Post # 1

Member
685 posts
Busy bee
Talking with my husband last night about where we want to be in the next few years, we both decided we realllly want to finally have our “own” house. But we both have the goal to build the home we want our kids to really grow up in. My question:
Is it a smarter option to rent a house, buy your less then dream home, sell then build.
or
Is it a better option to continue to rent until you can build? Does buying and selling a house eventually in the long run hurt you worse then if you just saved?
Post # 3

Member
14496 posts
Honey Beekeeper
If you can afford something that would be less than rent (plus maintenance, insurance, taxes, etc) than I would buy. At least you are putting money into something that you will at the very least get something back out of. (keep an eye on the federal home owners tax credit on the Hill, just FYI)
Post # 4

Member
401 posts
Helper bee
I had recently been batteling that same question. For now we are renting because we can’t buy but as soon as we are able to buy we plan on doing so. We would hope to buy a starter home and stay there for 5-10 years and then buy our dream home. I think that you will build a lot more in equity paying for a starter home then you would be able to save, at least that’s true in our situation. I think a lot depends on how long you would be looking to stay in a “starter home”.
This link was somewhat helpful to me.
Post # 5

Member
685 posts
Busy bee
Thanks guys! What I was worried about was buying a starter home and then not being able to sell it. In Michigan right now, its a buyers market. Selling is next to near impossible. BUT on the plus side (as sad as it is) you can find ALOT of bank owned homes for cheap. I also know that with renting you can’t build any equity. So theres so many ups and downs to both.
Post # 6

Member
4137 posts
Honey bee
generally, you have to stay in a home for 10+ years to build enough equity to make a profit when you sell. i’m not sure what the timeframe is in this market though..
Post # 7

Member
2829 posts
Sugar bee
We were sick of pissing our money away renting and made the decision to buy last year, despite our market currently being a sellers market with minimal “starter” options.
We really really want to build our own house (preferably on the lake, with solar panels, a wind turbine, geothermal, & some land 😉 haha), but currently are living in a community that we are not certain we will be staying in forever which was a big factor in our decision making process. If we were going to shell out the cash to buy property & build a custom home, we really wanted it to be the place we would be staying.
So we decided to buy a cheap starter home that was waaaaay “less” (in all ways) than our dream home, and at least this way when our term is up we can get the value & our investment back out of the property, and be able to put that toward our next home.
& kitzy is pretty spot on, on average it takes 10+ years to build up equity on a home.
Post # 8

Member
2090 posts
Buzzing bee
I think it totally depends on how much your rent is (or would be), how much the mortgage on the “starter home” would be, and how much you would need to build your dream home.
If you can rent a place at a below market rent, and sock away more cash each month, then I would do that, rather than buying.
In some areas there are lots of homeowners desperate enough for tenants that you may be able to negotiate a good deal on rent.
With home ownership there are more costs than just the mortgage, so you have to factor those in as well (including any downpayment)
Post # 9

Member
681 posts
Busy bee
Definitely factor in realtors’ fees too. Buying a home and turning it over within a couple of years could make the costs associated with selling it even more frustrating. Not to mention, if you have money tied up in a house that isn’t selling then it might make it pretty tough to buy your dream home when you’re ready.