Rent Or Buy?
If you pay attention to your tax advisor, your best friend or even your mother, you’ve probably heard it said that “Owning a home is the best investment you can ever make.” Although this is sound advice, it’s also a blanket statement that assumes everyone is in the same financial boat.
Sometimes, finances don’t even play a factor. Young professionals who travel more than 60% of the time often do not see the financial benefits behind taking on a mortgage. After all, what’s the point of paying so much for something when you aren’t even there to enjoy the benefits? Renting seems like a smarter choice.
In some cases, it may be. If you live in a major city and the average starter home runs five hundred thousand or more, your down payment can run you almost as much as people in smaller markets are paying to buy their entire home. This can make it difficult to take on the responsibility of a hefty mortgage.
The benefit of living in a major city, however, is the easy accessibility to willing tenants. If you and your buddies are already renting a house together, be smart enough to leverage that experience.
Find a way to get yourself a down payment (FHA loans offer a 3% down payment for first time buyers) and consider convincing your buddies to start renting from you. Be wary though – mixing friendship and business can be risky. It might be a better bet to rent out your home to strangers.
If you don’t live in a major city and are just scared to take that extra step, do a little exercise. Sit down and grab a calculator. Multiply what you pay for your monthly rent by twelve. Then multiply that by thirty. That’s the amount of money you will be giving away if you continue to rent a home instead of financing one on your own.
Money’s the issue for many, not motivation. If financial concerns like your past credit history, lack of a down payment or unexpected career changes make home ownership an impossibility for you on paper, you do have a right to be concerned. Sit down and talk with a financial advisor to determine what changes you can make to:
If you find you still can’t afford to purchase a home on your own, consider talking to a family or friend who also may be interested in buying. Going in on a purchase together will cut costs in half and make it possible for both of you to gather equity with an asset that should appreciate over time.
To avoid any disputes, get everything in writing, including an exit strategy. Ie. What happens if one of you wants to get married and move on, but the other is not ready to sell? Planning ahead for these scenarios before they happen and agreeing on an outcome is the best way to stop problems before they happen.
Don’t live the rest of your life making someone else rich. Invest in your future and start shopping for your dream home today.
Sometimes, finances don’t even play a factor. Young professionals who travel more than 60% of the time often do not see the financial benefits behind taking on a mortgage. After all, what’s the point of paying so much for something when you aren’t even there to enjoy the benefits? Renting seems like a smarter choice.
In some cases, it may be. If you live in a major city and the average starter home runs five hundred thousand or more, your down payment can run you almost as much as people in smaller markets are paying to buy their entire home. This can make it difficult to take on the responsibility of a hefty mortgage.
The benefit of living in a major city, however, is the easy accessibility to willing tenants. If you and your buddies are already renting a house together, be smart enough to leverage that experience.
Find a way to get yourself a down payment (FHA loans offer a 3% down payment for first time buyers) and consider convincing your buddies to start renting from you. Be wary though – mixing friendship and business can be risky. It might be a better bet to rent out your home to strangers.
If you don’t live in a major city and are just scared to take that extra step, do a little exercise. Sit down and grab a calculator. Multiply what you pay for your monthly rent by twelve. Then multiply that by thirty. That’s the amount of money you will be giving away if you continue to rent a home instead of financing one on your own.
Money’s the issue for many, not motivation. If financial concerns like your past credit history, lack of a down payment or unexpected career changes make home ownership an impossibility for you on paper, you do have a right to be concerned. Sit down and talk with a financial advisor to determine what changes you can make to:
- Improve your credit history rating.
- Investigate creative financing that would allow for a lower down payment than most traditional loans.
- Create a budget that works regardless of your career prospects.
If you find you still can’t afford to purchase a home on your own, consider talking to a family or friend who also may be interested in buying. Going in on a purchase together will cut costs in half and make it possible for both of you to gather equity with an asset that should appreciate over time.
To avoid any disputes, get everything in writing, including an exit strategy. Ie. What happens if one of you wants to get married and move on, but the other is not ready to sell? Planning ahead for these scenarios before they happen and agreeing on an outcome is the best way to stop problems before they happen.
Don’t live the rest of your life making someone else rich. Invest in your future and start shopping for your dream home today.