When I buy my first house, it won't be the house I want to live in for the rest of my life. And I've accepted that even before I start looking.
The idea behind the plan
My plan is to live for a few years in an affordable house that lets me move out, with a smaller initial investment because, let's be realistic, the first time around you won't have the largest amount of money you'll ever have. It's the smallest down payment I'll ever be able to put together, so it makes sense that it's also the most affordable house I'll ever buy.
From there, over the following years you keep paying down the mortgage. And by the time you finish paying it off — or even well before that, if you decide to sell along the way — you have as net worth the full value of the house, which has usually gone up too, because homes not only tend not to lose value, they tend to appreciate over time.
The effect of improving the house while you live in it
If on top of that you move into a house that needs some work — something less attractive or with pending renovations — and over those years you invest in fixing it up, by the time you sell you can get an even higher price for it. It's not just market appreciation: it's market appreciation plus whatever you've put into the house yourself.
A numerical example to make it concrete: if I buy a €150,000 house with a 20% down payment (€30,000) and a 25-year mortgage, every payment I make reduces the debt and increases my share of the house's value. If I decide to sell in 8 or 10 years, I'll not only have paid off a significant chunk of the mortgage, but the house is likely worth more than that initial €150,000. Between what's been paid off and the appreciation, the capital available for my next down payment would be much bigger than the €30,000 I put in at the start.
Why this leaves you better positioned for the second house
When it's time to sell, you have an advantage you didn't have the first time: much more capital than you had when you bought. Your second down payment no longer depends only on what you've been able to save month by month, but on everything that's built up in the first house — the mortgage already paid off, plus appreciation, plus any improvements you've made. That gives you access to a better house than you could have afforded by buying straight away the first time.
Why I'm not waiting for the perfect house
I know some people would rather wait until they have enough money to buy the house they actually want outright, with no intermediate steps. I get it, but for me that means waiting extra years just saving, with that money not generating any real estate wealth in the meantime. I'd rather get in sooner, even into a house that isn't ideal, and let time, the mortgage, and appreciation start working in my favor right away.
What's clear to me
I'm not looking for the perfect house on the first try. I'm looking for the house that lets me move out of my parents' place with a reasonable down payment, start building real net worth instead of paying rent, and leave the door open for that first house to become, a few years down the line, the down payment for the house I actually want.