When my husband and I first moved to Elko six years ago, we learned quick how expensive rent was here. We had a dog and two cats, and at the time, just my husband was working. We were looking at paying anywhere between $1200-$1500 in rent for a place that would allow animals.
Some of our friends and family told us, at the age of 23 & 24, that we were too young to buy a house and there was no way we could do it. Then came our Realtor, Joyce Molohon with Coldwell Banker. She told us it would be cheaper to buy a home in Elko, then to rent.
Sure enough, she was right.
Although we weren’t approved for much, we were lucky enough to find a home in our small budget of only $155,000! At that time our mortgage was only $989. Now, keep in mind this includes your mortgage, taxes, mortgage insurance (depending on your loan), and home insurance. With the rent, we weren’t investing into anything besides someone else’s pocket.
So, why were we even thinking of renting? We had the notion that we were TOO YOUNG to invest in Real Estate based off what society was telling us.
Over the next five years, we built up enough equity in the home and with our small mortgage, we could afford to make improvements on the home. We reaped the benefits of the equity when we sold the it to buy a larger home to fit the needs of our growing family. In the end, we won! And all because we bought early and didn’t rent!
Here’s why you should invest in Real Estate at a young age, even if the home you’re approved for is small, or not quite your “dream home”. Just in life, there are baby steps to take to get you to where you want to be.
1) 1. Real Estate is an INVESTMENT: Your first rule is to buy a home you can afford and feel comfortable with the payments. You don’t need a brand-new home, or a home that’s been updated. Keep in mind, this is your first LARGE investment. Find the best home for your price point in the best neighborhood.
Utilize roommates. If you can rent out a room in your house, do it! If you charge $500/month, that’s $500 you can use to either improve your house, or to help pay your mortgage. You can even make a higher payment toward your principal, which will give you more equity.
2) 2. Build Your Equity Early: Renting out a room, or making higher payments to your principal, will help you gain equity. That means when you’re ready for a bigger home, you won’t be upside down on your loan. You may even have enough equity to make a down payment on your next home! Or, keep the home and use it as a rental investment!
3) 3. Future Rental Income: Being young, most of you will just be starting your career. When you buy your first home at a young age, you’re probably not making as much at your job….yet! As the years go by, you’ll only increase your income. What does this mean? You can afford more! Some of you may even be able to afford to keep your house and buy another. Rental income can be high, like areas similar to Elko County. Over a period of 10…15 years, think of the potential income you could receive from that rental income. Retire early?!
4) 4. Freedom: Renting means you can’t do…well…a lot! You can’t paint, or move walls, or sometimes, have animals. When you buy Real Estate, you have the freedom to remodel, to make the space YOUR OWN. Even if the home doesn’t have granite counter tops, or updated bathrooms, you have the freedom to do these improvements and at your leisure.
Keep in mind, it’s not an easy task buying a home. Your lender will need tax returns, bank statements, W-2’s, paycheck stubs….the list goes on. A lot of young Real Estate prospects are worried about their credit score (of if they even have credit built up yet). That’s why working with a lender early will help you-and it’s FREE to do! Your lender is there to get you on the right track so you can buy a home, even if it takes a few months, or even a year, to get you to where you need to be.
Also, working with a Real Estate agent early is a great idea! Learn which neighborhoods will be better for a return on investment, and even what style of homes are more desirable than others for resale purposes.
Your Real Estate agent and lender should both act as your guides to owning your first home at a young age! Start now and reap the benefits when you’re older and ready to retire (earlier than your friends who waited to invest in Real Estate!).
It doesn’t matter how young you are, invest in Real Estate, and do it early!
If you have any questions about Real Estate investment give me a call!