home improvements

If you can spare the time, buying a starter home that needs some work can be an excellent investment. It can be more difficult later on when you have a large family to care for and less time to focus on making improvements.




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