Russell, I need an expert's opinion.

My Government Economist neighbor heightened his investment by putting enough money aside from the sale of his first house for an ADDITION right off the bat to his next (possibly having a contractor as contact). He purposely bought a home too small for his family to afford the purchase price. He then added a handsome family room right after settlement, immediately increasing the value of his property. Was this a good investment? It depends, I suppose, on the size of the rest of the houses in his new neighborhood. Being the largest on the block would be a real resale deterrant. But it seemed a good idea at the time.

This was when balloon mortgages emerged. While I know they are a much higher risk than fixed mortgages, being an Economist, he took a five year one. At the end of 4 years he moved (which he had anticipated doing to begin with). Given sky-rocketing property taxes, is this an idea for which the time has come and gone?

This was a while ago. Would either of these strategies be beneficial to the average second time buyer now, with such inflated market prices? Just an idea.