Buy What You Can Afford, As Soon As You Can Afford It! Example: Studio – Diamond Heights Village, $140,539 in TAX-FREE PROFIT Since 2000.What if you can afford to buy in San Francisco but what you can afford is a small studio? Should you buy? Will the studio appreciate over time? Will buying a studio now get you into your dream house sooner? Or is renting until some unknown time when you can afford your “dream” home a better plan?Â

Unless there is a windfall of money in your future (lottery, next Google, etc), I am a huge advocate of buying what you can afford, as soon as you can afford it. This doesn’t mean getting in over your head just to own a home. It means being realistic about the value of real estate over the long term.

If financial stability and wealth accumulation are a goal, then you should follow this advice. Your first home may not be your dream home in terms of amenities, location, size, style, “cool-factor,” etc…but if owning instead of wasting money on rent is your dream, then voila.

For example:

In the end of 2000, an average 580sf Studio condominium in Diamond Heights Village was worth $241,800.

Today, that same studio is worth an average of $382,339.

If you lived in this condominium for at least 2 of the past 5 years, you would have earned $140,539 in TAX-FREE PROFIT just by living in your own place, enjoying the pool, sauna, workout room, and parking spot insteading of renting in the Castro or Mission!

Unbelievable but true.

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