Today I was thinking about the homes I’ve owned over the past 20+ years and began to wonder if I’ve made the correct decisions. In other words, assuming continuous home ownership between age twenty something to say late fifties, is there a specific sequence of home purchases that minimizes life cycle cost, maximizes equity, and most importantly provide a nice nest to raise a family. If so and in chronological order, how many homes should you own, how long should you hold them, and what types of homes should they be.
Assumptions:
-Married at age 27
-Plan to have 2-3 kids starting at 28-30
-Professional single income (50K out of college, 100K+ by mid-thirties)
-Ignore unforeseen events like job loss, divorce, medical bills, etc.
– Return on investment is considered secondary
A typical scenario could be to buy small starter home asap at age 27-29, preferably 3/2 in nice school district. The 20% down payment came from savings from age 21 to 27 and family. Obtain 30 year fixed and pay bi-weekly or make extra payment as feasible. Live below means, focus hard on career, and save like crazy for next down payment. At mid thirties, buy the house where you will raise your family for the next 20 years. House should be 3000+ sf, upgraded, 3 car garage, excellent school district, and biggest best lot you can afford. Make the financial stretch if necessary and live tight for the short term because you will appreciate the extra room and amenities later. Rent out 1st house which should cash flow by now. After last kid leaves the nest, sell house, pocket 500K exclusion and move back to 1st house to qualify for property tax basis carryover. After 2+ years, sell 1st house, pocket 500K exclusion again, and buy retirement home cash. Live happily ever after.
Alternate scenarios. Rent forever and play the stock market. Buy one house, your dream house in your thirties and live there forever. Buy and flip continuously with minimum down for maximum leverage and deal with hassles of moving. What are your thoughts ? For all the math weenies, spreadsheet results and formula derivations would be interesting.
The tax break that congress gave the average couple of $500K tax-free cap gains on the sale of their personal residence was a huge gift to the people of CA. This made buying and selling every 2 years since the mid 1990’s, very lucrative.
The party is over for a while. And they’ll probably recind the tax break. Great while it lasted, though.
The tax break that congress gave the average couple of $500K tax-free cap gains on the sale of their personal residence was a huge gift to the people of CA. This made buying and selling every 2 years since the mid 1990’s, very lucrative.
The party is over for a while. And they’ll probably recind the tax break. Great while it lasted, though.
The tax break that congress gave the average couple of $500K tax-free cap gains on the sale of their personal residence was a huge gift to the people of CA. This made buying and selling every 2 years since the mid 1990’s, very lucrative.
The party is over for a while. And they’ll probably recind the tax break. Great while it lasted, though.
The tax break that congress gave the average couple of $500K tax-free cap gains on the sale of their personal residence was a huge gift to the people of CA. This made buying and selling every 2 years since the mid 1990’s, very lucrative.
The party is over for a while. And they’ll probably recind the tax break. Great while it lasted, though.
The tax break that congress gave the average couple of $500K tax-free cap gains on the sale of their personal residence was a huge gift to the people of CA. This made buying and selling every 2 years since the mid 1990’s, very lucrative.
The party is over for a while. And they’ll probably recind the tax break. Great while it lasted, though.
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