If I were to assume that you earn a yearly salary and live in a studio, there is no reason why you shouldn’t buy a home. I know, I know, it takes a lot of money, a lot of work and a lot of interest and taxes. The reality is actually far from our perceived agony and anxiety.
If you set aside $300-$400 a month (yes, you can skip the Starbucks and Tequila more often) in a year’s time you will actually have enough to buy a home. With $5000 in the bank, you should set your eyes on the following things:
- Look for the nearest city. Look up the crime rates and the average rent paid.
- Find a structurally sound house that looks like crap but is fundamentally sound. (Pay $400 to an inspection company and they’ll do the work for you)
- Roll in the closing rents into your mortgage and start paying the $1600 a month
Scenario 1
You just “lost” 5,000 USD and are paying probably $500 more than you would in rent. Find a room mate that is reliable and would be willing to spend the $500 for a furnished room. Each year you are actually spending only $12,000 in mortgage payments. At the end of the year get ready to get back a portion of the taxes and interest you just paid! (Yep, that’s $1500 in your pocket!)
Then, don’t forget to sign up for STAR Exemption (That’s’ right, another refund back to you for tax payments)
Each year in total, you will “get back” about $2000 to live in what you can call your own place. You can paint it however you want, have whoever over without folk’s downstairs or upstairs complaining about the noise. You can essentially pay the SAME RENT, have an asset whose balance owed each year goes down AND you get a fatter tax return!
Now compare that to paying rent every month which comes out to the same amount every month with less space and your losing out of the $2000/year!
In 5 years, there is a STRONG possibility your house price naturally appreciated + the balance decreased + you got your $5000 back and about another $5000 more.
I won't be buying a property anytime soon, real estate is in a bubble just like a lot of other things, there's pins flying everywhere lately!
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real estate is always and will be a bubble. But guess what? Show me where you can live rent free? I doubt it. But with a house, you will have returns either in 1 year, 15 or 30 years.
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Can't live rent free but can live cheaper and that gives more money for other investments, after the next recession I'll definitely be getting a property. Hoping to build one myself when I've got enough capital
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awesome! good to hear.
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