Thanks MM for the reply.
One of the reasons we like the house is because
A: Its close to the freeway, yet not ON the freeway and near a lovely forested greenstrip.
B: Its got good schools in the area(7-9 depending on the grade)
C: Location to work for us is great and not far for us to commute via public transit.
D: The house design we like but needs work
For us to think about owing the amount of money for a home like this kind of scares us, especially when we look at the house and see it hasn't been updated since the late 80's. The work requried to do minor renovations(new floors or cabinets) doesn't scare us, rather just the sheer of debt we would be taking on(we never had more than $20k worth of debt and that was paid off over a year). We live life without debt and are INCREDIBLY happy to not have it, but we understand taking on payments for a house is "better" debt than other types of debt.
That being said, I believe Seattle will remain to have long term potential, but the fact that we've had a great market for the last 8 or so years seems to be leading towards a time period where we will see a down period is what makes me nervous. That being said, we would likely own the home for the purpose of living in to fix up(over a year or so), then moving back aboard our sailboat and renting out the house for a number of years before moving back in to raise our family and settle down a bit. IF a down turn occurs, we would be more than happy to continue to live in the house until the market returns, and the benefit of this deal would be they wouldn't require us to have a down payment(as of right now with initial discussions), and that in turn means we can still be leveraged in the markets.
On a side note, some of the work that would be done by us would be to not modernize the house, rather fix the problem childs then go from there(new roof, new insulation, new windows).
@waltworks - That is a great point about 50-year horizon. Hopefully within the next year we can make this happen and if the markets stay the same.