I will not waste your time. I’m going to be as efficient as possible because I value your time. You could make a lot of money from this post. You could see huge returns with the right strategy. The process of analyzing whether to rent or buy has made me a lot of money. It is simple, free, and easy to follow. It’s a great way to learn new skills.
One of the most important decisions you can make is whether to rent or buy. It is important to consider the pros and cons of both options before making a decision. If you are reading this post, I know you are serious.
People rent for a long time. Buying a home can be more cost-effective in the long run, and many people don’t realize it. It’s one of my own 7 Millennial Money Mistakes. It almost always makes more sense to buy if you are going to live in a house for at least 2 years. The financial advantages of home ownership will benefit most people who have lived in a house for more than 2 years. Buying even with 5% down and paying PM is a good decision in most places. It’s important to remember that you’ll need to factor in additional costs, such as closing costs and monthly mortgage payments, when considering whether or not buying a home is the right choice for you.
Although it didn’t make my list of 7 Best Money Books for Millennials, the best book I’ve read on how to search for a home is Zillow Talk: The New Rules of Real Estate
Also, here is a recent Millennial Money Minutes podcast episode on rent vs. buy for a quick perspective (but there is a lot more data in this entire post):
I asked the same question when I was 27. I decided that buying was the better option. It was the third best investment decision I have ever made. I’m glad I made the decision, as it has brought me a lot of joy and satisfaction.
My condo has increased in value over the past 4 years. I’m happy that my investment in real estate has paid off.
A unit below mine that was the same size sold for even more recently. The neighborhood is projected to increase 8% this year. Of course, I understand that I haven’t yet sold this investment, but I was very close to not buying and renting (BECAUSE OF ALL THE CONVENTIONAL WISDOM TOLD ME TO RENT!)
Renting in most markets is not a good idea. For people who plan to stay in their home for at least 5 years, this is true.
People rent too long. They miss out on opportunities to build wealth through homeownership. You should buy in most markets as soon as possible. If you like something you see at a good price, it’s a good sign. – millennialmoney”
How did I do that? A bit of online research is not bad. I was able to find a lot of information in a short period of time. I don’t know if I got lucky. It seems like you did. I made an incredibly calculated decision despite having a little luck. I will show you how I evaluated the question and how you can do the same. You will be able to answer similar questions in the future if you follow the steps outlined in this post.
A lot of the data shared in the media is very generic, like you should rent in San Francisco or buy in Des Moines Iowa. It is not helpful. It may be detrimental to your progress. Forbes publishes an annual article on the Best Buy Cities and is worth checking out, but too many people only use this advice.
What did I do? I took matters into my own hands and found a solution that would work for me.
All you internet stalkers would know where I live if I showed you what I did for my neighborhood. You have to visit me in person to see the project I did. I don’t want you showing up at my door. Don’t visit me and respect my wishes.
Since I have gotten quite a few reader questions on this topic, I decided to use one of them as an example to show you how you can evaluate whether it makes more sense rent or buy in your own market. It’s important to remember that different markets will have different variables when it comes to the rent vs buy decision, so make sure you are researching and evaluating your local market before making any decisions.
Here is the exact process I used to decide whether it was better to rent or buy
Reader email (anonymized of course!):
Steve Wright is a recent graduate of Boston College. I have a degree in Economics and I’m looking forward to starting my career. I’ve been reading your website for a while. I look forward to reading more of your posts as I have enjoyed the topics you have written about. Only days after graduating, I was offered a full-time position as a policeman for the City of Syracuse. I am very excited to begin my career as a law enforcement officer. Of particular interest to me is your advice on purchasing a home instead of renting; I am required to live within city limits for the first five years of my employment.
Since I will be living there for a minimum of five years, I’m trying to decide if I should continue to rent or purchase a home. Since this will be a major commitment, I want to make sure I make the right decision. Many multi- family homes have been found in my search for houses within city limits. I want to find a home for my family soon. Do you think renting out a portion of the space is a good idea? Let me know what you think. I can’t wait to hear your thoughts! Thank you, Steve”
To help Steve determine whether it makes sense for him to rent or buy in Syracuse, let’s answer them and a few others. Steve’s budget will be affected by the cost of living in Syracuse. I went through the process of deciding whether it was better to rent or a condo when I replied back with the links and information. I decided that renting a condo was the best option for my situation. These are great questions. We need to make sure we have answers for them. I decided to turn it into a post because I was crazy researching it. I hope this post will help other people with the same problem.
5 Step Rent vs. Buy Decision Process
1. Check out the individual market trends using Trulia
This is a simple way to analyze any real estate market, and you can actually get super granular and zoom into more defined neighbors to do you own specific rent/buy calculations. I sent an analysis of the Syracuse market to Steve. I believe this analysis will give Steve the information he needs to make an informed decision. https://www.
The Syracuse market is growing like most real estate markets in the US over the past few years, according to the data. It’s a great time for investors to get involved in the Syracuse area as growth is likely to continue into the foreseeable future. Steve wouldn’t be buying at the bottom of the market, the data is pretty compelling that buying a house is more affordable thank renting, even if he only lives in the place for 2 years, given his personal situation that he is going to be a police officer
Search for homes that have a pool. Before you make a decision on a property, make sure to compare all of your options and read reviews from past tenants. Who doesn’t want a $100,000 house with a pool? Some of these are pretty nice. I think I’ll have to buy one of them. I didn’t want to get lost in the homes of Trulia. I reminded myself that this was just a daydream and that I should focus on finding my perfect home. I didn’t click on the $84,900 deal because I knew I was done. I was forced to walk away from the offer because I had been saving for months for the new car. There is nothing quite like a house-hunting addiction. It can be easy to get carried away with the thrill of looking for a new home, so be sure to make wise decisions when house-hunting. I deleted my Zillow and Redin apps from my phone because I couldn’t stop searching in my neighborhood and seeing what my friends paid. I decided to just uninstall them because I found myself getting distracted and spending more time on those apps than I wanted to.
2. Determine how long you are going to live there (it can be less than 5 years)
If you are going to live in a condo for at least 5 years, you should only buy a house. This is not right. It shouldn’t be allowed under any circumstances. I think it’s a good idea to buy even if you’re only going to live in a place for a couple of years. It’s important to take into account the market conditions of the area when making a long-term living decision.
Buying probably makes more sense if you do all of the calculations that say you should be renting. If you’re not ready to make a long-term commitment to one place, renting is 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 If you have to leave, you could keep your home and rent it out. New places to explore and experience, such as other cities or countries, could be considered while maintaining ties with your home city. If the numbers work, buy a home. Buying a home is a great way to build equity and financial stability. NOTE: I am not a professional
3. Determine your potential down payment (it doesn’t have to be 20%)
Too many people wait 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 888-353-1299 You do not need 20%. After having only $2.26 in my bank account I finally had saved up a decent amount of money to afford at least a 5% down payment with some additional padding I was investing in my emergency fund.
I put 5% down on my condo and bought it as quickly as I could because I was certain that prices would keep going up. I was fortunate to get in before the market took off. If I had waited one year until I had 20% saved, I would have missed out on at least $125,000 in growth. The long-term implications of any investment decisions should be considered.
I was confident in my income and the growth of my businesses made me feel comfortable doing it. Financial resources were available to me to take on this new venture. If your job is secure and you can afford to buy a home, you should be careful. It is important to consider the long-term implications of purchasing a home, so having a reliable source of income and the ability to cover unexpected costs should be taken into account. I immediately searched for a property after I locked those three down. I wanted to find a property that would meet my investment goals.
4. Get pre-qualified for a mortgage before decided whether to rent or buy
This could answer the question for you. The clarity you need will be provided by this extra sentence. Even if you have good credit and a good job, you might not get approved for a mortgage after 2007. Before you submit an application for a mortgage, it’s important to make sure you have all your documents in order. Sometimes it is weird. I feel out of place. If you want to pre-qualify for a mortgage, you should go out and see what kind of mortgage you can get. Once you have identified a mortgage that suits your needs and budget, be sure to compare rates from multiple lenders to ensure you get the most competitive terms. Then you can see what a bank is willing to lend you and at what rate.
ALWAYS SHOP AROUND. I was able to get a mortgage that was 0.81% less than the first rate that I was quoted, thanks to some simple shopping and calling around for 30 minutes. Over the course of the loan, I have saved hundreds of dollars in interest costs. The difference over 15 or 30 years is likely hundreds of thousands of dollars. You can take advantage of the compounding growth potential by investing in a retirement account early. I KNOW FOR A A lot of people don’t shop around for mortgage rates and just use the bank they bank with. If you bank with one of the big banks, they tend to have the highest rates and fees, so this is a big mistake. It’s important to shop around for the best banking options.
You will have specific rates to use the calculator below if you get prequalified. I thought I could get the mortgage rates that are published on bank websites because of my good credit. The rates I saw on the website were not the ones I was qualified for. There is always a catch to those rates and they are typically the lowest rate they could offer, but for some reason I couldn’t get them. If the lender requires a higher credit score to qualify for their lowest rate, it is worth looking into other lenders as well.
If you are considering buying a home in the next few years, I would recommend doing it as soon as possible because mortgage rates are still close to historic lows. If you want to buy a home, you need to improve your credit score so that you can get the best mortgage rate. Buying a home will cost you more money when rates go up. Before making a large purchase, it is important to consider your finances.
5. Check the two best free rent vs. buy calculators
What about the rent? The decision to rent or buy is up to you and should be based on your financial situation and lifestyle. buy calculators? I tried different rents. Each calculator has their own methodologies. Did I listen? Nope.
They are worth checking. Taking the time to explore them is definitely worth it. My two favorites free rent. If you use the buy calculator on Bankrate.com, you can determine if you would be better off renting or buying a property. buy calculators from Zillow and The New York Times. Let’s check out the results for Steve (making some assumptions about salary as a policeman in Syracuse and using the average home price + 20% to give him some flexibility!)
New York Times Rent vs. Buy Calculator – Buy!
Zillow Buying vs. Renting Calculator – Buy!
You have it. It was all I had to give. Steve should be buying in Syracuse. He can find great deals on homes in the area.
Steve says buying a multi- family home and renting part of the space where you live is a good idea. It’s a great way to build wealth over time. Renting one out and putting that rent towards the mortgage makes buying a house in the Syracuse market even better. It is an excellent time to invest in the Syracuse real estate market.
Happy house hunting!
