5 Reasons Why Millennials Should Buy Instead of Rent
In today's economy, young people move frequently, and job instability can be a problem in many industries. With many 20-somethings prioritizing experiences over possessions, owning a home or condo may be the last thing on their mind. However, investing in a small property in a city you intend to live in for a while can be a really smart choice. After all, who wants to just throw away money on rent?
Though the up-front costs to home ownership can be a little steep, you can probably find a great starter property with a down payment that's lower than that vacation you've been planning. Here are five reasons why you should strongly consider investing in a home.
Investing in Your Future
Would you rather throw away $900 a month by renting from a landlord, or pay $900 a month that you can mostly get back someday? Granted, that second scenario requires up-front funds that can be hard to secure, but putting the effort into buying instead of renting can save you significant money in the long-term.
Plus, if you make improvements to the property while you're living there, you can probably turn around and sell the property for a significantly higher amount in a few years. This is especially true for suburbs that are next to growing cities.
It's Often Cheaper
In many mid-size cities, it's actually cheaper to buy than to rent! Again, you'll have to pay some of the cost up-front, but the lower monthly payments will make up for this in just a few years.
If you live in a city where it's currently too expensive to buy, ask yourself if it's worth it to move to a nearby city or suburb where it's not as expensive. Depending on your current job and career plans, moving to a less-expensive city could be worth it even if it results in a slight decrease in pay. That decrease in pay could easily be offset by decreased monthly housing costs!
No Rent Hikes
Getting a fixed-rate mortgage means that you'll never have to worry about your landlord hiking your rent - and rent hikes can be a major problem in growing metropolitan areas and neighborhoods that are getting gentrified. If your rent has gone up significantly in the past few years, it's time to start looking for other options before you get priced out of the neighborhood entirely.
Remember, a mortgage is a commitment, but it also provides security! During economic downturns, wage growth can be sluggish across industries, so rent hikes can be a major problem regardless of your line of work. You can stabilize your living situation by buying property.
A Source of Income
If you purchase a large enough property, you can easily rent out a room while you still live there. Being a landlord can be a pain, since there are certain rules and laws you'll have to follow, but it's worth it if you live in an area where you can charge $300 or more a month for one room. If you live near public transit or a university, or are willing to be flexible on the length of a lease, you can probably attract a range of good, reliable tenants willing to pay whatever price you set. Plus, you can probably rent to a friend if you live in a fairly high-demand area.
Renting out the unit after you no longer live there is also an option. If you buy a condo in a fairly high-demand area, make sure to keep it up-to-date and in good condition so that you can manage it remotely. You may need to hire a property maintenance company to help with any issues that arise, especially if you relocate to another city, but this small monthly management fee is often worth it.
You can also theoretically set up an AirBnB listing, but keep in mind that many municipalities are cracking down on that. Plus, the most in-demand areas on AirBnB also tend to be the area where home ownership is the most expensive!
If you rent an apartment, your landlord can charge you for any damage to the property, however slight, while barring you from painting or even repairing things. This can be especially annoying when the landlord refuses to make necessary repairs to heat and water lines! Plus, landlords can set arbitrary rules about pet ownership.
If you own a property, you will probably be beholden to a homeowner's association or other entity, but their rules are usually reasonable. Condo association rules can be stricter and sometimes include a limit on pets, but you can mostly do what you want inside your unit. You can make changes and repair things as needed instead of waiting on a landlord to fix your furnace in the middle of winter. If you want to replace your aging dishwasher with a wine cooler, or put purple tile on your bathroom floor, you can!
Remember: It's Your First Home!
The first property you buy doesn't have to be your dream home, nor will you have to live in it for the rest of your life! It just has to be good enough for the next 5-6 years of your life, or in a desirable enough location that you can rent it out or sell it quickly if you end up wanting to move.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
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© 2019 Ria Fritz