I don't post here much but have been visiting regularly since 2006. I'm now in the process of buying a house so I thought I'd share an edited version of our story. I don't include this all to in some way justify our decision as I'm purchasing with my with eyes wide open; I just thought that as per the title of this board it might be of anecdotal interest to some.
Firstly, on financials.
STR 2007, mostly based on the arguments found here. Everyone we knew told us not to what with the house being in a 'nice' leafy part of East London, near Stratford and on the tube, bound to rise in value meteorically due to the Olympics (interestingly prices seem to have remained static looking at similar properties today). Anyway, renting it out from 2006-2007 was a royal PITA especially with us now living on the other side of the country and with 100% of people telling us not to sell we figured that selling was the right move.
We took a 6 figure chunk of cash but not enough to buy outright and there was no way I was going to buy back then. Had a number of near heart attacks 2008/2009 worrying about the money that we had stashed in multiple accounts. Pulled out of Icesave before it got hairy. Bought loads of gold at $700 p/oz sold it all immediately (doh) soon after as I realised that I couldn't afford to lose it, instead stashed it into a Northern Rock bond after UK Gov bailed it out. Maxed out (stocks and shares) ISAs, premium bonds etc, didn't touch stock market except through ISAs. That worked out OK; didn't touch ETFs, can't be bothered with day trading so bought things like funds or Lloyds at bottom and BP after the Mexico thing (though sold soon after as holding BP stock didn't sit well with me). Bought physical shiny stuff too as well as investing in forestry related qualifications and directly useful hand tools for woodworking as it's an area that interests me.
5 years on, taking into account the physical assets that we own I'd say the pot has reduced by 20% but we've spent more of it than that including using it to fund rent for a least 2 of those 5 years whilst I was getting my business settled.
In hindsight I could have micro-managed the money thing a whole lot less and trusted my initial instincts. Overall I've no regrets, though.
Renting has been good to us. It has enabled us to move around the country (with 3 school age kids) with low transactional costs (except to my poor back!) per move. Initially we lived semi-rurally, in a couple of big houses. Then, as other global issues such as resource depletion made themselves known to me initially through some of the more TFH post on here, we tried out some slightly more out of the box options.
Firstly a community set-up. Didn't work out on a number of levels. Then middle of no-where on a hilltop in Wales. Loved it, even when snowed in for 2 weeks winter 2010 (was glad of our TFH food stash I can tell you) but needed to drive everywhere and growing season noticeably shorter. Tried to set-up a housing co-op, but that didn't work out. Then converted our pensions into a woodland and moved near that. Have been renting a house worth 5x our purchasing pot since then.
This year we got *really* fed up of renting. No, we got fed up of having no security of tenure. We got fed up of not being motivated to start a garden that we might have to leave soon. Of making compost piles that we never had the time to use. We also wanted to be somewhere we could grow old and not need to rely on vehicles both for us, or ferrying the kids everywhere.
So, the start of this year we started looking seriously at buying in the local town.
On the market.
Talking with EAs and based on our own research the market has definitely picked up here (North Shropshire) for more interesting properties (big gardens, outbuildings etc) going between £200k - £300k (our budget). Properties that have been on for 2 years are now being sold and similar properties that are coming on are shifting. Stuff under £200k is staying on the shelf, unless it's quirky, especially estate houses.
We're buying a house in the middle of a small market town with good amenities including branch line train station with connections to decent main lines, good schools, police and fire station as well as local shops and a seemingly thriving small industrial estate. The town is surrounded for miles by quality agri land and has a canal network within 5 miles. It's also not touristy, the infrastructure is there to support the locals.
The house has been on for 2 years. It went to auction recently and didn't sell, that's when we went to look at it. It's south facing, has an excellent size 3/4 acre south facing garden and being custom built by the current vendor in the 1970s, seems of good quality construction and well maintained. We're getting it for 55% of the price it was 'worth' in 2010 (which we could never have afforded). They wanted offers over an amount, we went in at 5% under. They told us to bog off and we walked. 3 weeks later they came back to us and we're now proceeding at that price.
Due to us buying a building plot nearby - another plan, now discarded due to the hassle factor and realising that we'd have to take a mortgage out to fund the build - a lot of our cash is currently tied up until we sell it (after us getting residential PP, which we will according to a positive pre-panning enquiry). So, we've scrabbled around selling everything not tied down and have managed to make a 25% deposit. I'm self employed with 5 years accounts but with decent credit (except being unfurnished tenant and moving lots). Incidentally I'm really glad that I kept a credit card account going, purposely keeping a balance on it and paying some interest each month, that's definitely helped with our credit score.
Mortgage was surprisingly easy even though we're self employed. Given we've got a lump of around 50% of the mortgage that we'll want to use to pay it down when the land is sold we've opted for an offset. The remaining balance will equate to 2x earnings. Interest rate is fixed at 2.39% for 2 years then onto SVR. Payments at current SVR and for the full loan amount equal the rent we're currently paying.
So, that's where we're at. I fully expect the house to continue depreciating in value but it genuinely doesn't concern me; what's more important is that we'll have that longer term security of location and we can start putting some roots down, literally. Going back to having a mortgage is obviously a concern given my negative expectations for 'the economy' (read: infinite growth paradigm being unmasked as the ponzi scheme that it is) but I've decided that I can't wait any longer.
Good luck all and sorry about the essay, I got carried away a bit.