I aimed this rant at a few employees who earned small raises last week and were talking about new cars or vacations. Some single, some married. Makes no difference, if you have a stable job, now is your time. Start investing in yourself instead of your landlord.
Spring is coming, the supply in your area is at it’s peak, mortgage rates at so low we’re nearing free money.
If you have good/great credit and low-no savings this is your moment.
First, get a fixed rate mortgage loan pre-approved, it’s easy, you’ll know exactly what you can afford and what your monthly payments will be. If you can afford to pay rent then you can afford a starter home/apartment. Then find a realtor and start shopping. Right now.
I don’t see a first home as a money maker. I see it as a home with monthly price you can build stability for your life with vs the instability of renting year to year.
I’m constantly dealing with twenty somethings shuffling their lives around the city once a year chasing rent they can afford. Had they bought years ago when they were making the money to but didn’t have the thought to, they’d already be better off.
I bought my first house little over 2 years ago. In retrospect I wish I would have kept renting. The constant anxiety of what may break and cost me thousands of dollars often outweighs the couple hundred dollars I save on my mortgage every month vs renting a similar size space.
I owned a home for years, up until my wife passed away. I rent now…Gotta say I prefer renting…Are there a few minus’s in renting?..Sure. But the positives of owning aren’t worth the headaches.
Unless you have a big house and can’t say no to out-of-work relatives who want to come stay in your guest room for what turns out to be a year…
I guess it all depends on where you live.
Every state also has programs to help people buy their first home - everything from the mortgage to downpayment assistance.
The only thing I’d suggest is that if you’re moving into an area with lots of neighbors, you check them out to make sure none of them are wackadoodles…because once you’ve got that house it’d be a pain to move because you can’t stand the neighbors.
My advice to people who can’t afford a mortgage payment on their own is to by a 4-plex. Live in one. Rent out the other 3.
The closest that such advice came to being wrong was when my daughter did exactly that before the real estate bubble burst in 2008. The value of the property they bought dropped initially, but rents only went up. Initially owning that property cost then $500 out of pocket a month after collecting rents from the other 3 units. (As opposed to paying someone else $1000 rent.) After 5 years the three other apartments paid the full mortgage/taxes/insurance, and after another 5 they were pocketing $500/month. Sweat equity, market recovery and the positive cash flow made it an investor’s dream when they sold it. They cleared $100K and put that down on their own single-family house, and they never looked back. The investor that bought it paid cash, rents out all 4 units, and clears over 15% per year after management fees. He lives on a boat in the Bahamas.
When they sold, the realtor asked them why they didn’t just keep it themselves and use the huge cash flow of all 4 units to pay their new mortgage. But they didn’t want to deal with landlording any more. The 4-plex did what they bought it for, and got them where they wanted to be.
Lots of people want to complain about “rich landlords”. But many landlords are just looking to do what my daughter and her husband did – find a way to slip into their own home that they wouldn’t have been able to afford otherwise.
That was my Dad’s advice and I had that chance and I blew it by waiting too long and the market flew past me. Not long after the zipcode it was in became one of the fastest rising real estate values in the country. The taxes would have pinched me at first but by now I’d be living free. It all worked out in the end for me but every time I drive past that neighborhood I kick myself a little.
At the moment I own three residences. My primary residence in Pennsylvania. My recently constructed property in the mountains of North Carolina. And a small place in Florida. I am currently managing a my late Uncle’s house that is currently in his estate. I am a 1 percenter, so obviously home ownership is the unquestioned option in my situation.
But it gives me a very concrete outlook on the costs. And even for a small house costs can be quite significant.
Of course, if your buying on credit, you have very significant up front costs, including down payment and closing costs. Then monthly mortgage payments, insurance, title insurance, taxes. And you have no sure way of knowing what the future might bring. The market may stay stable, prices may increase or the bottom may find out and you may find yourself grossly underwater.
Now if you have new construction you will likely have a reprieve of several years, but as the house gets older, there is always something, whether big or little, wearing out or breaking. And some of those are not exactly optional. For example, if you live in Florida and your central air conditioning dies, replacing it is not exactly an option. There is several thousand dollars. Roofs must be replaced at intervals. Water heaters and other major appliances must be replaced at intervals. A house consumes a substantial portion of an average person’s income beyond the monthly basics.
For some people, home ownership is simply NOT the right thing to do.
Just google renting vs home ownership and you will find lots of resources that will try to guide you as to whether to rent or buy.
As for the last paragraph, I strictly live out in the boonies. If the area has either municipal water or sewer service, it is too close to civilization for my taste. If I can’t have a spring or well and a septic tank, I will move farther out into the boonies. The best neighbors are those that are miles away and that you cannot see.
