By my mid-twenties, I’d paid my landlords tens of thousands of hard-earned dollars that I would never see again. I’m sure they enjoyed some lovely vacations with my rent money. Meanwhile, my life revolved around advancing a career which I hoped would allow me to purchase my own home. The birthday candles kept increasing and I realized “one day” still wasn’t here.
That’s when I decided to make a big move. I started researching the real estate market in my area. To my surprise, I was paying so much to rent a tiny apartment, it would have been cheaper for me to buy a larger place in the same part of town.
That’s the case in many U.S. cities, so don’t focus on the big, overwhelming number, the overall price of a home. Investigate what it would cost you monthly to own a home, like you do all of your other bills. Remember, you’re not just giving that money away every month to your landlord anymore. It’s an investment in your future.
After realizing how attainable buying a home was, I met with a real estate agent and mortgage broker and, within a few months, I was a homeowner! It was such an empowering and exciting feeling that I decided to completely switch my career path to helping people also achieve the American Dream as a real estate agent.
Nationally, the market is in a great position right now, especially in urban areas.
Millennials make up the largest pool of homebuyers. Most, like me, don’t have a big pile of money lying around, so nearly everyone finances the purchase. You’ll probably get approved for something more than you actually should spend. Be smart and find out what home price breaks down into a feasible monthly payment.
Mortgage rates are still low, but they’re starting to creep up. Housing prices are also going up, which means pushing off buying to save up a slightly larger down payment may not actually save you anything. You have the advantage in a competitive market because you’re not a saddled up with an existing mortgage, or having to wait until your home sells.
Another option many Gen Yers are catching onto is income properties. I’m sure the idea has at least entered your mind as you’ve binge-watched HGTV on rainy Saturdays. A lot of investors target foreclosure to “flip,” and, while that can be a money maker, there are now fewer foreclosures on the market to choose from. Plus, renovating may cost more time and money than you care to spend starting out. Another popular option is buying a condo, single family or multi-unit property to rent out. Use that cash flow to not only pay your mortgage, but put some extra money in your wallet.
Be thoughtful about where you choose to invest. First decide who your target renters are, their average income and the area of town they’re most concentrated in. If you’re targeting other Gen Yer’s, commute time is consistently the number one influencer in choosing where they pay to live. The important thing is to recognize what outcome you want before choosing any random property you think “has potential.”
If you’re still unsure owning is for you, I challenge you to take out a calculator and add up how much you’ve spent in rent during your adulthood. Tip: you may want to be sitting down!