the baby boomers are phasing out and to old to care about buying a home and half the new generations are graduating and only care about mobility doesn't want to be tied down. That is a lot of people that's no longer interested in "the American dream" of home owner ship. But there is still power in buying a home, if you are renting your home and paying 1,000 for rent. On average the landlord is making 200-400 dollars in profit. So if you owned the same house you would be paying as little as $600 maybe even less depending on loan amount, credit score and some other things that factor in. What I will do is give you the pros and con's of being a renter, buyer, and what I think is the best option a investor
Renters:
Don't let know one try to talk you out of being a renter there are some major upsides to this option. First it's yours, you can use it as you see fit granted that its stated in your lease. But, you can paint it to fit your style and really use the space to your liking. Another upside believe or not is, its not yours your not stuck somewhere you don't want to place roots at if you don't like. Just give your landlord the appropriate amount of time if it's a month to month lease its typically 30 days or more if its a year or longer lease 60 to 90 days or more. You might have to pay a fee to break the lease but if you just got the dream job at google it'll be worth it to have that flexibility. Upside #3 someone else takes care of the property all you have to do is give a quick call to the landlord and say "Hey, my roof is leaking can you come fix it". Upside #4 No utilities the landlord/ or property management company will pay the bills for you in order to keep you as a tenant. You have a lot of negotiating power as a tenant more then most people think if you're staying in a certain area for longer then 2yrs you can ask for a lower rent for a longer lease. Just make sure you're happy who you're renting from. In fact everything on the lease is negotiable.
Now for the downsides #1 it's not yours you can't knock down that wall to give your space that Feng Shui look you were looking for. You have to ask can you have a pet or face fee's and penalties. (most allow small cats and small dogs any thing bigger your going to have to pay maybe.) you can't change out appliances but like I said everything in the lease is negotiable. downside #2 Most and I mean the majority of landlords and property management companies (I use that term loosely) sucks I mean they are bad at everything property management related. Most don't have any systems in place to take care of a tenant they don't have someone to respond to leaky faucets, clogged drains, or just to keep the common area clean. Downside #3. You can't get a hold of them unless the rent is late. Downside #4 Most are still stuck in the stone age when it comes to paying rent. You can't log on a site under your account and pay rent with your card while the technology exist most landlords are small and/ a accidental landlords so they don't keep up with it or don't care. Downside #5 rent will always increase sometimes 25 to 50 bucks a year or more. When it comes to renting do your homework its a relationship like any other make sure it's one you want to be in. There's great landlords and there's slumlords.
Home buyers:
The American dream is still alive and well. The white picket fences, the manicured lawns, and Sunday barbecues while watching the football game. Yes there is pride in home ownership as well as pitfalls or some call them a money pit. Upside #1 Its yours and all yours if you want a totally open concept it's time to start knocking those pesky walls down. if you want to turn your backyard into the playboy house grotto grab that back hoe and start digging, bunnies still won't come but you can dream. and it's that sense of ownership that we all want. Upside #2 Tax deductions on everything home appreciation and depreciation you can get taxes back at the end of the year. Disclaimer I am not a C.P.A (certified public accountant) consult one about this. Upside #3 my favorite is equity which is any money over what you owe in the property ex. if you owe 60,000 on your home but it's valued at 100,000 that means you have 40,000 in equity, and you can pull that money out of your home to do anything with it. Like... buy more real estate. Upside #5 your mortgage payment wont increase (as long as you have a fixed loan) but the value of your house will.
Downside #1 If you want to alter the psychical structure of your home ex: add a extra floor from 2 to 3 stories often time you have to notify the city or county you reside in and the whole process is just a headache. Downside #2 All the maintenance is on you, you have to find someone or be that someone to fix every little problem around the house. Downside #3 You might get stuck with a house you can't sell in the future. Due to you owing more then the house is worth, how the loan was structured or the condition of the property where no bank will give someone money to live in it. To me if you're going to live anywhere for more then 5 yrs. you should focus on buying.
Investor:
Oh the joys of being a investor like I said at the top if you have a tenant paying $1000 and your mortgage and is 500 and upkeep is 100 a month then you're making 400 a month. Even if you're a accidental landlord making a extra $400 a month is awesome. Upside #1 Building generational wealth you can set your family for life with a few properties and if you buy a single family home up to a 4plex/ quad-plex (4 apartments in the building) the bank will treat it as the same loan. So if you have 4plex filled up that's $4,000 a month your mortgage is still 500 minus a extra 100 per apartment for upkeep you're still making $3,100 a month. Upside #2 if you're a great landlord you could have life tenants. (dreams do come true) can you imagine someone so happy with your service that they will pay you every month for their entire life. Businesses would fight for this type of person. Upside #3 Living rent free instead of renting out the entire quad-plex live in one apartment and rent out the other 3 sure the profit will be smaller but your having people pay you for you to live there for free. Upside #4 Rent will always increase I've seen investors buy a apartment complex and realized that the apartments was paying 100-200 less then what the market/ area was demanding he jumped on this opportunity. Granted he had to pay some upfront money to bring the property to that asking price but he instantly seen a 35% increase.
Downside #1. Tenants skipping out in the middle of the night. I had it done to me and heard it done to other people tenants would just leave without any notification for whatever reason. And sometimes trash the place so now you have to have it cleaned and redone for the next person which can take a month or two. So that's 2 months no rent and try to track down the asshole that ran out on you to try and recover rent + damages. Downside #2 This should be number 1 but this is a business I don't care if you're a accidental landlord you have someone health and welfare in your hands you have to treat this with a tenant first type attitude if you are not up to the job find a credible and reliable property management company to handle the day to day and you just collect mailbox money. Downside #3 The money pit. If you are looking to get into investing full-time you have to know how to run numbers and realize you are not living in the property. So don't put in the top of the line fixtures unless you are flipping top of the line homes. You can see your money go down the drain very fast and will never see a return on your money hence the money pit. This is truly the path to go down in my opinion it gives you amazing flexibility and allows you to live life on your terms. Plus it can be ran off of very little of your own money in your house but more on that later.
Downside #1. Tenants skipping out in the middle of the night. I had it done to me and heard it done to other people tenants would just leave without any notification for whatever reason. And sometimes trash the place so now you have to have it cleaned and redone for the next person which can take a month or two. So that's 2 months no rent and try to track down the asshole that ran out on you to try and recover rent + damages. Downside #2 This should be number 1 but this is a business I don't care if you're a accidental landlord you have someone health and welfare in your hands you have to treat this with a tenant first type attitude if you are not up to the job find a credible and reliable property management company to handle the day to day and you just collect mailbox money. Downside #3 The money pit. If you are looking to get into investing full-time you have to know how to run numbers and realize you are not living in the property. So don't put in the top of the line fixtures unless you are flipping top of the line homes. You can see your money go down the drain very fast and will never see a return on your money hence the money pit. This is truly the path to go down in my opinion it gives you amazing flexibility and allows you to live life on your terms. Plus it can be ran off of very little of your own money in your house but more on that later.
