10 Reasons to Buy a Home While You're Young
Many young adults in this this day and age are choosing to move out of their parents’ homes sooner than previous generations. The bottom line to living on your own is you can either pay somebody else’s mortgage, or you can pay your own. Seems like a clear-cut decision on which is more beneficial to you. Here are 10 reasons to buy a home while you’re young.
1) Investment: Buying a house is a vehicle for investing. Look at it this way – if you’re in your twenties and not living with your parents, there is a good chance you will have roommates whether you rent or buy a house. If you are renting, you and your roommates are paying your landlord, and his or her mortgage. If you buy, you can rent rooms out to your friends and pay next to nothing, while they are paying off your mortgage for you.
Eg: Let’s say you are interesting in purchasing a semi-detached home for $300,000. You put 5% down, ($15,000), and mortgage the rest over the span of 30 years at a 7% annual interest rate. Your mortgage cost will be approximately $1600/month. Let’s say this is a 3-bedroom semi-detached home, and you charge each roommate $650/room + split utilities. You are only paying $300 to live there, plus your share of the utilities. Not only is this number most likely cheaper than rent elsewhere, but you are putting it directly into paying off your home, which in turn increases your equity and will later increase your return on investment. Pretty good deal huh?
2) Appreciation: Home prices move up and down every year depending on fair market value. If you buy while you’re young, especially in this current Calgary market, you can guarantee your home will appreciate in value. (You will be able to sell for more than you paid for it later down the road). Calgary is a buyers’ market right now. Oil prices dropped, therefore housing prices dropped – the two tend to go hand in hand. However, as the price of oil regains its value, and goes back up, the same will happen with houses. Now is the time to buy, and sit back and relax while you watch your home’s value appreciate.
3) Return on Investment (ROI): There are plenty of ways to use real estate as a means of making money. Renting out rooms is a great way to earn passive income. Using this income to pay off your mortgage means more money in your pocket when the time comes to finally sell. 80% of millionaires achieved their financial status through investing in real estate… Remember this when considering what to do with your money.
4) Forced Savings Account: Let’s say you worked your butt off and managed to save up $15,000. Of course there are many options of what you can do with this money. Some may choose to invest in stocks, and hope for the best. Others may decide their hard work has paid off, and use this money to travel the world. The smartest of people will use this to put a down payment on a house. Putting this money into the equity of your home is a forced savings account. You cannot spend this money, as it is locked into your home. Every mortgage payment you make, is basically adding onto that “savings account” you now call your home. Buying a home is a great way to secure the money you are saving, while simultaneously building your equity and your credit.
5) Build Equity: Some say buying a house is not beneficial because it doesn’t make you money per say, however it does build your equity. Many successful landlords no longer have to work. They have escaped the drab lives of working 9-5’s by wisely investing in rental properties. So I say again, why pay off their mortgage and earn them equity, when you could do it for yourself?
6) Rental Income: If you treat your home like a business when you are young and able, it is absolutely an asset to you. Rental income is a fantastic way to earn passive income, and any additional income is good income. There are constantly people in the city of Calgary looking for places to rent. Whether they do not choose to purchase a home because they are here short term, or they are too afraid to take the leap into home ownership, there are always people seeking a place to stay. Take advantage of this while you’re young, and watch how easily your mortgage gets paid off in front of your eyes.
7) Creative Freedom: Many landlords have clauses in their leases where you cannot make changes to their property. Let’s say you are a carpenter who wants to build a fantastic gazebo in the backyard, the landlord will most likely not allow it. Let’s say the place you’re renting is nice, but you are flooded with painting ideas to truly express yourself, chances are your landlord will not allow it. Enjoy the ability to make your residence exactly the way you want it!
8) Responsibility: Buying a home is a huge responsibility in itself. Choosing the right one can be stressful enough, but fortunately working with the right Realtor will take this responsibility and stress right off your shoulders. Once you own your home, you will be forced to learn responsibilities you may not have ever learned by renting. If something in your home breaks, you are responsible for fixing it. This means increasing your skills around the house, which is a huge benefit to everyone. You will have the responsibility of making all payments, which is a phenomenal way to learn how to budget yourself financially to set yourself up for an early retirement down the road. If you choose to rent out rooms, you are responsible for collecting rent when it is due. This is a great way to allow your leadership skills to shine through which helps in every aspect of life. A lot of responsibilities taken on at once can certainly be nerve racking, but proving to yourself that you can succeed at them is a very freeing and empowering feeling.
9) Thorough Understanding of Finance: It’s no surprise that 8 out of 10 millionaires invested in real estate. Not only does it build equity and earn you passive income, but it teaches you the art of finance. Having a good understanding of finance at a young age will be a huge asset throughout the rest of your life and career.
10) Feeling of Accomplishment: It’s not every day that a 20-something year old gets to say that they own a home. Back in your parents’ generation, that was nearly unheard of! Take advantage of the wonderful century that we live in, & set yourself up for a very bright and wealthy future as early as you possibly can.
There you have it, 10 great reasons why you should buy a house while you’re young! If you have any additional questions, or would like to take a look at your home possibilities, contact Gary Fayerman TODAY for a worry free, educated, and proficient real estate experience.