How would you start with 5K?

I am getting started and want to get the most enjoyment for $5K in Home Theater. Music is key, but I cannot afford the best of both worlds. I live in an appartment so I don't want to over-do-it. I have about $5K to spend and I am planning to start with a Denon 3801 (new) and a pair of B&W 804's (used) and HTM-1 (used). I already have a Sony S550D and some speakers (nothing special) for the rear channel. With time I want to add an Amp, better sources and better surround speakers. What would you do?
Speaking earnestly, I'd start with the best two channel system $5K would buy, including basic room treatments, and build from there. You might be surprised how well a two channel system with good imaging works for the occassional HT use. A good CDP with variable out would be preferable, but if a preamp were part of the package it'd have a pass through for the future processor. Next would be the addition of a processor followed by a three channel amp for the center and rear speakers. Subs and rears would follow in that order. That's what I'd do and it may or may not suit your desires.

A Denon AVR-3801?? B&W 804's?? (granted that they are used...... but) And a B&W HTM-1?? Before I go any further, may I ask you, what is the size of your apartment?? To be getting speakers like the B&W 804's and then powering them with a powerhouse like the Denon AVR-3801, I take it that you must either live in a very large apartment, or you must be quite friendly with your neighbors. I live in an apartment too, and there's no way in hell I could use gear like that in my apartment (which apparantly, is quite a bit smaller than yours).

But anyway, the gear that you have listed thus far?? Well, you are on the right foot. But being that the Denon AVR-3801 A/V Receiver already has a surround sound processor built-in, I would be content with just that, and I would go on and build from there. In time, I would start my additions with a new (and better DVD Player...... maybe a Pioneer Elite DV-37 (about $1,000.00 MSRP...... but you can obtain for around $650.00 or so..... Or a Sony DVP-S9000ES for about $1,500.00......... and unlike the Pioneer Elite DV-37, the Sony is not as widely discounted) DVD Player. Afterwards, I would go on and add a Denon 2 Channel Amplifier (to keep in tonal harmony with your Denon AVR-3801..... I would think that after spending about $3.5K+ on the AVR-3801 (or is it really the AVR-3800), I sure as hell wouldn't be upgrading it NO TIME SOON), and then I would add a subwoofer and buy better quality speakers (they don't have to be B&W 804's, unless that's what you want down the road) like the B&W 601 MkII's or ultimately, the B&W 805's as your surrounds later on. The other poster that has posted before me?? Well, I like his idea about adding some room treatments to your listening/viewing area as well. Living in an apartment and all, with the kind of equipment you got, I would consider that a necessity.

When you are done, you are going to have a very good system. Good luck.

sony s9000es at one call .com 4 $1050
I would buy PSB gold speakers and their center ($2000), a B&K ref 20($1000) for a processor and Sunfire's Cinema Grand ($1500) to push it. The other $500 you can spend on cables and interconnects. Next purchase would be Sony's new SACD/DVD player, when you come up with the extra dough.
I agree with Fpeel. In fact, in getting to the system I currently have this is exactly the route I took. At one point it was pretty comical because I had speakers that were about 4 times the size of the television. (Music reproduction was at least 4 times as important too) If music is key to you--do that first and as well as possible, then expand into 5.1 channels as your budget permits.
Your approach is pretty close to the advice I give friends when they ask how to start down this path - put your money into two good fronts and a matching center, but a decent A/V receiver (Denon is my choice as well, but certainly not the only one), use anything you can scrounge up for the rears and buy a cheap DVD player. An alternative to this is to buy something lower in the line for the fronts and then move them to the rear when buying upgraded fronts from higher in the same line, but assuming $5K is all you're planning to spend in the next year or so you might find it too long to wait.

By the way - you got a comment about the 3801 where I think the writer was referring to the 5800, a much higher-end model from Denon. The 3801 is an excellent choice given your goals.

This setup would give you really nice performance initially and, depending on your desire and means to upgrade in the future, you'd have lots of options. First, depending on what you put in the rears initially, a decent set of rears could be had for $300 or less, new. Something from PSB or Boston Acoustics. BA makes a really nice dipole that is ceiling or wall mounted for about $400, but if you move a lot you might not want something that mounts. In another year you'll be able to get a sub-$500 progressive scan, DVDA DVD player which will be an improvement over whatever you get now for a couple hundred. Then, of course, you can replace the Denon with separates - if it has pre-outs, you can start with the amp and then ultimately the processor. I went from the old AVR-3600 to separates and the improvement was great. Throughout all of this, your L/C/R will give you a lot of enjoyment, and by the time you're done with these upgrades, you can decide whether these are your fronts for life or not. You're definitely on the right track - hope you enjoy it.

Thanks "Kthomas":

That was what I was referring too (the Denon AVR-5800). And I am sorry for totally misinforming the guy. There is in fact a Denon AVR-3801 available. This is a new model, and more than likely, it is likely to retail anywhere from $1,500.00 to $2,000.00, putting him WELL within reach of his goals. The Denon AVR-3801 is a very nice receiver by the way (I have downloaded the brochure two days ago). Again, my apologies.

Charles - I think the 3801 is not intended to be that expensive - I had heard more around a grand. The 4800 retails for $2000, so I doubt they'll bring out another model at the same price point. In any case, Denon's whole lineup is really nice, IMO - pick your price point and buy the Denon closest to it and you'll probably be pretty satisfied. And I completely agree with the point you were making about the 5800 - if you dive into this by buying the 5800 you're probably making a big mistake if you're planning to upgrade it within a year or two - that's a seriously nice piece of gear and you should get years of good service out of it. If you're constrained by budget (and who isn't) and you're going the receiver route until funds build back up, buy a lower-end one so you don't take such a huge hit. As always, having a longer term strategy to guide your buying decisions will make it cheaper in the long run.
I agree with the comments before me, with one twist. In HT the most important speaker is the center channel. I would buy a B&W that matched the sound of your 804's. Ideally, it should be another 804 or better. I can't stress enough the importance of the center speaker for HT. Almost all the dialogue and sound comes from it. For music, don't use it at all. It's difficult for 3 speakers to provide a clear, consistent sound. Stereo works best.

Second purchase, Sony S9000ES. It greatly improved the sound of my CDs and DVDs. I had a Sony 300 DVD player and a $500 Sony CD player. The S9000ES also has a SACD option for music and has progressive scan video.

Third, a TV to take advantage of the progressive scan.
To All: Good advice. Thank you. We bought the N804's and HTM2 (yes a step down from plan) new (people want almost full price for used anyway) for a little under $4K. Beautiful speakers - hooked up to an older Denon that sounds pretty good. Now we're shopping for an amp ... but after doing my taxes I may put that on hold.