This is what I hear in literally every single debate that I have with anyone regarding real estate. Young people are often clueless about real estate. The assumption is that you must buy a home as soon as you start working. There’s no time to wait. The process should go like this in life:
- Finish college.
- Get a job.
- Buy a home.
I must admit that I’m in a unique position because I own a condo that I rent out, while I also happen to rent a place for just over $500 with my cousins. However, the point is that you can’t just claim that renting a place is throwing money because you’re paying for freedom and a roof over your head. You can brag about how great it is living with your parents all that you want, but they eventually deserve a break.
Are you sort of stuck on your next real estate move? Are you torn between buying and renting?
Most young professionals get stuck in this real estate debate. What are you supposed to do? I want to help you out and make life easier for you. In order to do this, we must answer three questions together before we figure out the next move.
You must answer these questions before you buy or rent a home in the near future…
How long do you plan to stay put?
I would actually put this as the most important factor in deciding if you should buy or rent. Why’s this so important? Because renting is usually the right move when you’re not overly positive about your next move in life. If you’re iffy about your work conditions or expectations, then you really don’t want to get stuck with a mortgage.
With that being said, buying a place makes total sense when you know where you want to stay for the next ten years or so. A friend of a friend recently bought a home because he moved to a new town where he plans on living for a long time because of his new job.
Buying or renting should often be decided on by how long you want to stay put.
How much cash do you have saved?
Once you think about how long you plan on staying put, it’s important to look at your own finances next. How much are you making now? How much will you be making in the future? Do you have any student loans to pay off?
I don’t give a damn if interest rates are low or if prices are down. If you don’t have any money, you don’t have any money. Low interest rates don’t help with buying a home when you have lots of debt to pay off.
Getting a great job is the first step. The next step is to figure out how to budget your money. Then you can start saving lots of money.
If you’re working on building yourself up, you might want to lay low on buying a home for now. If you have the money saved and are comfortable with your job, you could make the right choice by buying.
Once again, I can’t give a one-size-fits-all sort of answer in here. It all depends on your bank account.
What’s the monthly cost of buying vs renting in your hood?
What’s the real estate situation like where you want to live?
There are a few other minor questions that I would consider asking as well.
- How’s the housing market? Every area in the country has its own unique housing situation.
- What do you really want? Do you want to travel more? Do you want to tie up a huge chunk of your savings? What is it that you really want?
You’d be surprised by how often it’s better to rent than buy a home.
I know, I know. I probably created more work for you. You wanted a simple answer. I’m sorry but there’s no simple answer when it comes to making a purchase worth HUNDREDS of thousands of dollars. This isn’t a new shirt for Friday night. This is where you plan on living.