First and foremost, thank you to all who have posted and contributed your knowledge and time. I anticipated there would be a spectrum of different thoughts on investing vs. buying primary residence. I have to say this is why I love BP.
So many different perspectives and experiences that help us see things in ways we may not have seen before. Something I wanted to share for those who may not not be aware of appreciating markets (I understand because I myself didn't believe it until it happened to us):
in 2012, pregnant with my first child, my husband and I put every bit of our savings into our first home in Toronto, Canada. $36,000 bought us a pretty nice home for around $500k. In 2016, we just delivered baby #3 and the markets were booming - we were also outgrowing our home and wanted more space. We sold that home for $753k and put $260k as a down payment for an $860k home. We lived in that beautiful home for 2 years before we moved here to the US. We rented that home out and before we left, took out a HELOC and with a little additional savings, we bought 2 more investment properties. We rented our primary home out - now this was not exciting as we were nowhere close to the 1% rule. We were closer to .4%! However, we appraised the home before we moved and in two years our home went from $860,000 to $1,050,000. We knew this would be an appreciation game and stuck to our gut. We just sold that same home for $1,280,000. The capital gains that we will be taxed on is on the difference between what the house appraised for when we moved ($1,050,000), so it's not too bad.
Basically, our $36k in 2012 is now equivalent to 1 property (valued at $475k) that we still own which is cash flowing positive and have about $250k equity, in addition to $500k cash. This 20x return on our initial $36k investment was unimaginable 8 years ago - but we are reaping the benefits from the decisions we made then.
I tell this story because it's hard to fathom when you are not in this market, so I understand where many are coming from. I think the cash flow strategy is amazing in many areas that are not appreciating as quickly - and our plan is to diversify in the following areas: smaller multifamily housing, short term rentals, SFH homes in higher appreciating areas, and eventually larger commercial apartment buildings.
For now, we are considering dropping our budget to $1M for our own home, so we still have around $200k left and we can use this to BRRRR in Dallas/Bakersfield. While many of you suggested house hacking and we really like that idea, it is just so rare in the tiny pocket that our search criteria is set to. We feel like our new strategy would be a good way to merry the idea of owning our own home (not paying someone else's mortgage) and still having some capital to invest (and we will still use the income off our flips to save more so we can accelerate our portfolio).
@Axel Meierhoefer I really enjoyed reading this story - well done sir! You've got a point and this strategy is a good one. I have come to conclusion that going either way, investing in other markets or in my own home, is a good decision. Either way, I'm confident that we will be raising our glasses to celebrate our real estate journey in the very near future :)
I have to say @Account Closed, "you invest to live not live to invest" is very powerful - I always knew this deep inside, but to see someone else say it was helpful. We work hard so we can play harder - after all, isn't that the ultimate goal? There is no price we can put on quality of life - and if we cannot enjoy the fruits of our own labor, we are not doing ourselves justice.
