I'd like to tell two fictitious tales of home ownership. Today's post is our first story. I'll follow up tomorrow with the second tale. And then we'll wrap up with some thoughts*. And a spreadsheet.
Let call homeowner A Jamie. Jamie is a keen, skillful and hardworking lady who we meet as she is about to buy her first home.
Anyway. Settle in, and follow along as we learn about Jamie's story of early home ownership.
Story 1: The Dream Do-Up
Jamie is keen to buy a home. She has worked hard for the last ten years and saved a large deposit, over one hundred thousand dollars!
She is handy with a set of tools, has a keen eye for interior design and is quite content spending weekends in the garden. So, she looks around for a "doer-upper" property. A step on the property ladder, a place she can enjoy working on, improving, making her mark on and hopefully turning a tidy profit on when she sells in a few years' time.
She finds a house for $450,000 and, with a little bit of help from her parents, manages to pull together a 25% deposit. Nice work Jamie!
Over the next five years she tidies up the place significantly, managing to install a new kitchen and bathroom. She modernises the garden, building a garden shed and raised planterbeds in the process. By keeping a keen eye on second-hand sales, making sensible design decisions, haggling with suppliers, and spending many nights and weekends doing the work herself, she manages to keep her spending down to only $25,000.
At the end of five years, she gets a new job in another city so puts her house on the market. A young couple fall in love with the place and she sells for $500,000. $50k more than she bought it for, giving her a 100% return on her $25k renovation spend!** Nice!
Tomorrow, we'll look at an alternative five-year first home ownership story.
* Subject to change as I'm yet to write the next two posts.
** I've simplified the financial details for the sake of the story. Just go with it.