What difficulties did you have to go through so I don't make the same mistakes.

A few things I would do differently:

- I would try to do more of it on my own, especially in a market like today's. While I got a "relative discount" for my full-service RE agent (5%, instead of 6%), I don't think the process is so hard to understand/execute that I need to pay that much to sell. In fact, when I have bought, I end up doing quite a bit of the legwork anyway, and the agent just helps find properties, showings, etc., in areas with which I am unfamiliar.

- I would be much more in-tune with the market and the area, its history and its future. In short-term purchases (speculation, really), you are dependent on the demand for that property in the near term, and not very concerned about growth in value. You're looking to sell something whose value doesn't really change over the short term, but yet whose price is driven up by demand for whatever makes it desirable. For example, I would never buy in an area that was being newly developed if it was a short-term (less than ten year) purchase. The condo on which I lost $30,000 was on a small island that was being developed and had hundreds of similar units, with more being built. Mine didn't stand out, and no amount of upgrading was really going to change that. If someone wanted in, they had a whole slew of new-construction options that were going to command less than I wanted to sell my place for. That market was hit hard by the bubble burst. On the house where I made $60,000 in two years, it was a new construction when I purchased, but was in a desirable area that didn't have a lot of newly developed areas or housing growth, so the price I was able to command wasn't submarined by new construction or similar, lower priced options. (I am currently in an ideal situation for that as well, living on an island with lots of old housing and next to no housing growth, just remodeling, thus demand is always there).

- I think there's a lot of value in holding property on the low-end of the price range in highly desireable areas. I own a house now that is the least-expensive stand-alone house model on the island. Anything less expensive is a part of a multiple unit building/townhouse. When we bought it, there were two contingent offers, and that was two-plus years ago when the market was down. Again, on the condo where I lost money, I was at the higher end of the available market on that island.

- Always remember that housing prices don't HAVE to go up, even on foreclosures (though a foreclosure is usually a better value). There's this assumption in the US that a house will always gain value. That holds true over the long term, as housing tends to be good inflation protection if you view it as an "asset" (which is debatable). But in the short term, RE can be very volatile. I wouldn't engage in "flipping". About as risky as I'll get with RE is shorter-term purchasing of homes in which I intend to live for less than five years.

- I look for quicker ways to build equity and minimize my costs. This specific example may not apply to you, but in the case of my current home, I put 20% down, maxed out a "regular" mortgage at $417k (rather than financing a "jumbo") and then used that equity from the down payment to get another Home Equity loan to cover the rest. Mortgage rate was 4.6% (I have since re-financed with the PenFed 5/5 for around 3.2%), but the HE loan was more like 8%. I paid that HE off in about six months, and made just the minimum payment to the mortgage. Now, with the refi and the HE loan paid off, I am paying extra toward principle, again as an inflation hedge (and because I just don't see a whole heck of a lot of investment opportunities out there that I like right now, and I have good emergency funds and "opportunity cash" on hand already).

- Never use Interest Only ARMs. (I never did, but never would, either!)

That's my 20 cents' worth of experiences over three home purchases in my 20's and 30's.

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Argh I can't believe I forgot to ask this. Lets say I get a 100k home with 20% down with the current rates of either 4.5 for 30 yr note or 3.5 for a 15 year note. Which one should I choose? Keep in mind the monthly difference is only 150 dollars a month.

On one hand I pay more interest but I have more cash on hand to invest more into a rIRA or tIRA/ mutual fund. On the other hand I pay less interest towards the bank.

I chose to do a 30-year initially, but refinanced to the PenFed 5/5 with no closing costs. If you can afford it, I would choose the lower interest rate so that you're not stuck with something you don't want and either (a) have to sell when you don't want to; or (b) are forced to pay to refinance in the future.

There are calculators out there that can help. The general rule I usually follow is that over the time I intend to hold that loan, if I think I make more on an investment than I would paying down the loan (i.e. make >4.5% on an investment over five years that I hold the 4.5% loan), then I go with that option. In my most recent purchase, I went with the 4.6% 30-year initially, and used any remaining cash to invest. Two years later, I've re-fi'ed and am paying 125% more principal every month while still paying the same amount toward the house.

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