The average person stays in their home for a duration of five to seven years. Then, they sell it and buy another house that is likely bigger and better than the last, but for what reason? Here are the typical responses that I’ve heard:
- We want to move to a better school district for the kids
- We grew out of our old place and needed something a little bigger
- The neighborhood we were in was taking a turn for the worse
- The market was hot, so we sold while we could make a nice profit
- The house was old and just needed too much maintenance – we wanted something newer
In actuality, the real reason for moving was probably something like this:
- We just got bored with our old place, started looking around, and fell in love with this new house
- Our friends all had such nice houses and we felt inferior, so we ended up buying a bigger, better house
- I really wanted the kitchen of a master chef, even though I only cook once a month
- I wanted to pull into my driveway and have my breath taken away by my own house
So what’s the deal with Americans and their houses? Why do we have such an obsession with buying something bigger and better all the time? After all, it’s only making us broke! When we sell a house, we have to pay pretty steep realtor fees. When we move into that new home, we’ll likely pay more in property taxes, insurance, maintenance, and repairs!
Editor’s Note: Related Article – “Top 5 Projects That Will Add Value To Your Home“
By living in our homes for an average of just 6 years, there is no way we’re building enough equity to cover all of these added expenses. At best, the average American is breaking even on these house hops, and many of them are unknowingly going backwards financially, even though they’re stepping up in home value.
My First Home
I graduated from college at a terrible time to find a decent first job (2008…with a degree in Finance…ugh!), but when I saved up enough money for a home, the housing market was a buyers dream! In 2011, I was able to buy my first home for $78,000! It was a 3 bedroom, 2 bath home that I put $15,000 into to fix up, and is now worth well over $120,000. I still live in this home today for the following reasons:
- It still has plenty of space for me and my future spouse
- I was able to pay off the mortgage and now have zero payments each month
- The location is desirable – near the community pool, hospital, and the local park
- The yard is small, which means very little upkeep
- It will likely continue to rise in value
- It puts me in a fantastic spot to build wealth
Why I’m Still Hanging Onto It
As the post title clearly states, I plan on owning this home forever. Why? Because it serves all my needs and will probably make me a very rich man.
When house values rise, some homeowners decide to sell and cash in on their good fortune, but then they typically just end up spending their profits on the next home because the entire market rose in value, not just their one house, so selling for profit really makes no sense (keep that in mind if you ever get caught up in the hysteria of the rising house market).
To me, a home should just be a solid structure where I can stay warm, dry, and maybe store a few belongings. Also, my home is a wealth building tool. Since I bought my house so cheap, I was able to pay off the mortgage in 3 short years. Now, with no payments, I am able to store away a bunch of cash to invest! Here is my basic plan as a whole:
- Buy a cheap house
- Pay off the mortgage
- Save up cash
- Buy a cheap investment house with cash only
- Rent out the property
- Repeat steps 3-5 over and over
Right now, I’m pretty much done with step #3 and will probably buy my first investment property in the fall. With the new cash flow of the investment property, I’ll be able to save up cash even faster for the next one. Within seven years, I should be able to buy 10 investment properties with cash, all thanks to my first humble home.
What if I followed the trend of most Americans and bought a $200,000 first house? Then, after a few years I would move up into a $300,000 home. With the large mortgage payment, I wouldn’t be able to save up any money and my only “investment” would be my primary residence! Instead, I have chosen to buy a cheap fixer-upper, live there for 10 years, build up a million dollar investment estate, and then rent out my primary residence while I move into my dream house with cash! Just 10 years of delayed gratification can make all the difference.
Do you plan on owning your first house forever?